New Zealand

New Zealand

Legal framework

 

The legal framework analysis aims to provide general knowledge of the national cooperative legislation and of its main characteristics and contents, with particular regard to those aspects of regulation regarding the identity of cooperatives and its distinction from other types of business organisations, notably the for-profit shareholder corporation.

It aims to evaluate whether the national legislation in place supports or hampers the development of cooperatives, and is, therefore “cooperative friendly” or not, and the degree to which it may be considered so, also in comparison to the legislation in force in other countries of the ICA region, or at the supranational level.

In addition, the research aims to provide recommendations for eventual renewal of the legal frameworks in place in order to understand what changes in the current legislation would be necessary to improve its degree of “cooperative friendliness”, which is to say, to make the legislation more favourable to cooperatives, also in consideration of their specific identity. This webpage presents a snapshot of the legal framework analysis results for New Zealand.

 

 

New Zealand doesn’t have a single constitutional document but a collection of legal documents coming together to make an uncodified constitution, which carries no special recognition or protection to cooperatives. This legal framework analysis of New Zealand specifically covers the Co-operative Companies Act 1996 and the Industrial Provident Societies Act 1908.

Except for financial cooperatives which have their own legislation (Friendly Societies and Credit Unions Act 1982), New Zealand’s cooperative legal framework does not make specific provision for different types of cooperatives. However, the laws mentioned below provide ample flexibility to accommodate types of cooperatives.

 

Main laws relevant to cooperatives in New Zealand


Co-operative Companies Act,1996

Industrial and Provident Societies Act, 1908

Building Societies Act, 1965

Incorporated Societies Act, 1908

Friendly Societies and Credit Unions Act 1982

 

New Zealand’s cooperative legal framework includes general and specific application of some of the cooperative principles.


 

Cooperative Friendliness

The Co-operative Companies Act,1996 is more cooperative friendly than not because it has been tailored to meet the specific requirements of the dairy industry which is the largest industry in the cooperative sector, and the law doesn’t itself encourages compliance with the cooperative principles but rather leaves it to the by-laws of cooperatives registered under the act. The Industrial and Provident Societies Act, 1908 is also more cooperative friendly than not because it requires the registrar to determine if the organisation seeking to register is a bona fide cooperative. It is an archaic law, which is otherwise flexible but leaves it to the bylaws of a cooperative to set out its adherence to cooperative principles.

 

Key recommendations for improvement

  • Replacement of the Industrial and Provident Societies Act, 1908 with new legislation for cooperative and community benefit associations.
  • To also include a provision in the Co-operative Companies Act,1996 and Industrial and Provident Societies Act, 1908 which allows cooperative companies to adopt accounting standards that are tailored for cooperatives.
  • Co-operative Companies Act,1996 to also adopt a mandatory cooperative governance code.

 

Conclusions

The history and development of cooperative law, in New Zealand, is unique, however recently due to global competition, volatile markets, etc. signs of cracks have emerged in New Zealand’s flexible approach to the cooperative business model.

 

Subscribe to New Zealand