Charitable Trusts Act 1957

The Charitable Trusts Act 1957 is a structural and administration law for charitable trusts and charitable trust boards in New Zealand.

For most organisations, it becomes important when there is a property issue, a trustee change, an incorporation step, or a need to change the use of charitable assets or fundraising money.

In practical terms, the Act deals with three main areas.

This Act is most relevant to trustees and organisations holding property for charitable, religious or educational purposes. It is also relevant to charitable trust boards incorporated under the Act.

It can also apply where money has been raised by voluntary contribution for a charitable purpose and the original plan can no longer be followed.

For ordinary for-profit businesses, the Act is usually only relevant if they operate through a charitable trust structure, hold assets on charitable trust, or run a fundraising vehicle tied to a charitable purpose.

The Act also draws some boundaries around who can use the incorporation pathway. Trustees cannot apply under Part 2 if they are already incorporated under another Act or otherwise. Since 2023, societies can no longer make new applications to be incorporated as a board under this Part.

That said, societies already incorporated as boards may continue under this Act, and the Act also says such a society may choose to reregister under the Incorporated Societies Act 2022.

Many small organisations do not look at this Act until something changes.

A common trigger is a trustee change. Another is buying, selling or holding land through trustees. A third is wanting a more durable incorporated structure for a long-running charitable activity.

The Act also becomes important when records are incomplete. If your trust deed is unclear, your trustee appointment trail is patchy, or your registered office details are out of date, a routine governance issue can quickly become a legal one.

Another trigger point is a stalled project. If money was raised for a specific charitable purpose and that purpose can no longer be carried out, the Act may provide a formal route for dealing with the funds. What it does not allow is an informal decision to spend the money on something else just because it seems sensible.

For incorporated boards, basic administration also matters. The Act gives the Registrar powers relating to registration, removal, restoration and inquiries about whether a board is still carrying on operations. That means poor record-keeping can create practical problems even where nobody has acted dishonestly.

Part 1 is especially important where property is held by trustees for a religious denomination, congregation, society, or a body of persons associated for a charitable purpose.

The practical effect is continuity. Where the section applies, property vests not only in the named trustees but also in their successors in office and continuing trustees, without any further conveyance or assurance. That helps avoid repeated transfers every time trustees change.

But continuity does not mean informality. The Act requires evidence of each appointment of new trustees covered by section 3. That evidence must be a memorandum under the hand of the chair of the meeting at which the appointment was made. It must be executed in the presence of that meeting or later, and attested by 2 or more witnesses.

If land under the Land Transfer Act 2017 is affected, there is an extra step. The memorandum must be lodged with the Registrar-General of Land. For that land, the appointment has no operative effect until the memorandum or a certified copy has been certified by the Registrar-General of Land.

For a small trust, this means trustee changes should be treated as a document process, not just a meeting decision. If the paperwork is weak, title and authority issues can follow.

Part 2 allows trustees of a trust that is exclusively or principally for charitable purposes to apply to the Registrar for incorporation as a board.

This can be useful where a trust wants a continuing legal vehicle rather than relying only on changing individuals as trustees. Under the Act, an incorporated board has perpetual succession and a common seal. It can hold property, sue and be sued, and do what bodies corporate may lawfully do, subject to the Act and the board’s constitutional documents.

The application process is document-heavy. The application must be signed by a majority of the trustees. Each subscriber must add their name and address to their signature.

The application must also be accompanied by supporting material. That includes copies of relevant wills, declarations of trust and other documents showing the general purposes of the trustees and the trusts on which property is held. If some trusts are not set out in documents, a statutory declaration is required.

If the application is made by trustees of a society, extra documents and a statutory declaration about the society’s authority are required. The Act also now requires an electronic address for communications with the board.

The Registrar may refuse registration until further information is supplied if the documents do not disclose sufficient information about the trusts on which property is held.

Incorporation changes the legal vehicle, but it does not erase the underlying trust obligations.

From the date in the certificate of incorporation, the board becomes a body corporate made up of the persons who are for the time being the trustees. In the case of a society previously incorporated as a board, it consists of the persons who are for the time being the members of the society.

The Act also says that property held by the trustees or society immediately vests in the board without transfer, conveyance or assignment. But that vesting is for the same purposes, with the same powers, and subject to the same trusts, contracts and equities already affecting the property.

That is the key practical point. Incorporation can simplify continuity and ownership mechanics, but it does not free the organisation from the original restrictions attached to the property or funds.

If land under the Land Transfer Act 2017 is involved, the Registrar-General of Land registers the board as proprietor on written application under the board’s common seal. So even where vesting happens by statute, there may still be a land registration step to complete.

For many organisations, the value of incorporation is administrative stability. For example, a community trust may prefer a continuing board structure so that property and contracts are not constantly tied to a changing list of individuals.

Parts 3 and 4 are the Act’s formal mechanisms for change.

Part 3 deals with certain charitable trusts. It allows property or income given or held for a charitable purpose to be disposed of for some other charitable purpose in specified situations. Those situations include where the original purpose is impossible, impracticable, inexpedient, already effected, illegal, useless or uncertain, or where the amount available is inadequate.

Part 3 also deals with extending powers or altering the mode of administration of a trust. That matters where the charitable aim remains, but the original structure or method no longer works well.

Part 4 deals with certain charitable funds raised by voluntary contribution. It includes a more detailed process involving contributors, meetings, a scheme committee and the Attorney-General, with court involvement where needed.

The Act also gives contributors a right in some cases to get back their contribution, or a rateable proportion, before the date fixed for the first meeting, subject to the Act’s conditions.

The practical lesson is simple. If your organisation wants to repurpose trust property or fundraising money, the Act may provide a route, but not a shortcut. A board resolution on its own is not enough where the Act requires a scheme process.

If your organisation is incorporated as a board under Part 2, ongoing administration matters.

The Registrar keeps the register of boards. The register records matters required by the Act or regulations, and it may be kept electronically. The Registrar may also amend the register to reflect changes, correct errors, or comply with a court order.

The Act allows the Registrar to remove a board from the register if satisfied that the board is no longer carrying on its operations or was registered because of a mistake of fact or law. The Act also provides for restoration where a removal was made in error.

There is also a specific inquiry mechanism. It is sufficient to satisfy the Registrar that a board is no longer carrying on operations if a registered letter is sent to the board at its registered office and either no reply is received within 6 months after posting, or the letter is returned undelivered.

For small organisations, this makes basic admin discipline important. A stale registered office, unmonitored mail or ignored correspondence can create avoidable risk. Even if the underlying charitable work is genuine, the register still needs to be kept usable and current.

The Act gives the Attorney-General power to examine and inquire into charities in New Zealand. That includes their nature, objects, administration, management, results, and the value, condition, management and application of property and income.

The Act also places duties on trustees and people involved in management or administration. On request, they must produce relevant books and documents, answer questions and give reasonable assistance in connection with the inquiry.

For a small charity or trust, the best protection is orderly records. If your documents clearly show who the trustees are, what property is held, what trusts apply, and what decisions have been made, it is much easier to deal with governance changes, land issues, incorporation steps or any formal inquiry.

Good records also matter when money has been raised for a specific purpose. Appeal wording, donor communications and meeting records may all become important if the original project changes or cannot proceed.

This is one of those laws where administration quality has real legal consequences. A trust with clear records is usually in a much stronger position than a trust relying on memory, informal understandings or missing paperwork.