Incorporated Societies Act 2022 and Constitution advice

You may be aware that the Incorporated Societies Act 2022 has come into law

Whilst the Act is now law, its provisions will not come into effect until Clubs re-register within the timeline outlined below. This means that the provisions in Incorporated Societies Act 1908, under which existing societies are registered will still apply until re-registration takes place, and no changes need to be made to your club structure or constitution at this time.

From October 2023, Incorporated Societies will be able to re-register under the new Act and will have until 6 April 2026 to file a revised constitution that complies with the new legislation to ensure they remain an Incorporated Society.

Above all our advice is not to panic. Until re-registration under the new Act takes place the existing Act applies.

Tennis NZ has developed some constitution templates and guidance notes which you can find here on the website.

In December 2024, Tennis NZ passed its new constitution, and you can view it here.

General Act Changes

Some of the changes that will apply once the provisions in the Act come into force include:

Membership

At least 10 members are now required to register an incorporated society (15 were required under the old Act). The society must have always at least 10 members. People will need to consent to become a member, and a Membership Register must be maintained and include specified minimum data.

Committee

Each society must have a committee comprising three or more officers. A majority of those officers must be members of the society and/or representatives of corporate bodies that are members of the society. This committee will be the “governing body of the society”, responsible for the management of its operations and affairs.

Review and update of rules

Procedures for resolving disputes and other grievances between members, as well as between members and the society, must be documented and set out in the society’s constitution. The society’s rules need to include certain provisions, for example nominating a not-for-profit entity to which surplus assets are given if the society winds up.

Financial Standards & Reporting

Every society must file financial statements with the registrar within six months of the balance date of the society.

There are changes to required reporting standards depending on the size of the entity.

The financial statements must be:

Dated
Signed by two members of the board/committee on behalf of the Club

Clubs will need to decide if they are happy with a review of there financials, or if they trigger the need for an audit. In order to make this decision, we suggest that you review the details here from the Companies Office.

You can also use this information here to confirm what Tier your Club is, which triggers the need for an audit.

Small Clubs* only need to meet minimum requirements set out in the Act.

All other Clubs must use External Reporting Board (XRB) accounting standards and will fall within one of four reporting Tiers depending on the size, as based on the value of the total operating expenditure of your organisation.

Tier 4 Standards – Your Club needs to adopt Tier 4 accounting standards if it is not a ‘Small Club’ and has operating payments of less than $140,000.00. Reporting requirements are cash based. Tier 4 Clubs do not need to have their financial statements audited, but a review is recommended and best practice.

Tier 3 Standards – Your clubs needs to adopt Tier 3 accounting standards if it is not a ‘Small Club’ or a ‘Tier 4 Club’, and has total expenses of less than $2 million. Reporting requirements are accrual based. Tier 3 Clubs do not need to have their financial statement audited, but a review is recommended and best practice.

Tier 2 & 1 Standards are for the largest of societies and Clubs. Only a small number of societies and Clubs will fall into these two categories nationally, and most probably already do some form of formal reporting. Tier 2 societies and Clubs are those that spend over $2 million a year. Societies and Clubs that spend over $30 million per year meet Tier 1 criteria.

For these top two Tiers, the standards are based on international standards issued by the International Public Sector Accounting Standards Board, they are complex, and we imagine that it is unlikely that any of our Clubs would fall into this Tier. However, societies and Clubs who do, will need assistance from a professional to prepare their financial reports.

*Definition of a Small Club:

Total operating payments less than $50,000.00 in each of the two previous financial years, and
Total current assets of less than $50,000.00 at the end of the two previous accounting periods, and
Is not a registered charity or a donee organisation for tax purposes.

A small club may choose to follow either the XRB standards (Tiers 1 – 4), or the minimum requirements as prescribed by the Act. (ref: Section 103 (2) b).

Minimum financial requirements

The minimum requirements (ref: Section 104 of the Act) are that financial statements must contain:

Statement of income and expenses/receipts and payments, and
Statement of assets and liabilities, and
Any security interest over the club’s assets.

IMPORTANT NOTE: While the need for an audit verses a review is optional for Tier 3 and 4 entities, Regions and Clubs applying for grants and funding may be required to provide an audit report.

All clubs (except ‘Small Clubs’) are required to prepare financial statement in accordance with standards set by the Financial Reporting Act, issued by the XRB. Click here for more information on meeting your reporting requirements.

What Tier is my club?

Size of Club/Society	Financial Reporting Requirements
Small Clubs – total operating payments less than $50,000.00, and total current assets less than $50,000.00 and is not a donee organisation at balance date.	A small club may choose to follow either the XRB Standards (per below), or the minimum requirements as prescribed by the Act. No review or audit is needed, although a review would be best practice.
Total operating payments less than $140,000.00	Tier 4 · Simple format reporting · Financial statement do not need to be audited, but a review is recommended and best practice. For out more information about Tier 4
Total operating payments less than $2 million	Tier 3 · Simple for a reporting – accrual · Financial statements do not need to be audited, but an audit is recommended. For out more information about Tier 3
Total expenses less than $30 million	Tier 2 · PBE standards with reduced disclosure required. · Financial statement may need to be audited, see this note. Find out more information about Tier 2
Total expenses greater than $30 million	Tier 1 · Standards, amendments and guides can be found here.

The financial statements, whether reviewed or audited or not, must be submitted to the AGM. The Committee may recommend the [Auditor or Reviewer] to be approved by Members at the AGM.

Webinar Support

Tennis NZ has delivered two webinars, you can view those here. Both have supporting documents which cover the questions generated during the sessions.

Sport NZ have delivered a webinar to allow clubs to understand how to comply with the new changes.. This webinar is hosted on the Sport NZ learning portal, SportTutor and can be accessed by registering here.