How Is an Incorporated Society Closed Down or Wound Up?

What are the immediate issues our Incorporated Society needs to attend to with regard to closing down or winding up my Incorporated Society?

Making plans to close down or winding up an Incorporated Society requires diligence and planning. Under the Incorporated Societies Act 2022, Incorporated Societies are required to consider a number of areas when considering winding up or closing down, this article will address six (6) of them:

• Making a Plan.
• Announcing the Proposal.
• De-registering the Name.
• Considering Purposes.
• Control and Management of Finances.
• Winding Up.

Making a Plan

Looking around Incorporated Societies, they collect a lot of assetts and other property during their time. An Incorporated society needs to make a plan to account for these when filing to close the society with the register.

Announce the Proposal

If the Executive Committee is considering closing down the Incorporated Society, this needs to be discussed at length with membership. Establishing the reason and factors leading to that reason is essential. Evaluating this and announcing it is key to a successful closing of an Incorporated Society.

Deregietering the Name

Similar to the Incorporated Societies Act 1908, the Incorporated Societies Act 2022 requires the society’s constitution to include its name.

The Incorporated Societies Act 2022 also explains the Registrar must refuse to incorporate a society under a particular name in the circumstances set out in section 11 of the Incorporated Societies Act 2022, such as:

• The use of the name would contravene legislation;
• the name is identical or almost identical to the name of another society, company or body corporate; or
• where the name does not include the word “Incorporated”, “Inc”, or “Manatōpū” (or 2 or more of those words) as the last word or words of the name.

Considering Purposes

The Incorporated Societies Act 2022 requires the Incorporated Society’s constitution to include its purposes, which is similar to the requirements of the Incorporated Societies Act 1908. Under section 12 of the Incorporated Societies Act 2022, the Registrar must refuse to incorporate a society if its purposes include an unlawful purpose or a purpose of carrying on the society for the financial gain of any of its members.

Control and Management of Finances

Similar to the Incorporated Societies Act 1908, the Incorporated Societies Act 2022 requires the constitution to provide for how the society will control and manage its finances.

Winding up

The Incorporated Societies Act 2022 expands on the Incorporated Societies Act 1908, setting out particular requirements for the distribution of the society’s property on liquidation. The society’s constitution must nominate a not-for-profit entity, or a class or description of not-for-profit entities, to which any of the society’s surplus assets should be distributed on liquidation or removal from the register. Under section 216 of the Incorporated Societies Act 2022, the surplus is the remaining assets of the society after all of the costs, debts and liabilities have been paid. Section 216 also sets out what happens where more than one not-for-profit entity has been nominated in the society’s constitution. Section 5(3) of the Incorporated Societies Act 2022 defines a not-for-profit entity and subpart 5 of part 5 sets out other matters relating to the removal or liquidation of a society.

Legislation cited is linked to the current consolidated text on the New Zealand Parliamentary Counsel Office website at legislation.govt.nz. Statutory references are to the Incorporated Societies Act 2022 and the Incorporated Societies Regulations 2023 as in force at the date of this article. This article is general information about the law and is not legal advice; for advice on a particular society, contact Working for Workers.