Will bankruptcy affect the Society

Farmer Freddy is worried about a board member's bankruptcy.

Early on Thursday morning as Pebbles sat down to breakfast, she received a call from her Dad, Farmer Freddy.

"Pebbles, I'm a bit worried," explained Freddy.  "Last night I was elected chairperson of the Cattle Protection Society Inc."

"That's great Dad but what are you worried about?" asks Pebbles.

"Joe, who's been on the Board with me for years, has just been declared bankrupt.  Is that going to affect the Society?" asks Freddy.

"Well Dad, I am glad you thought to check with me about that," says Pebbles.  "Do you remember when you and the other Board members signed a certificate that you were not disqualified from being officers of the Society?" asks Pebbles.

"Yes, I remember," says Freddy "the Society is a registered charity so we had to send those certificates to the Charities Commission."

"Well Dad, being declared bankrupt is one of the things that disqualify a person as an officer of a charity," says Pebbles.  "There are some new requirements under the Charities Act that came into effect on 25 February 2012 that you need to comply with," explained Pebbles.

One of those requirements is that charities must notify the Charities Commission of any officer becoming disqualified within three months of becoming aware of the disqualification" explains Pebbles.  "So you need to tell the Charities Commission that Joe is bankrupt."

"There is another change that you also need to know about Dad," says Pebbles. "The definition of who is an officer of a charity (other than charitable trusts) has been widened to include not only the Board members but anyone who occupies a position of significant influence over the management and administration of the charity.  This means people who hold positions such as:

  • chief executive,
  • treasurer,
  • finance officer,
  • paid or unpaid staff who manage contracts for the charity, and
  • paid or unpaid staff that have access to, or control over, the charity's funds or its financial arrangements

are all likely to be officers.   You need to regularly ask these people to confirm that they are not disqualified so that the Society can certify that they are not disqualified when it completes its next Annual Return to the Charities Commission," explains Pebbles.

"Oh dear, this chairperson job sounds like a lot more work than I expected," sighs Freddy.

"No worries Dad, the forms you need to complete are all on the Charities Commission website www.charities.govt.nz," explains Pebbles.

"I'll get right onto it," says Freddy, "right after I've had a cup of tea and a lie down...."


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Marie Callander