(Note: In this article, “rules” refers to an organisation’s governing document – ie its rules, constitution, bylaws, trust deed etc)
We recently received an enquiry about whether a non-profit could temporarily place a clause in its rules in abeyance (ie operate outside of its rules). We are aware of some organisations that have done this without any problems – for example, a church noticed that there was a typographical error in the amended rules which had been registered with DIA Charities Services. the rules required that a period of notice should be given for any meeting at which it was proposed to amend the rules. At the next general meeting of the church members, a motion (which had not been notified in advance) was agreed to amend the rules to remove the error. This was amicably agreed as a pragmatic solution. The change was made, the matter being fully reflected in the minutes of the meeting.
We are, though, also aware of an organisation which was experiencing internal strife and which for many years had not strictly observed some of the processes set out in its rules. Chaos ensued when the chairman endeavoured to strictly enforce the rules.
Noting that we are not lawyers, the following must be taken as a general comment and our advice is always to seek legal advice in constitutional matters, particularly where any conflict is likely or possible.
This comment is based around a registered NZ charity. The comment also applies, in a general sense, to other organisations which have a set of rules, such as incorporated societies, although they will be subject to the provisions of their own legislation .
In New Zealand, charities are governed by the Charities Act 2005, which outlines the legal framework for the establishment, operation, and regulation of charitable organizations.
Charities in New Zealand are governed by their own constitutions or governing documents, which may include a set of rules, bylaws, trust deed, or a constitution that outlines the organisation’s structure, purposes, and operating procedures. These governing documents often provide mechanisms for decision-making and may include provisions for temporarily suspending or amending specific clauses.
Whether a New Zealand charity can agree to place a particular clause in its constitution in abeyance would depend on the provisions outlined in its rules and the legal requirements set forth in the Charities Act 2005. Typically, such decisions would need to be made in accordance with the charity’s established procedures, which may include obtaining approval from the charity’s governing body or members, as well as ensuring compliance with any legal obligations.
It’s essential for charities in New Zealand to ensure that any actions taken, including decisions to suspend or amend clauses in their constitutions, are carried out in accordance with their governing documents, relevant laws, and best practices in governance. Detailed minutes of a meeting should be made. Additionally, charities may be well advised to seek legal advice to ensure that their actions comply with legal requirements and do not risk their charitable status or reputation.