A New Triennial Duty Now Falls Due

From the 5^th of October 2023, all registered charitable entities in New Zealand became subject to a new statutory duty to review their governance procedures at least once every three years. For many charities, 2026 will be the first time this obligation falls due.

The requirement was introduced by the Charities Amendment Act 2023, which amended the Charities Act 2005 (“the Act”) as part of a broader reform aimed at improving accountability and good governance across the sector. While the concept of reviewing governance may not sound new, the key change is that this is now a formal legal duty codified under section 42G of the Act, and one that charities must be able to demonstrate they have complied with.

For trustees and officers, the good news is that a governance review does not automatically mean redrafting your trust deed or constitution, nor does it require a complex or resource‑intensive process. What matters is that charities take a structured and genuine look at whether their governance arrangements remain fit for purpose.

Who does the requirement apply to?

The duty applies to all registered charitable entities, regardless of size or structure. That includes charitable trusts, incorporated societies, and charitable companies.

It is the responsibility of a charity’s officers – typically trustees or board members – to ensure the review is carried out. Failure to do so may place the charity in breach of its statutory obligations under the Act, and charities are now required to confirm that a governance review has been completed as part of their annual return to Charities Services.

What are “governance procedures”?

The Act itself does not provide a strict definition of “governance procedures”, but guidance from Charities Services makes it clear that the term is intended to be broad.

In practice, governance procedures usually include:

• the charity’s governing document, such as a trust deed, constitution or rules; and
• any policies or internal guidelines that relate to how the charity is governed, managed, and held accountable.

Common examples include policies dealing with financial management, conflicts of interest, delegation of authority, officer conduct, and decision‑making processes.

Importantly, governance procedures are not limited to one document, and they do not need to be formally consolidated in order to be reviewed. The focus is on substance rather than form.

What must the review consider?

The Charities Act now requires charities to consider three specific questions when reviewing their governance procedures:

1. Are they fit for purpose?
2. Do they assist the charity to achieve its charitable purpose?
3. Do they assist the charity to comply with the requirements of the Charities Act?

These questions set the framework for the review. They do not prescribe a particular outcome, but they do require trustees to engage meaningfully with how their charity is governed in practice, not just what the documents say on paper.

For example, a trust deed may still technically comply with the law, but no longer reflect how the charity actually operates, or how decisions are being made day‑to‑day. Equally, policies may exist but be out of date, unused, or not properly understood by those responsible for governance.

Does this mean we have to amend our trust deed or constitution?

Not necessarily.

One of the most common misconceptions we encounter is that a governance review automatically requires amendments to the governing document. In many cases, a review will confirm that the charity’s existing trust deed or constitution remains appropriate and compliant, and that no changes are required at this stage.

That said, a review may identify areas where changes would be beneficial or advisable – for example, where a governing document no longer reflects current regulatory requirements, or where policies have not kept pace with the charity’s activities or scale. Where issues are identified, trustees can then make an informed decision about whether amendments are required, and if so, what level of change is proportionate. If it is determined that amendments are required, it is important that the procedures set out in the governing document are carefully followed.

What does a “good” review look like?

The legislation deliberately allows flexibility, recognising the diversity of the charitable sector and the fact that many charities are volunteer‑led.

In practice, a governance review might involve:

• identifying all documents and policies that form part of the charity’s governance framework;
• testing those documents against the three statutory questions (are they fit for purpose, do they assist the charity in carrying out its purpose and compliance with the Act);
• considering whether they are clear, workable, and aligned with how the charity currently operates in a practical sense;
• documenting any decisions made as a result of the review.

For some charities, this may be a relatively straightforward exercise, such as a structured discussion at a board or trustees’ meeting, with minutes recording the matters considered and any conclusions reached. For others, particularly where governance arrangements have grown organically over time, a more detailed review may be appropriate.

What matters most is that the review is intentional and documented.

Timing and frequency

The requirement to review governance procedures came into force in 2023, and reviews must be carried out at least once every three years. For charities that have not yet undertaken a review since that date, the obligation will soon be falling due for the first time.

Charities may choose to align governance reviews with existing governance milestones, such as an AGM, strategic planning session, or a broader compliance review. Some may also undertake a review sooner where there has been significant change, such as a shift in activities, funding arrangements, or governing structure.

How we can help

While many charities will be able to carry out a governance review internally, there is value in obtaining advice where trustees are unsure what is required, or where governing documents are complex, outdated, or interlinked with other legal obligations.

There are a number of ways we can assist, including:

• reviewing a trust deed or constitution against the requirements of the Charities Act;
• identifying gaps or inconsistencies in governance documentation;
• advising whether updates are necessary, or whether existing arrangements remain fit for purpose;
• supporting trustees to document and evidence compliance with the review obligation.

Crucially, assistance can be provided in a way that is proportionate and tailored to the size and structure of the charity.

Final thoughts

The new governance review duty should not be seen solely as a compliance hurdle. At its best, it is an opportunity for charities to pause, take stock, and ensure that their governance framework continues to support their charitable mission in a changing environment.

For trustees and officers, the key is to be aware of the obligation, plan for it, and ensure the review is carried out thoughtfully and recorded appropriately. With the first review now falling due for many charities, now is an ideal time to start that conversation.

Need help?

If your charity is preparing for its first governance review, or you’re unsure what’s required under the new Charities Act obligations, our team can help.

Whether you need guidance on reviewing your governance procedures, understanding your responsibilities, or identifying if any updates are needed – get in touch with our Business & Commercial Law team by filling out the form below, or contact Chantal Laidler using the details provided.