Industrial and provident societies

An industrial and provident society may be established under the Industrial and Provident Societies Act 1908 on application to the Registrar of Industrial and Provident Societies by seven members and the secretary for carrying on any industry, business or trade authorised by its rules (except banking).  The primary purpose of the society should not be for the profit of its members.

An industrial and provident society will usually consist of the owners of small businesses who, while continuing to operate independently, become part of this larger entity for mutual benefit.  They work (industrial) and receive benefits (provident) from the society for their future wellbeing.

A co-operative taxi society is a good example with independent operators benefiting from car insurance schemes and a radio booking system.  Societies are identifiable by having names ending in Society Limited, sometimes Co-operative Society Limited, and operate according to registered rules.

Features of industrial and provident societies

The key features of an industrial and provident society are set out in the Industrial and Provident Societies Act 1908 Schedule. They include:

• a society has to be either a bona fide co-operative society or where the activity to be carried on will improve the conditions of living, or the social well being of members of the working classes or be for community benefit
• members are not liable for a society’s debts
• by restricting the degree of participation of any one member to a value fixed by the Industrial and Provident Societies Act 1908, domination by one member is not possible.  This ensures that the co-operative nature of the society will continue
• approximately 300 societies are currently registered in New Zealand.

Advantages of an Industrial and Provident Society

The advantages of an industrial and provident society are similar to those of other bodies corporate, including:

• a society becomes a separate legal entity once incorporated
• a society will have a common seal (no longer applicable to companies)
• a society can lease, rent, buy and sell property, borrow money and enter contracts in its own name, generally under its common seal. No member of the society can have personal rights or interest in any of the assets of the society
• a society will continue as a separate entity even though its membership changes
• members will not be personally liable for the debts, contracts or other obligations of the society.

Registration of an Industrial and Provident Society

An application for registration in the prescribed form needs to be made to the Registrar of Industrial and Provident Societies.  That application must be signed by seven members and the secretary and be accompanied by a copy of the rules of the society.

The rules must comply with the requirements of the Industrial and Provident Societies Act 1908 and provide for all matters specified in Schedule 2 of that Act.  These include:

• object, name and registered office of the society
• entry criteria for membership of society
• modes of holding meetings and voting
• appointment and removal of executive
• matters relating to the holding and transfer of shares in the society.

Important information

The name of the society must not be identical to that of any other society or any company carrying on business in New Zealand or any other body corporate established or registered in New Zealand, or so nearly resemble that name as to be 'calculated to deceive', unless that other society, company or body corporate gives its consent in a form acceptable to the Registrar and provided that registration under that name will not be contrary to the public interest.

The meaning of 'calculated to deceive' under the Industrial and Provident Societies Act 1908

The term calculated to deceive is an objective test meaning likely (or reasonably likely) to deceive or mislead the public.  Names cannot be reserved in advance of incorporation.  Intending applicants need to check the proposed name carefully against existing names, starting with those on the registers available for search on this website.