Community sport hit by mass dissolutions

Community Sport Hit By Mass Dissolutions

Of the clubs contacted by the Association following the dissolution gazettal, nearly three-quarters (70%) were unaware that they had been dissolved, were still operating and were unaware of their compliance obligations under the current Act, (which is proposed to be replaced with more onerous compliance conditions if amendments currently before Parliament become law). One club with around 400 members which voluntarily dissolved cited “apathy” as the principal reason why it was forced to be wound-up, with few of its members interested in taking up the necessary governance roles required to deliver the club’s objectives.

(Over the past five years, around 1,000 incorporated sport entities have been dissolved)

In the shadow of the current national COVID lockdown which has shut-down community sport due to public health concerns, one involuntarily dissolved club contacted by the Association was surprised to learn that it no longer had legal status, noting that “we were not aware, were not told or informed”.

In total 44 different sporting codes were affected.

What should be of great concern to New Zealand’s amateur sport community, are the impacts of dissolution, particularly if a club continues to operate unaware of its dissolved status: legal liability and responsibility passes to all club officials personally, with the heightened risk of criminal and/or civil prosecution; in the event of financial default, the credit rating of the club may impact club officials’ own personal credit ratings and their ability to take on personal debt; clubs will find it difficult to obtain community grants, (a condition of receiving grant funding is that a club must be (and stay) incorporated); and other club fundraising activities of the club will also be impacted, (e.g. clubs will be unable to run raffles with prizes, (they will not be able obtain a licence).

(The Bill may shatter an already fragile volunteer infrastructure supporting community sport)

Among other changes proposed by the Association in terms of the legislation before Parliament, the Association believes that National Sport Organisations who require clubs to be affiliated to them in order to be able to provide sport to their local communities, must take a greater responsibility for ensuring that their members meet their regulatory obligations. Additionally, the Registrar should be compelled to (where a club is affiliated to a National Sport Organisation), contact that organisation to advise of any non-compliance and seek remedial action before the Registrar is forced to act.