NZARC Blog

The New Zealand Association Resource Centre Trust (NZARC) blog is a place for board members, partner organisations, and subscribers to contribute articles and discuss issues of relevance to the non-profit sector. Contributions are welcome and encouraged.

NZARCT submission for review of Incorporated Societies Act 1908

Members of the NZARCT recently attended the Northern Auckland Community Consultative forum for the Law Commission review of the Incorporated Societies Act. The meeting was a valuable opportunity to engage with senior advisors of the Law Commission. 

This assisted Ralph Penning develop a submission on behalf of the NZARCT. Ralph is a qualified Chartered Secretary and Charity Trustee with a career spanning over 40 years in Association Management, governance and charity trusteeship.

To view our submission, please click here.


New Copyright Act

Commerce Minister Simon Power drove through the Copyright Bill a few months ago. It gets enacted on 1 September, but as of now (today) illegal filesharing will count towards penalties. Labour supported it in order to keep the termination clause inactive.

InternetNZ (Internet New Zealand Inc) has launched a new website 3strikes.net.nz to help people and organisations get ready for the new copyright law

What’s the new law about?

The law is called the Copyright (Infringing File Sharing) Amendment Act 2011. It amends the Copyright Act 1994 to provide owners of copyrighted works such as movies, TV shows and music a quicker and easier way to penalise people infringing their copyright via online file sharing. The intention of the law changes is to crack down on peer-to-peer file sharing.

You get 2 notices (warnings) and then, following the 3rd notice, the copyright owner can take you to the Copyright Tribunal. Depending upon circumstances, generally the minimum penalty is $275 and maximum $15,000, payable to the copyright owner.

The person who owns the Internet account (account holder) is liable, even if he or she wasn’t the person who broke the law. Allegations of copyright infringement made against you (the account holder) by the copyright owner are presumed to be correct unless you give evidence or reasons why you aren’t guilty.

When does the new law start?

The law comes into force on 1 September 2011.

However, notices can be sent for alleged infringements occurring in the 21 days before the notice. Therefore, allegations of infringements from 11 August 2011 onwards count under the new law.

What’s covered by the law changes?

Only online file sharing that infringes copyright. “File sharing” is defined by the new law as:
  • material uploaded or downloaded from the Internet (and) using an application or network that enables the simultaneous sharing of material between multiple users.
  • Anything that doesn't meet both parts of this definition is not covered by the new law.
The intention of the law changes is to crack down on peer-to-peer file sharing (see details in InternetNZ press release). This means using peer-to-peer protocols like Gnutella and BitTorrent with peer-to-peer software like uTorrent, BitComet, FrostWire, Ares, LimeRunner, and Vuze.

While the intention of the law changes is to target peer-to-peer infringing file sharing alone, the definitive word on what’s covered and what’s not will depend upon decisions of the Copyright Tribunal and Courts if the scope of the law is ever tested.

Remove unneeded P2P software

Peer-to-peer (P2P) software is used to exchange (download and upload) files between people. P2P allows users to download files such as music, movies, and games using a file sharing software client that searches for other connected computers (called ‘peers’). Similarly, other computers on the Internet are able to search for files on your computer.

Examples of P2P software includes uTorrent, BitComet, FrostWire, Ares, LimeRunner, and Vuze. There are many others and the list keeps changing.

Having P2P software is legal and can be used for many legal file exchanges. However, you need to keep in mind that the new law specifically targets P2P (see details in InternetNZ press release). Unless you are an advanced Internet user, can manage the risks, and use P2P for legitimate purposes, the law changes makes P2P too risky for most people. Remove all P2P software from your computer. Make sure you remove it completely, including any directories and files associated with the software. This step on its own will hugely reduce your risks from the new law. If you’re an advanced Internet user and decide to continue using P2P, you must understand the risks and take sensible steps to manage them.

Recognise the seriousness and resources of copyright owners

Many copyright owners take detection and prosecution of copyright infringement very seriously. Some like the Motion Picture Association or the Recording Industry Association of America have significant resources and determination to go after infringers. If anything, they can be overzealous so don’t underestimate the seriousness of the new law.

There are many ways that copyright owners detect infringement of their work. Sophisticated technologies include digital fingerprinting/watermarking, automated webcrawlers, and countermeasures.

Three common detection methods used are:
  1. Using law enforcement and court action internationally to obtain lists of IP addresses of people infringing their copyright
  2. Setting up fake websites to lure unsuspecting people
  3. Using third party expert services such as Bay TSP, Peer Media Technologies, and Copyright Enforcement Group
By Jenny Kirk

Is your constitution registered and up to date?

There’s one sure way to risk the integrity of an association/charity and that is not to register the constitution or trust deed. As the founding document, and the basis for all compliance decisions, it is critical that your document is registered! It defines who you are, how you operate, who your constituents are and your organisation’s rules and regulations.

We have witnessed a situation recently where an association spent a lot of time and energy ‘overhauling’ their most recent constitution, only then to find out it was not even registered in the first place. The association was acting ‘ultra vires’ – this means:
  • All their decisions, having been based on the most recent constitution were in fact beyond their authority
  • Any decisions could be challenged, leaving the organisation vulnerable to potential legal actions by employees or other parties

The outcome was that members became polarised by the possibilities of two different constitutions, it created a lack of confidence in the Executive Committee and caused a number of member resignations. It meant the Association had some serious ‘fire-fighting’ to do – distracting it from its core activity.

We strongly suggest you ensure your constitution/trust deed is registered and that its contents meet the needs of your association or charity.


Or email Colette on colette@associations.org.nz for more information.


Incorporated Societies Act review – have your say with us!

The move to ‘overhaul’ the Incorporated Societies Act of 1908 provides an ideal opportunity for feedback around what improvements could be made.

While it can be argued that the present Act (in spite of its simplicity by modern standards) has stood the test of time, we perceive there is a growing need to bring it more into line with other corporate legislation. The volunteer governed non-profit sector is no longer immune from the complexities of contemporary commercial practice. 

There are many challenges we face today that simply weren’t a factor over 100 years ago. It is arguable whether its compliance regime should be brought more into line with the Companies Act considering the prominence of craft, industry, trade and professional interests represented by incorporated societies. 

As we experienced in putting forward a multitude of ideas and recommendations to the legislature, we are inviting input from those associations wishing to submit collectively, We believe this will achieve greater substance in terms of shared experiences and practical examples.

Matters that come to mind for the current Act are:
  • its failure to deal with internal issues like conflicts between members and the executive,
  • disputes between members and the association and power struggles at governance level.
  • the lack of provision to invoke the Registrar’s authority in resolving acrimonious relationships without recourse to the Courts
  • We have prepared a more explicit discussion paper on this subject headed “New Rules for Incorporated Societies?”, which we would be happy to forward to you. If you could please email Colette at colette@associations.org.nz for a copy. We also have a guide that we can forward to you if you are happy to contribute to the joint submission we will be making.

If you would like to make a submission yourself, please click here


Greenpeace struck off Charities Register

As reported 9 May 2011, the High Court has ruled Environmental lobbyist Greenpeace of New Zealand Inc. is too involved in political causes to register as a charity.

It highlights the distinction between a cause being ‘worthy’ or deemed ‘charitable’. Another mitigating factor was that Greenpeace’s charitable purposes weren’t deemed to be its primary purpose, being overtaken by political activities that weren’t “merely ancillary”. Justice Heath said the charitable purposes of Greenpeace could be met without resorting to political activity to advance its causes.

This highlights the need of a charitable organisation to be clear about its objectives and what activities are deemed to be acceptable if it wishes to continue with charitable status.

If you have any concerns about whether your NFP is on the right track, please contact Rosemary Mahoney in the first instance 09 419 0042

Is it the silver bullet - Officers’ Potential Liability?

The general assumption that officers and trustees of NFPs enjoy blanket limited liability is not true in all cases.

An incorporated society or charitable trust is exposed to the effects of changing market forces, internal issues or the inability of its elected or appointed officers to direct the organisation in a sustainable manner. ‘Not for profit’ does not mean ‘for loss’. It is the duty of the Board or governing committee to observe normal business practices – remaining solvent and achieving financial gain.

Committee members of incorporated societies (associations) and charity trustees can be personally liable in certain situations. This can occur if, while under their governance, the organisation were to go into liquidation resulting in financial losses. This would be the case if they failed to keep proper financial records or if executive staff working under the Board’s direction were delinquent or negligent.

If it is proven the Board or committee failed in their responsibility of care and due diligence (acts of breach of trust and fiduciary responsibility, resulting in the winding-up of the entity’s affairs at the instigation of the Registrar), they are exposed to that organisation’s members or creditors seeking recovery.

This places greater emphasis on individual competence and good governance.