The last few months have been as busy as ever. It is great to see that many members have regained positions in the industry during this period. However, we do still have a relatively small number of members in the ‘temporarily not employed’ category as an ongoing result of the pandemic. Their position as members on a fee-waiver will be reviewed again by the Board of Management in the New Year.

In this report, I am going to focus on a matter that is central to the way that NZALPA functions – the legislation that we operate under.

At the time of writing this report, a Rule change has been prepared to be sent out to the membership for ballot. This incorporates some minor changes made by the last Annual Conference, but importantly also brings our Rules in line with the requirements of the new Incorporated Societies Act 2022. This was passed into law on 5 April 2022 and significantly changes the way incorporated societies are regulated in New Zealand. 

The new Act replaces the Incorporated Societies Act 1908, which (as you can imagine) was woefully out of date. Legal, governance and enforcement settings are changed and – in broad terms – are now brought into line with those already required of a registered company. Although the new Act does not immediately apply to existing societies, there is a re-registration period which is now scheduled to begin in October 2023. An existing society such as NZALPA must re- register, or ultimately it will cease to exist. For this reason, a lot of work has been completed behind the scenes to ensure that we are ahead of the game and, in fact, we would have re-registered already, if we had been given the opportunity.

Our existing constitution (Rules) and procedures have meant that NZALPA already complies with the new Act in many respects. However, there are a few key changes. These relate to our dispute resolution process; complying with new financial reporting standards; a provision nominating a not-for-profit entity to which the society’s assets may be distributed on wind-up/liquidation; appointment and replacement of the society’s contact person (the Secretary); and significantly, some enhanced requirements which will apply to our representatives.

With regard to the latter, I believe that it is useful to point out the following:

• Societies will be required to have a committee as a formal governing body. For NZALPA, this is our Board of Management. Those who serve on the committee must give their consent to do so and this must be recorded. In the past, our Board has been populated by elected position (requires consent) or automatically (for instance when becoming the Admin Head of a Council). For reasons that will become clear, it is vital that representative members now know what they are letting themselves in for.

• Importantly, a person may be disqualified from being an officer of the society under the new Act (for example if they are under 16 years of age, an undischarged bankrupt, subject to a variety of orders including a property order, or convicted of a dishonesty offence). Although I do not think we have ever had a problem with  the age of our Board members (in fact, some have arguably been well past their prime), the other disqualification criteria could be the source of some embarrassment, particularly if members nominated for positions are unaware of the requirements and the matter came to light later.

• The new Act codifies the duties imposed on a society’s officers and places a more substantial burden on them. An officer is defined in the new Act as a member of the committee, or someone occupying a position that allows that person to exercise significant influence over the management or administration of a society. This could potentially capture a wider group of our representatives than we might imagine, for instance the members of our various subcommittees, such as the Finance and Admin subcommittee.

• The officers’ duties are fairly standard, being: the duty to act in good faith and in the best interests of the society; the duty to use powers for a proper purpose; the duty to comply with the new Act and the society’s constitution; the duty to exercise the care and diligence that a reasonable person would in the circumstances; but also the duty not to carry out the activities of the society in a way that creates substantial risk of serious loss to the society’s creditors, and the duty not to incur an obligation if the officer believes the society will not be able to meet the obligation.

• Officer’s duties are owed to the society and members may apply to the Court to enforce these duties. Officers are entitled to rely on information and advice from management and advisors, providing they act in good faith and make proper inquiries.

• A society may indemnify its officers for criminal liability and/or third-party liability arising from a failure to act in good faith, and any costs associated with these liabilities. However, a society cannot indemnify an officer for the officer’s liability to the society.

• The 1908 Act did not consider conflicts of interest. The new Act states that any member’s interests must be disclosed, recorded and appropriately managed in an interests register. The new Act also specifies that a member or officer who is ‘interested’ (i.e. conflicted) in a matter must not vote or sign documents in relation to the conflict, without permission from the society’s committee. Nevertheless, an interested member can participate in any discussion about the matter and may be present when the committee makes a decision. The Board of Management has had a Code of Conduct, Conflict of Interests Policy and Interests Register for seven years, so we are compliant in that respect.

Enforcement provisions clearly state who may apply for Court orders and what sort of orders can be made in relation to a society and its affairs. These provisions include penalties that may be imposed where an officer has breached their duties to the society.

Of significance, the new Act sets out new criminal offences relating to dishonest and fraudulent behaviour. The liability for the most serious of these offences includes imprisonment for up to five years and/or a fine of up to $200,000. These offences include: knowingly making false or misleading statements in relation to a society; fraudulently taking and applying a society’s property for personal use or benefit; destroying or concealing property belonging to a society; falsifying or destroying any register, record or document required by the new Act or a society’s constitution; dishonestly using the position of officer for financial gain, and knowingly operating the society fraudulently or dishonestly incurring a debt. The new Act also includes some infringement offences which, if breached, may require the society or officer to pay a fine of up to $3,000 if imposed by the Court.

So what does this all mean for us, in practical terms?

NZALPA relies heavily upon member representatives, as well as a small office staff, to function. The new Act places more onerous requirements upon these representatives. From time to time, we have struggled to fill roles from our membership and it is not my intention to fear-monger and make this situation any worse. However, in the future, members who stand for representative positions will need to properly consider their eligibility and (quite rightly) continually assess the ramifications of their actions whilst in office.

By way of example, you may not be aware that the last Annual Conference introduced a Rule change to make clear the intellectual property rights of NZALPA. This was as a direct result of renegade action, by persons long since dealt with by the Board, that could now be considered to constitute an imprisonable offence under the new Act. As an association, we are never going to be immune from the possibility of dishonesty or representatives acting in self-interest, but the new Act will better protect our membership.

Members who stand for representative roles will have to explicitly confirm their eligibility. They would also be wise to consider their suitability. Without in any way attempting to make light of our electoral process or our history, I’d suggest that the days of someone applying to become a Principal Officer, Council or Board member on a whim, or because it might seem to be a good idea over a few beers, are over.

It seems obvious that in order to do justice to any representative position, a potential nominee – now more than ever before – needs to seriously consider his or her credentials, skill-set and experience. To this end, some Position Descriptions are being updated as part of a review of our structure and the matter will no doubt be dealt with by way of remit to the 2023 Annual Conference.

At the end of the day, our democratic process ensures that the membership still gets to make the final decision on who fills a role. Let’s just hope that some members are still willing to step up to the task!

Have a great Christmas and a safe 2023.