Community organizations play an important role in New Zealand society. In the RMA context, it is common for a group of individuals to enter into a process under the RMA as a group of potentially and commonly affected parties set up as an incorporated society.
Membership of a society does not of itself impose on the members any liability in respect of any contract, debt, or other obligation made or incurred by the society. Incorporated societies tend to be used for the sharing of resources, but also (and perhaps more often) for shielding individual members from an award of costs in the Environment Court. The risk of costs can be a significant factor in discouraging vexatious appeals or those with little merit. Establishing an incorporated society essentially avoids that risk. A respondent to an appeal has the ability to request an order securing costs before allowing an appeal to be heard, to ensure the person bringing the appeal has sufficient financial resources to pay costs should their appeal be unsuccessful. The Environment Court only very rarely grants security for costs (despite the recent re-enactment of the Security for Cost provisions in the RMA) – citing the importance of public participation.
Currently societies are able to incorporate under the Incorporated Societies Act 1908. This statute is over 100 years old, and does not provide for contemporary concerns such as modern governance structures or modern dispute resolution mechanisms. The Law Commission is seeking to update and revise this Act and has released an Issues Paper.
Relevant to the RMA context, the paper poses questions for discussion, such as:
- Do you agree that a review of the legal structure for incorporation of non-profits, and the requirements on those running such societies, would be a useful step in strengthening the non-profit sector?
- Is the current limitation of liability sufficient? (i.e. section 13 prescribes that "a membership of a society shall not of itself impose on the members any liability in respect of any contract, debt, or other obligation made or incurred by the society").
- Do you think that for some purposes it might be advisable to divide societies between members' benefit and public benefit societies? If so, in what circumstances?
- Should a society require a minimum number of members, to be incorporated? If yes, what minimum numbers of members do you consider would be appropriate? The current number of members is 15, Australian statutes require 5.
- Is the current limitation of liability sufficient?
- Should there be a provision for mergers of societies?
Submissions close on 30 September 2011.