Choosing the right legal structure
Club management
Choosing the right legal structure
Club management
29 September 2025
When you set up a sports club, you need to choose a legal structure. This affects how your club operates, who is responsible for decisions, and how you manage risk.
The right structure depends on your club’s size, activities, and future plans.
Why legal structure matters
Your legal structure determines:
- who is legally responsible for the club
- how decisions are made
- whether the club can own property or enter contracts
- how easy it is to apply for funding
Common legal structures for clubs
Most clubs in New Zealand choose one of these:
Incorporated society
This is the most common and recommended structure for clubs. It offers:
- protection for members from personal liability
- the ability to own assets and enter into contracts
- a clear governance framework
To become an incorporated society, your club must:
- have at least 10 members
- form a committee with at least 3 members
- create a formal constitution
- register with the Companies Office
Important: Under the Incorporated Societies Act 2022, all existing incorporated societies must re-register by April 2026. Make sure your club’s rules and practices meet the updated requirements.
Visit the Companies Office for authoritative information and the actual registration process:
https://www.companiesoffice.govt.nz/
Charitable trust
Used for clubs with charitable purposes. Trustees manage the club. Must register with the Charities Register.
Key points:
- your club cannot own assets or enter into contracts
- members may be personally liable for debts
- fewer legal obligations, but also less formal structure
What to consider before choosing
Ask yourself:
- Does your club own significant assets or handle large sums of money?
- Is there risk involved in your club’s activities?
- Does your national or regional body require a specific structure?
- Are you applying for funding that has legal structure requirements?
Use the Community toolkit table below to help guide your decision.
| Category | Unincorporated group | Incorporated society | Trust | Charitable trust board | Company | Industrial and provident society | Maori land trust |
|---|---|---|---|---|---|---|---|
| Best suited for | One-off situations Informal and emerging groups with no staff |
Not-for-profit membership-based groups | Owns property or funds for charitable or community purpose (including marae and Māori land) | Not-for-profit bodies operating for charitable purpose (education, religion, relief of poverty, or other community benefit) | Keeping control in few hands Not-for-profit purpose (although ownership changes this) |
Not-for-profit organisation for the purpose of industry, business or trade | Only for Maori land owners or shareholders of incorporation |
| Relevant legislation | — | Incorporated Societies Act 1908 Incorporated Societies Act 2022 |
Trustee Act 1956 Charitable Trusts Act 1957 (Part 2) |
Charitable Trusts Act 1957 (Part 1) | Companies Act 1993 | Industrial and Provident Societies Act 1908 | Te Ture Whenua Maori Act 1993 (Maori Land Act) |
| Operates for benefit of | Members and/or community | Members and/or community | Charitable purpose (education, religion, relief of poverty, or other community benefit or community issue) | Charitable purpose (education, religion, relief of poverty, or other community benefit) | Shareholders | Members and/or community | Landowners and their descendants |
| Minimum number of people required | 2 individuals | 10 (However, aername that is a body corporate, such as another incorporated society, counts as three individual members) | 1 trustee (but usual to have 2) | If based on a charitable trust: 1 trustee (but usual to have 2) If based on a charitable society: 5 |
1 shareholder, 1 director (can be same person) | 7 individual members | 1 trustee (trustees are appointed by Maori Land Court) |
| Tax status | Income not taxed if group has charitable status with DIA Charities and IRD Can take advantage of range of exemptions from IRD |
Income not taxed if group has charitable status with DIA Charities and IRD Can also operate under a range of exemptions from IRD |
Income not taxed if group has charitable status with DIA Charities and IRD Can also operate under a range of exemptions from IRD |
Income not taxed if group has charitable status with DIA Charities and IRD Can also operate under a range of exemptions from IRD |
Charitable status possible | Tax paid on profits over wages and expenses | Charitable status possible |
| Decision-making | By members at general meetings and/or by the management committee | Usually by members at general meetings and/or by management committee – but will depend on the rules in the constitution (which may grant different voting rights to different levels of membership) | By trustees | By trustees (if the board is based on a trust) or By members and/or management committee (if the board is based on a charitable society) |
By directors generally By shareholders at AGM (in proportion to shares held) |
Usually by members at general meetings and/or by the management committee – but will depend on the rules in the constitution (which may grant different voting rights to different levels of membership) | By trustees |
| Members | Made up of members with spoken or written agreement between members | Membership rules around joining or leaving the organisation | No members – has trustees appointed under trust deed | Boards can be based on either a trust or a society; the board members will be either the trustees or the members of the society | No members, just shareholders | Membership rules around joining or leaving the organisation | No members – has trustees appointed by Maori Land Court |
| Liability of management committee/trustees | Members and trustees bear legal liability for debts, torts, and statutory obligations and offences | Limited liability, if actions or decisions that legally, prudently, within society's objects, and not for personal gain | Trustees bear full, unrestricted, liable; usually the trust deed will grant them the right to be indemnified out of the trust property | Board members bear full, unrestricted liability, unless the trust deed decision makers act legally, prudently, within society's objects, and not for personal gain | Shareholders and directors bear limited liability, if actions or decisions act legally, prudently, within society's objects, and not for personal gain Also specific legislation provisions for directors |
Members bear limited liability, if actions or decisions act legally, prudently, within society's objects, and not for personal gain | Trustees bear full, unrestricted liability, if decisions are done legally, prudently, within society's objects, and not for personal gain Also specific legislative provisions for trustees |
| Reporting requirements | None, unless the group has charitable status reporting to DIA Charities | Annual financial statement, notification of any change of rules and office – to Registrar of Incorporated Societies Additional requirements if charitable status – to DIA Charities |
None, unless the trust has charitable status reporting to DIA Charities | Changes of rules, name or office; annual reports (even if trust is wound) – to Registrar of Incorporated Societies | Change of constitution, name or office – to Companies Office, and for some companies annual accounts – to Companies Office Additional requirements if charitable status – to DIA Charities |
Annual financial returns to Registrar of Industrial and Provident Societies | Annual financial statements to Registrar of Maori Land Court |
| Assets on winding up (liquidation) | Surplus assets will be disposed of according to the group's rules unless the group has charitable status | If the society is liquidated or removed from the register, it can distribute its property and assets to its members, instead it has to distribute them in a not-for-profit direction | Assets disposed of as provided in the trust deed, assets usually distributed to a charity, trust or organisation with a similar charitable purpose | All surplus assets (after costs, debts and liabilities have been paid, are distributed as directed in the trust deed or society rules, or as ordered by the courts | Surplus assets are distributed among shareholders, unless the society company has charitable status | Surplus assets can be distributed among shareholders, unless the society has charitable status | As the courts direct or to beneficial landowners or successors |
Incorporated societies resources
Find practical tools and advice to help your club meet the requirements of the Incorporated Societies Act 2022.
You’ll get:
- constitution templates for clubs, regional organisations and national bodies
- summaries of key changes in the Act
- compliance checklists
- answers to frequently asked questions
- governance resources to support good practice
Guidance on Unincorporated groups
Better Boards: What Are Unincorporated Groups (Unincorporated Societies)?
Community toolkit: Unincorporated groups
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