BENEFITS OF BEING A CLUB
- My name is John Hickey:
- I am a member of the Landrover Owners Club Auckland. I am Liaison Officer for that Club. Last year I was the Vice President for the Northern Zone of the New Zealand Four Wheel Drive Association. This year (2014) I was elected President of the Northern Zone.
- I have been asked by Tony Burgess as President of the Four Wheel Drive Association to speak at the conference about the benefits of being a club.
- By “club” I mean a group of people with similar interests not seeking to profit from their association with each other, so not a business.
- If a club is incorporated, it is usually incorporated under the Incorporated Society’s Act 1908 (“the Act”), the Charitable Trusts Act 1957 or the Charities Act 2005.
- When I refer to club I am only talking about incorporated societies or clubs. (According to Von Dadelszen in his “Law of Societies in New Zealand” (2 nd Ed.) (“Von Dadelszen”), there are about 20,000 incorporated societies in New Zealand.)
3. Why have an Incorporated Society?
- If a group of people get together and are not an incorporated society under section 13 the Incorporated Society’s Act there is joint and several liability for debts. Unless otherwise specified in the Act members are not liable for the debts of the society.
- You might not think that a problem. However, some years ago I acted for a person who was a member of an immigrant sports community that joined together for sporting purposes. They were not incorporated. The person ordered sports clothing. The supplier was not paid. The supplier sued the client for thousands of dollars owed to the supplier.
- Because the club was not incorporated each person was jointly and severally liable for the debt.
- In other words, one person could be sued for all of the debt and was sued for all of it. If it had been an incorporated society, it would have been the Society rather than the individual person who would have been sued.
4. The benefits of being an incorporated society include:
- It is a separate entity from its members;
- (a) There is limited liability (see above).
(b) The other side of this is that a club cannot exist for the pecuniary gain of members and members should not financially gain from their membership. So if clubs make too much money they may lose their not for profit status (see sections 5, 14 & 20).
- It can own property apart from its members. As you may be aware, some Four Wheel Drive clubs own land which is used by club members;
- The Health and Safety in Employment (Adventure Activities Regulation 2011) do not apply if the activity is a club activity provided for members (please see endnote );
- A club must have a Constitution which sets out the rules affecting members (s6).
- If the club is a member of the New Zealand Four Wheel Drive Association, its members have the benefit of the Association’s insurance policy.
The Rules and Regulations for clubs
- An incorporated club has certain obligations:
- It must use the word “incorporated” in its name which can be abbreviated to “inc”.
- It must have a registered office (s19).
- It has to have a Constitution (s7) and must register any changes of rules (s21).
- It has to file annual returns.
- It must keep a register of members (s22).
- A constitution sets out the guiding principles or Rules of a club.(s6)
- A club constitution means that the rights of the members are set out and those rules affect everyone. (see s6)
- There are specific minimum requirements under the Incorporated Societies Act; (see s6)
- Many club’s rules include items that are specific to that club.
- A club must have officers (s6) and a Committee who need to understand their roles and the practice of the club.
- Meetings are ultimately more important than any meeting of the executive or actions of the officers of the club. (As Von Dadelszen says, the executive is always subservient and accountable to the members at a general meeting (6.2.3)).
- The club needs to have at least one general meeting every year, known as the Annual General Meeting (“AGM”) and proper notice must be given together with an agenda.
- A club must file annual financial statements (s23).
- A member of a club; or
- A member of another sports club or recreation club under an agreement between the clubs; or
- A person who is not a member of the club if the activity:
- Is provided only to encourage membership of the club or interest in the club’s activities or for the purposes of a competition; and
- Is provided to any one person no more than 12 days in any 12 month period.