The Newlands-Paparangi Tennis Club Photo: RNZ / Bridget Tunnicliffe
Costs are mounting for volunteer-run sports clubs around the country as they seek to comply with the Incorporated Societies Act 2022.
Incorporated community sport organisations (ICSO) have until April 2026 to re-register under the new act, or face involuntary dissolution.
The new act puts in place a modern legal, governance and accountability framework for incorporated societies and those who run them.
But the New Zealand Amateur Sport Association said some clubs had started to get expert legal and financial advice on how to comply with the act.
Association chair Gordon Noble-Campbell said most sport clubs were run by volunteers, who do not have the expertise to navigate the complexities of the act, so they have to pay for professional legal advice.
"That pressure is becoming more evident as more organisations are going through the process of reviewing and re-registering with a new constitution and are coming up against specific costs, which in some cases is something they can't afford to pay," Noble-Campbell said.
"One club has forked out well over $3000 just for legal advice to assist with re-registering under the Act. Another club received a quote for over $1000 for professional services in order to meet the new financial reporting requirements. Another got an invoice for $750 for professional services simply to confirm that a new constitution is compliant with the new Act.
"If you extrapolate that type of figure out across the 7000-odd Incorporated Community Sport organisations around New Zealand, you come up with a very big bill."
Gordon Noble-Campbell Photo: supplied
Clubs will have to rewrite their constitutions and include additional procedures like dispute resolution processes, in order to meet the requirements of the act.
Organisations like the Companies Office and Sport New Zealand have developed tools and constitutional templates to help clubs with the transition but Noble-Campbell said they only went so far.
"When you look closer they will tell you that you need to seek your own independent legal advice before you can confirm that this is going to be fit for purpose for your organisation.
"The challenge for clubs that are re-registering is to look at how they currently operate and then figure out how that applies within the framework of the new legislation and that's why they need professional advice."
Re-written constitutions will have to satisfy a club's unique circumstances and the wishes of their members as only the members of an ICSO can approve a new constitution based on that organisation's objectives and operating framework.
Noble-Campbell said the level of awareness across the country was alarmingly low and some clubs will not end up re-registering because they don't even know that they have to.
"And they will probably just carry on most likely in an unincorporated state once the deadline has gone by."
Noble-Campbell said if a club dissolves, it loses its incorporated status, and becomes a risk to the people running those organisations, in terms of their obligations under law.
"Dissolution removes the legal status of the club, which can have implications particularly if the club is continuing to operate.
"A club's liquor licenses, for example, are unlikely to be renewed if it is operating as an unincorporated state."
Or some clubs he said will just decide to close their doors permanently because the burden is too much on time-poor committee members, who already have to deal with a lot of paper work.
"They are people who don't want to be involved in corporate type governance in order to keep on delivering sport to their community."
Sports clubs are part of the fabric of New Zealand society. Photo: ©creativenature / 123RF
The Amateur Sport Association lobbied the previous government on the implications of the new legislation on volunteer-led sports clubs. Now it is asking the current government to at least make improvements to it.
"It isn't going to be repealed, but we would like to see amendments to the Act and regulations to remove some of the more arduous compliance requirements. Otherwise we could be facing an extinction event in 20 months where suddenly the bulk of our [ICSO's] become dissolved, and either continue to operate in an unincorporated state or simply cease operating at all."
Noble-Campbell said the association had been in contact with the offices of both the Minister for Sport and Recreation Chris Bishop, and the Minister of Commerce and Consumer Affairs Andrew Bayly, who has statutory responsibility for the legislation.
The association was recently contacted by the Ministry of Regulation, which wants to better understand the impact of the new Act on ICSOs.
"They want to learn more about the specific concerns the sector has with this legislation and how it could be better fit for purpose to alleviate some of the pressure on volunteer led incorporated community sport organisations."
The Ministry for Regulation was established earlier this year and aims to improve "the regulations imposed by government to make them better, more streamlined, and easier for New Zealanders to navigate."
A spokesperson told RNZ - "We're aware of the issues raised by NZ Amateur Sport Association, and we have been in touch with them for an initial exploratory discussion."
Noble-Campbell said the compliance transition date should be deferred for at least another 12 to 24 months to allow for greater engagement with volunteer-led organisations.
Clubs will be automatically dissolved if they have not complied with the requirements of the new Act by the deadline on 5 April 2026.
