Sports Clubs May Need to Shape Up!
You may think The Incorporated Societies Act 2022 has nothing to do with you, but if your child is in the local soccer club, or you’re on the board of the squash club, chances are you will be affected by recent changes to the Act.
The gist of the changes are that “officers” of incorporated societies can now be personally liable for not running the club properly, and that members are entitled to expect higher standards of governance from their club. In short, the new Act aims to improve the governance, accountability, and transparency of incorporated societies – and there are now consequences for failure to meet those standards.
Who is affected?
The New Act affects all existing societies incorporated under the old 1908 Act, this includes your local sports club, Resident Associations, and any other special interest group.
Any new society seeking incorporation from 5 October 2023 will also need to comply with the New Act.
What’s changed?
The New Act introduces a number of changes
- Governance Requirements: The Act introduces clearer governance requirements for societies, including duties for committee members similar to those of directors of companies. This includes acting in good faith, exercising care and diligence, and acting in the best interests of the society at all times.
- Dispute Resolution: the New Act mandates that societies must have a clear procedure for resolving disputes among members of the society and those between a member and the society itself.
- Financial Reporting: Societies are required to keep proper financial records and, depending on their size, may need to have their financial statements reviewed or audited.
- Constitutional Requirements: The Act specifies certain minimum requirements for the content of a society’s constitution, aiming to ensure that societies are run fairly and transparently. For example, a constitution must now include procedures on how the constitution can be amended, and how a member can be appointed or removed as contact person.
- Dissolution and Amalgamation: The Act provides detailed processes for the dissolution and amalgamation of societies. This makes it easier for two or more societies to amalgamate, making the transfer of assets or contractual obligations easier.
- Minimum Membership: The minimum number of members for societies decreases from 15 to 10 under the new Act.
- Criminal Offences: The new Act provides several new criminal offences, which target dishonest and fraudulent behaviour in relation to an incorporated society. For example, fraudulently taking and applying a society’s property for personal use or benefit.
Next Steps
All existing Incorporated Societies will need to re-register as an Incorporated Society. The deadline for re-registering is 5 April 2026. If you are thinking of starting an incorporated society, it is important that you comply with the New Act.
Our specialist team of lawyers at Henderson Reeves Law are well placed to assist you in ensuring that your incorporated society meets the new requirements set out in the New Act. We are happy to help with a review of your current society rules and assist with bringing these in line with the New Act and the re-registration process.