The new Incorporated Societies Act 2022 (“the Act”) was passed by Parliament in 2022. The Act will take effect from October 2023 and the final Regulations will be passed by September 2023.
The new Act will focus on improving Incorporated Society governance by retaining the best of the 1908 Act and codifying case law in the new Act.
What is an Incorporated Society?
An Incorporated Society is a membership-based organisation that exists for a lawful purpose other than making a profit. It is an incorporated body with legal identity of its own and thus ensure perpetual succession even though its membership may change. Members are not responsible for debts or other obligations that the society takes on. The activities are limited by the Act and the rules of the organisation.
What are the main changes?
The new Act will require primarily the following:
- Constitutions will have to be compliant with the new Act containing specific content relating to the composition, roles, powers, functions, and procedures of the committee/board. This is a significant change compared to the old Act.
- Clearer governance arrangements are required with 3 officers required to manage the affairs of the society with duties similar to that contained in the Companies Act 1993, such as duty to act in good faith, in the best interest of the society, exercise reasonable care and diligence, and officers will be liable for any breach of those duties.
- Qualification of officers will be based on an officer being a natural person, and not disqualified on the basis of being an undischarged bankrupt, previously convicted of dishonest offences etc.
- Officers have to disclose conflicts of interests where they might be obtaining a benefit and there should be a clear process managing this situation.
- Dispute resolution procedures must be in place to deal with member grievances and complaints.
- Transparency and accountability in the form of members being able to access information about the society and there are further requirements around financial reporting and return filing.
The next steps
All existing Incorporated Societies will have to re-register to continue as an Incorporated Society and failure to re-register will result in removal form the Register. Applications to be reregistered can only be made after October 2023 until April 2026.
New members must consent before joining and accurate records must be kept.
There are new accounting standards, financial reporting and annual return details and audit requirements.
The Government is still finalising the Regulations to sit alongside the new Act and it is the Regulations that will provide the most guidance as to what is actually required in the constitution. The finalised Regulations will be published around September 2023.
This is a good opportunity to review your Incorporated Society’s Constitution, make the necessary amendments, prepare for re-registration, and ensure that your society will be able to comply with the new Act. We have a team ready to assist you if this task seems too daunting to tackle on your own.
If you have any questions or need any advice, please contact us for an appointment T:06 349 0090 or email email@example.com
Joamari Van der Walt │ LLB │ BComm(Econ)-Law (Stellenbosch) │
Disclaimer: This publication should not be construed or acted on as legal advice. It is brief and general in nature. Specific advice should be sought.