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INTERNATIONAL CENTER FOR NOT-FOR-PROFIT LAW
Pacific Civil Society Law Programme
Civil Society Organisations in the Small Island States: A
Review of the Enabling Legal Framework in the Cook Islands
© ICNL 2008
I INTRODUCTION 1
A Brief Country Facts 1
B Scope of Report 2
C Nature and Types of CSOs 2
II ENABLING LEGISLATIVE FRAMEWORK 3
A Constitutional Guarantees 3
B Purposes and Objects of Civil Society Organisations 3
1 Statutory Objects 4
2 Determination of Status 6
3 Media Access and Exercise of related Freedoms 6
C Establishment and Incorporation 7
1 Registration 7
2 Administering Authority 10
3 Management of Registers, Content & Accessibility 11
D Termination of Incorporation & Operation 12
1 Cancellation, Dissolution & Winding Up 12
2 Assets and Liabilities upon Winding-up & Liquidation 14
3 Appeals and Remedies 15
III GOVERNANCE & MANAGEMENT 17
A Governing Bodies 17
B Powers & Duties 18
C Audit & Inspection of Accounts and related matters 20
D Income & Profit of Organisations 22
E Conflict of Interest & Accountability 23
F Umbrella Organisations 24
IV ECONOMIC ACTIVITIES & TAX INCENTIVES 25
A Public Entertainment 25
B Tax Deduction & Exemption 25
C Commercial Undertaking 27
V CONCLUSION 27
Table of Legislation 29
A Brief Country Facts
The country is a parliamentary democracy with a unicameral Parliament made
up of 20 members – 14 as village representatives and 6 from the common roll.
The Queen in Right of New Zealand is the Head of State represented by the
Governor General of New Zealand. This re flects the self-governing status of the
country in free association with New Ze aland. Executive powers are exercised
by the country’s Government headed by a Premier assisted by a cabinet. The
island was first declared a British Prot ectorate in 1900, and later annexed by
New Zealand in 1901. An act of self-determination was held under UN auspices
in 1974 which lead to adoption of the current Constitution and definition of the
status of the country. Its historical links with New Zealand have since been
maintained, with all Niueans now holding New Zealand citizenship. New
Zealand is responsible for the country’s de fence and external affairs, as well as
providing necessary economic and admini strative assistance under its bilateral
As per the 2006 census, Niue has a resi dent population of just around 1,600
people compared to the approximately 20,000 Niueans currently living in New
Zealand. Its land area is 260km² with an EEZ of 390,000km². The country’s
economy is one of the smallest and most fragile in the South Pacific,
constrained by numerous factors includin g limited land and soil fertility, and
limited access to regular transportation services. This situation is often
exacerbated by natural disasters and a declining population.
2 Cook Islands
The country shares a similar political hi story with Niue, and currently enjoys
self-governing status in free association with New Zealand pursuant to the 1965
act of self-determination. It is a par liamentary democracy with a unicameral
Parliament of 24 members elected every four (4) years. Executive power is
exercised by the Government headed by a Prime Minister. In relation to all
matters governing land use and kastom, the Government is advised by a 15-
member House of Ariki (Chiefs) appointed by the Queen’s Representative.
Given the political history it shares with Niue whilst under New Zealand
annexation, all or most benefits enjo yed by Niueans under current legal,
political and economic arrangements with New Zealand also apply to Cook
Islanders. As such, the latter also hold New Zealand citizenship. The Cook
Islands has a land area of 240km², an EEZ of 1.8 million km² and a population
of approximately 19,000 people. Further, the country enjoys relative economic
stability with a GDP that is high comp ared to other Pacific economies. The
largest export earner is the marine r esources sector whilst tourism is similarly
vital having accounted for approximately 40% of GDP. It is important to note
that the Cook Islands, as in Niue, uses the New Zealand dollar as its currency.
B Scope of Report
This report presents a scoping review of the laws affecting the functions and
operation of CSOs in the Pacific Island countries of the Cook Islands and Niue.
An underlying objective is to bring to the attention of law and policy makers
legal and related issues that impinge on the present and future operation of
CSOs in the above countries. It is anti cipated that this report presents baseline
information that makes an appreciable contribution to future law reform
exercises pursued in the countries the subject of this review.
C Nature and Types of CSOs
Given the small population size of both co untries, the types and nature of CSOs
found in the Cook Islands and Niue are, among others, less complex, not
diverse, and characterised by low subscr iption in the case of membership
organisations. The few CSOs operating in both the Cook Islands and Niue are
both public and mutual benefit organisa tions which are incorporated either by
way of special legislation or under general enabling legislation. Whilst some
organisations are faith and rights-based, others are centred on traditional
structures that were maintained and allo wed to evolve over the years. The latter
group nourished owing to the homogenous culture of their respective societies.
II ENABLING LEGISLATIVE & OPERATIONAL FRAMEWORK
A Constitutional Guarantees
No constitutional guarantee for the formation and operation of CSOs is found in
the Constitution Act 1974 of Niue. Thus, no freedoms of assembly, association,
expression and speech are found in the co untry’s supreme law. The position is
different in the Cook Islands which adopts a similar approach to those of most
independent Pacific Island countries. The freedoms of peaceful assembly and
association, and speech and expression are guaranteed in the country’s
supreme law. The exercise of such freedoms is however not absolute as
conventional exceptions that can be found in most other Pacific constitutions
also apply in the Cook Islands. Thus, Article 64(2) of the Constitution provides
for the application of limitations either by ‘ enactment or rule of law for the time
being in force, for protecting the rights and freedoms of others or in the interests
of public safety, order, or morals, the general welfare, or the security of the Cook
B Purposes and Roles of Civil Society Organisations
This section sets out the statutory objects recognised in law as the principal
qualifying criteria for incorporation un der the laws of both countries. The
principal legislation in the Cook Islands is the Incorporated Societies Act 1994.
However, discussion will also focus on the Cooperative Societies Regulations
1953, Cook Islands Christian Church Incorporation Act 1968, and the Red Cross
Society Act 2002. The latter two statutes fall under the special category of
legislation. Niue has two principal statutes: the Incorporated Societies Act 1908,
and the Charitable Trusts Act 1957. Despite the relatively small size of each
country, it appears both the Cook Islands and Niue have comparatively
adequate enabling legislative frameworks compared to bigger Pacific
jurisdictions such as Fiji, Solomon Islands and Vanuatu.
1. Statutory Objects
(a) Incorporated Societies
The provisions of incorporated societi es’ legislation in both countries are
identical at least in substance. By virtue of s.4 of the Incorporated Societies Act
1908 of Niue, ‘[a]ny society consisting of not less than 15 persons associated for
any lawful purposes but not for pecuniary gain’ qualifies for registration under
the Act. The corresponding provision in the Incorporated Societies Act 1994 of
the Cook Islands is s.3 which also sets minimum membership at 15 persons. In
general therefore, any object which do es not promote pecuniary gain will,
subject to its legality, be deemed to qu alify as one for a lawful purpose. Whilst
s.3 of the Cook Islands Act and s.4 of the Niue Act appear wide and providing
room for potential ambiguity, this po ssibility is pre-accommodated by latter
provisions which require societies to speci fy in their rules the objects for which
they are established and incorporated.
(b) Cooperative Societies
Compared with Western societies, the co operative movement in Pacific Island
countries is often seen as part of the civil society sector. For one reason,
cooperatives play a key role, thus, being agents for realising the socioeconomic
interest of local communities. The gr adual integration of once traditional
institutions into the cash economy has signalled the importance of
strengthening the cooperative movement as a tool for advancing rural
development to render local communities more adaptable to changing
1 s.5 (Cook Is); s.6 (Niue)
The Cooperative Societies Regulations 1953 , whilst promulgated for the Cook
Islands, is also extendable to Niue. Wh ether it does and is applied is another
matter that will not be considered in this report. Reverting to its application to
the Cook Islands, a society must have as its principal object the promotion of
the economic interests of its members in accordance with cooperative principles
so as to be eligible for registration under the Regulations.
2 Similarly, a society 3
which has as its principal object the in vestment of its funds in any existing
corporation or company carrying on business exclusively in the Cook Islands, or
any corporation or company to be formed with the purpose of carrying on
business exclusively in the Cook Islands may be registered under these
Regulations as a special society with limited liability.
Note that the specific objects of a soci ety are required to be specified in its
bylaws and need to conform however to the statutory objects set out in the Act.
(c) Charitable Trusts
The Charitable Trusts Act 1957 of New Zealand applies to charitable
organisations operating in Niue. In essence, the Act is now part of the laws of
Niue by virtue of the Niue Amendment Act 1968 . For purposes of registration,
the trustees of a trust or a society which exists exclusively for charitable
purposes may apply for incorporation under the Act.
5 The term ‘charitable
purpose’ is defined twice in the Act to cater for the different circumstances
purportedly addressed within its provisio ns. Section 2 defines it as including
‘ every purpose that is religious or educational, whether or not it is charitable
according to the law of New Zealand’. Section 38 adopts an approach that is
commonly found within charitable trus ts legislation of other South Pacific
2 Cooperative Societies Regulations 1953, r.5 3 r.9A 4 r.5 5 ss.7 & 8
Further, an international trust for charitable purposes can also be registered in
the Cook Islands under the International Trusts Act 1984 . Thus, any trust which
operates for the relief of poverty, the ad vancement of education and religion,
and for other purposes beneficial to the community will quality for
incorporation as an international trust.
2 Determination of Charitable, etc. Status
None of the two countries has a body or independent institution the functions
of which include the determination and conf erment of charitable or other status
on an incorporated CSO. Note that the qualification of a CSO as either a public
or mutual benefit organisation matters most when it comes to taxation and
related purposes. The absence of any such body does not leave this issue in
suspense as inference may be drawn from the objects of an organisation or
provisions of the enabling legislation. A classic example of the latter is the
Charitable Trust Act
6 which prescribes objects that are charitable per se. Thus,
registration under the Act and subscription to those objects is a first step
towards achieving charitable status. In this connection, note the effect of s.12 of
the Act which adopts a subjective test vi s-à-vis evidence of incorporation under
the same. In other words, incorporation under the Act is not full and conclusive
evidence ‘ that the purposes of the trust or society are exclusively or principally
7 As highlighted above, the attain ment of charitable status is a
significant criterion for the enjoyment of certain benefits offered by the state
and donor agencies.
3 Media Access and Exercise of Related Freedoms
Media freedom and access is generally gu aranteed in both countries. However,
media laws are in place to regulate media and communications services in the
countries, viz. the Broadcasting Act 1989 of Cook Islands, the Communications
Act 1989 and Broadcasting Act 1989 of Niue. Whilst regulating the right to set
6 Niue 7 s.12
up communications infrastructure, the above legislations are facilitative than
otherwise of media access and the fr eedom of expression. The legitimate
controls that may be imposed by a gover nment relate to the quality of content.
Thus, guidelines may be put in place to re gulate matters including material that
is offensive to community standards of behaviour, the depiction of sexual
activities, violence and the use of drugs, observance of standards of good taste
and decency, recognised standards of ob jective journalism, maintenance of law
and order, and the privacy of the individual.
C Establishment and Incorporation
This section will briefly set out the proc ess and requirements for registration
under the Cooperative Societies Regulations 1953(CI), Incorporated Societies Act
1994(CI), Charitable Trusts Act 1957(Nu), and the Incorporated Societies Act 1908
(i) Incorporated Societies
Incorporated societies legislation in both countries is similar, having traced
their foundation to the original legislation of New Zealand. In terms of
registration in Cook Islands, s.3 of th e Act makes provision for any 15 or more
persons associating for a lawful purpose to apply for registration under the
9 A fundamental requirement is that su ch application must be made with
the consent of the majority of members of the society. Section 8 of the Act
requires two copies of the rules of the ap plicant society to be sent together with
the application for registration. Such copies are to be signed by at least 15
members, or in the case of a body corpor ate, the affixing of the resolution of
that body’s board or members. Note however that each signature of a
subscriber is to be attested by an in dependent witness who is not a subscriber.
8 Broadcasting Act 1989 (CI) , s.40(3)(4), Communications Act 1989 (Nu) s.13(3), Broadcasting Act 1989
9 s.4, Incorporated Societies Act (Nu)
Section 8(b) further requires such application to be accompanied by the
prescribed fee ‘together with a statutory declaration made by an officer of the
society or a solicitor to the effect that a majority of the members of the society
have consented to the application, and that the rules so signed or sealed are the
rules of the society ’. The corresponding provision in the Niue Incorporated
Societies Act 1908 is s.7. Registration is deemed complete with the issuance of
a certificate of registration by the Registrar of Incorporated Societies.
(ii) Cooperative Societies
The relatively small populations of both countries raises question as to the
practicality of having functioning cooperative societies within their
communities. But this fact alone does not deter the adoption of legislation to
pre-accommodate the possibilities of growing interest within the islands in
establishing cooperatives. Whilst Niue may have relied on cooperative legislation
of New Zealand, the Cook Islands has its own – the Cooperative Societies
Regulations 1953 . Minimum membership that qualifies a society for registration
in the country is 10, each of whom mu st be qualified for membership of the
11 In terms of the latter, the two factors are majority age (which is 18
years) and requirement for the same to be resident ‘within or a titleholder by
Cook Islands customs within the society’s area of operations as described by the
12 Note however that, except with permission of the Registrar, s.24
prohibits membership of more than one society whose primary object is the
granting of loans to members. This mech anism is made on good policy reasons,
one of which is to protect a member from being overburdened with loan
repayment to more than one loan-making society.
An application is to be signed by at least 10 persons qualified to be members. 13
Note that in the case of a registered society being a corporate member of the
applicant society, s.7(2)(b) requires the si gnature of a duly authorised person on
10 The Registrar of the High Court is appointed as Registrar by virtue of s.34 of the Incorporated Societies
11 s.6 12 s.22 13 s.7(2)
behalf of such society, ‘and where all the members of the society are not
registered societies, by each of the other societies ’. The application for
registration needs to be accompanied by copies of the proposed bylaws of the
14 In the course of processing of the application, the persons submitting
the application are obliged to furnish such further information as may be
required by the Registrar. Registration is complete with the issuance of a
certificate of registration by the Registrar.
(iii) Charitable Trusts
Trustees or a society may apply for registration under the Charitable Trusts Act
as a Board. However, eligibility for regist ration will be denied if a society for
instance is already incorporated unde r another statute. The process for
incorporation is commenced by an applic ation in the prescribed form (Forms 1
& 2 of the Schedule) lodged with the Registrar. Application is to be made by the
trustees of a trust or an unincorporated society, and must be signed by at least
five (5) members of the society or a majority of the trustees.
16 Note however that
such registration is also contingent upon evidence of authorisation through
internal processes of the applicant which includes a resolution passed by the
majority in accordance with the rules of the trust or society.
17 A fundamental
requirement for a society therefore is th at the application for registration is
authorised by the rules of the same.
Documents to be furnished to the Registra r before registration can be effected
includes (i) a certified copy of a docu ment (will, trust declaration, etc)
evidencing the general purposes of the a pplicant trustees or society, (ii) a
statutory declaration by on e subscriber to such application setting out details
of any trusts property not specified under (i) above, (iii) a copy of the society’s
rules providing for constitution of the sa me, and (iv) a statutory declaration by a
subscriber to the application showing proof that such application is made
14 s.6(3) 15 s.8 16 ss.7&8 17 s.9.
pursuant to a resolution passed in accordance with rules of the applicant
18 Upon being satisfied the purpose of the applicant is principally
charitable, and procedural requirements of the Act being complied with, the
Registrar will then issue under his seal a certificate of incorporation of the
board of the trust or society.
For purposes of the International Trusts Act of the Cook Islands, application for
incorporation is to be made to the Registrar of International Trusts
under the International Companies Act 1981 . No application for registration will
be actioned and given effect by the Registrar unless the applicant furnishes to
the Registrar ‘ a certificate from a trustee company certifying that the trust upon
registration will be an international trust and a notice of the name and registered
office of the trust’ .
21 Note however that a certificate of registration is only valid
for a 12-month period and has to be renewed for every subsequent year.
2 Administering Authority
Whilst s.32 of the Incorporated Societies Act 1908 provides for the appointment
of a Registrar, this provision must no w be read together with s.60 of the Public
Service Act 1912 which, by construction, supersedes the former in terms of
appointment of the Registrar. The appointment of the Registrar under the
Public Service Act renders the same a public officer. What is material, however,
is that the Registrar of incorporated so cieties also assumes statutory authority
and responsibility for the registration of trusts boards under the Charitable
Trusts Act .
Registration in the Cook Islands is admi nistered respectively by a Registrar of
cooperative societies appointed under the Finance Act 1931,
22 and a Registrar of
incorporated societies appointed under the Incorporated Societies Act 1994. The
latter may not be a fulltime dedicated officer as it is permissible for the same to
18 s.10 19 s.11 20 s.14 21 s.15 22 s.19
hold other office which the appointing Minister considers not incompatible with
the roles and functions of the Registrar.
3 Management of Registers, Content & Accessibility
Public registers are managed by Registra rs whilst internal registers are kept
and maintained by incorporated societi es and trust boards. And whilst registers
are required to be kept and main tained for incorporated societies
23 and trust
24 there is absence of corresponding provision in the Cooperative
Societies Regulations of the Cook Islands. The latter is ambiguous as to the
operation of a public re gistry, but provides nonetheless for the operation of
internal registers for cooperative societ ies which contain the names of members
and their dates of commencement or ceasing to be a member. In the case of
incorporated societies, particulars to be entered by the Registrar include
matters required by [the] Act or by any regulations to be recorded by the
25 In this connection, Societies are re quired to furnish to the Registrar
from time to time the ‘names, addresses, and occupations of those members,
and the dates at which they became members’ .
Public access to the registers maintained by respective Registrars is guaranteed
under the Incorporated Societies Act 1908 (Nu) , Charitable Trusts Act (Nu) ,
Cooperative Societies Regulations and the Incorporated Societies Act 1994 (CI).
Whilst a nominal fee may be charged for the inspection of the register and
documents relating to incorporated societies
27 and trust boards, 28 no fee may
be charged for the inspection of the register of cooperative societies. A
fundamental issue which is critical to building public confidence and trust in
CSOs is not however clearly addressed in the reviewed legislation. In this
contention, financial statements of organi sations are, contrary to public desire,
excluded from public registers accessible to the public.
23 Incorporated Societies Act : s.36 (CI); s.33 (Nu) 24 Charitable Trusts Act 1957 (CI), s.28 25 s.36 (CI), s.33 (Nu) 26 s.24 (CI), s.22 (Nu) 27 s.34 (CI), s.34 (Nu) 28 s.29
D Termination of Incorporation and Operation
This section will consider in brief the processes and gr ounds of winding up or
liquidation of an incorporated or cooper ative society, and trust board. The types
of remedies available to societies and trust boards aggrieved by acts or
decisions taken in the course of winding up or liquidation will form part of the
discussions. In general, three mechanis ms are available for the liquidation or
termination of registration of a society or trust board: (i) voluntary winding up,
(ii) winding up by court, or (iii) dissolution and cancellation by the Registrar.
1 Cancellation, Dissolution & Winding Up
(i) Incorporated Societies
An incorporated society can be wound up either voluntarily by resolution of its
members with such resolution co nfirmed at a subsequent meeting
29 or by
petition to the Court
30 with such action to be instituted by the society or a
member thereof, a creditor or the Registrar.
31 The grounds for winding up by
Court include the suspension of operations by a society for a period of one year,
reduction of membership below the prescribed minimum,
32 inability to satisfy
debts, obtaining pecuniary gain contrary to law, and the need for attaining
justice and equitability through liquidation of a society.
Moreover, in the event a society is no longer carrying on its operations or has
been registered by reason of a mistake of fact or law, the Registrar may exercise
discretion in dissolving the society.
34 Other Pacific jurisdictions, such as
Kiribati, also include the failure to provide financial statements within a
specified period as an additional ground for unilateral dissolution by the
Registrar. Note that a power of rect ification is vested in the Registrar for
29 s.24, Incorporated Societies Act (Nu); s.26, Incorporated Societies Act (CI) 30 Supreme Court for Niue, whilst High Court for the Cook Islands 31 s.28 (CI), s.26 (Nu) 32 The prescribed minimum is 15 persons in both countries 33 s.25(Nu), s.27 (Cook Islands) 34 s.30 (CI), s.28 (Nu)
purposes of reviving a society to the register where dissolution is made on the
basis of error or mistake.
35 A declaration of dissolution is required to be
published by a Registrar in the Gazette.
(ii) Cooperative Societies 37
Dissolution may be given effect by the Registrar upon application by at least
three-fourths of members of a cooperative society.
38 Similarly, dissolution may
be taken after an inquiry by the Regist rar into the constitution, working and
financial condition of a registered society. Such inquiry may be taken by the
Registrar either of his own motion, upon application of the majority of a
society’s committee or at le ast a third of its members.
39 Further note that the
Registrar is also empowered to cancel the registration of a society in the event
its total membership is proved to be less than 10 ‘ or in the case of a society of
which at least one member is a registered society, to less than two’ .
Cooperative Societies Regulations does not contain any provision for rectifying
any errors or mistakes caused by the Registrar in the cancellation of a society’s
(iii) Charitable Trusts
A trust board incorporated in Niue under the Charitable Trusts Act 1957 ‘may
be wound up voluntarily if at a general meeting of its members it passes a
resolution requiring the Board to be wound up….’ Such resolution has to be
confirmed at a subsequent meeting whic h must be held in compliance with
prescribed time requirements.
35 ibid. 36 ibid. 37 Cook Islands 38 r.40 39 r.38 40 r.41 41 The meeting should be held not sooner than the 28 th day or later than the 42 nd day after the original date
of the resolution, s.24
Further, an application for winding up of a board by the High Court may be
made by either the Attorney General, boar d or a member thereof, creditor of the
board, Registrar or ‘ any other person who adduces proof of circumstances which
in the opinion of the Court make it proper that he should make the application ’.
Section 26 further empowers the Registrar to dissolve a board upon being
satisfied that such board ‘ is no longer carrying on its operations or has been
registered by reason of a mistake of fact or law
….’ As a safeguard, the Registrar
is also empowered to revoke such notice of dissolution, th ereby restoring the
dissolved board to the register.
2 Asset & Liabilities Upon Winding Up & Liquidation
Liquidation processes are prescribed in the Incorporated Societies Act 1908 (Nu),
Charitable Trusts Act 1957, Incorporated Societies Act 1994 (CI), and the
Cooperative Societies Regulations . Liquidation processes are facilitated by either
an appointed liquidators or as per directions of the Registrar or Court
respectively. This section provides in brief the process involved in the disposal
and distribution of assets of a liquidated society or trust.
(i) Incorporated Societies Act
Upon dissolution of a society by the Re gistrar, the surplus assets of the same
will be disposed of according to such society’s rules or in the absence of any
such rules, as directed by the Registrar.
44 Surplus assets refer to the remainder
of the total assets of the society after the payment of costs, debts and liabilities.
Any assets affected by a trust will be dispo sed of as directed by the Court in the
case of winding up by the latter or as directed by the Registrar in all cases of
voluntary winding up or dissolution by the same.
42 s.25(2) 43 s.26(3) 44 s.29 (CI), s.27 (Nu) 45 ibid
(ii) Cooperative Societies
Upon the issuance of an order for wi nding up a cooperative society, the
Registrar may appoint a liquidator to undertake liquidation of a dissolved
society. The liquidator’s powers are broad, albeit subject to the controlling
powers of the Registrar who can, inter alia, remove the liquidator.
powers and roles of the liquidator includ e determining the question of priority
arising between creditors, taking possession of the books and documents of the
society, determining the contribution of past and present members towards
assets of the society, and determining the extent of liability of members. One of
the most crucial roles of the liquidator is to arrange for the distribution of
assets of the society in accordance with a scheme of distribution approved by
(iii) Charitable Trusts
Section 27 of the Charitable Trust Act of Niue provides for the Court to give
directions as to the disposal of all su rplus assets of a board being wound up or
dissolved. Such disposal of assets is to be undertaken after the payment of all
debts, costs and liabilities of the Society.
3 Appeals & Remedies
(i) Cooperative Societies
Aggrieved parties are not without remedy under the enabling legislation of both
countries. Thus, appeals can be lodged against the decisions or actions of the
Registrar, liquidator or Court respectively in relation to certain matters
including winding up processes. As an overview, appeals can be lodged by
members of a cooperative society to the Resident Commissioner
47 within one
46 s.43 47 The Resident Commissioner is now replaced by th e Queen’s Representative as per Part I of the
Constitution of the Cook Islands . For purposes of appeals under legislation, the statutory reference is ‘Her
Majesty in Council’.
month against refusal of the Registrar to register a society 48 or within two
months against the cancellation of registration by the Registrar.
49 Moreover, an
appeal may be made within 21 days against an order of the Registrar for
repayment or restoration of proper ty or money in cases of alleged
misapplication, retainer, dishonestly or breach of trust.
50 The decision of Her
Majesty in Council in respect thereof is final and conclusive. Reverting to the
liquidation process, an appeal can be ma de against a decision or order of the
51 or a decision of the Registrar to vary or rescind an order of the
liquidator. Any such appeal lies to th e High Court but is subject to written
consent of Her Majesty in Council. In terestingly, Her Majesty in Council’s
consent is the ultimate authority in prescribing the time limit for appeal.
Dispute settlement is an important mechanism in the Regulations for the
settlement of debts and claims between members, members and the society, or
between two different societies. Sect ion 51 therefore provides for a party
aggrieved by the awar d of an arbitrator
52 to appeal such award to the High
53 No time period is specified for such appeals. However, the Registrar or
Minister (whichever is the case) do ha ve the discretion under s.53 to refer a
question of law for the court’s opinion, with such opinion to be final and
(ii) Incorporated Societies
An appeal can be made to the High Court 54 or the Governor-General in
55 challenging the Registrar’s decision in refusing to register a society or
any amendment of the rules of a society.
56 Similarly, an appeal can be lodged
within 21 days of the Registrar’s decision relating to the division or disposition
48 s.8(1) 49 s.40(2) 50 s.48 51 In the exercise of powers under s.43 52 The arbitrator is appointed by the Register under s.50 for the settlement disputes 53 s.51 54 Cook Islands 55 Niue 56 s.14 (CI.); s.12 (Nu)
of surplus assets of a dissolved or wound up society that are subject to a
57 Note that any such appeal can be instituted at the suit of any interested
(iii) Charitable Trust 59
Matters the decisions to which are subject to appeal include the refusal of the
Registrar to register trustees or societies, or the failure of the same to approve a
name or name change of a board.
60 Any such appeal must be lodged within 28
days of the date on which the decision appealed was made. Note that the
Registrar may apply to the Court to strike out an appeal with costs in the event
the appellant fails to prosecute the appeal with due diligence. This mechanism
operates to deter, among others, the ab use of court process. There is absence
however of provisions granting rights of appeal in processes involving winding
up, dissolution and disposition of property.
III GOVERNANCE & MANAGEMENT
A Governing Bodies
This section will briefly set out the types and forms of governing and
management bodies that exercise execut ive and management functions over the
affairs of societies and bodies registered under the Cooperative Societies
Regulations, Incorporated Societies Act (CI), Charitable Trust Act and Incorporated
Societies Act (Nu) .
(i) Incorporated Societies 61
An incorporated society is governed princi pally by its rules registered with the
Registrar. Management and executive func tions are exercised by a committee or
57 s.29(2) (CI); s.27(2) (Nu) 58 ibid 59 Charitable Trusts Act 1957 (Nu) 60 s.17 61 1908 (Nu); 1994 (CI)
number of sub-committees as per a society’s rules. The organisational and
governing structure of a society is a matter left to be specified within the rules
of such society. A degree of flexibility is thus present within enabling legislation
as regards the types of governing bodies that can be defined for a society to
reflect, for instance, its nature and operating environment.
(ii) Cooperative Societies
The highest governing and decision-making body of a cooperative society is the
annual general meeting
62 of members, which normally appoints the
management committee. Any other governing or management body additional
to that is left to be determined in the bylaws of a society.
(iii) Charitable Trusts
The Board of Trustees is the highest go verning body of a trust incorporated
under the Charitable Trusts Act 1957 (Nu). A trustee is normally appointed as
per the rules of a society or trust. In practice, trust boards often delegate most
functions to management committees or officers responsible for the day to day
administration of the trust.
B Powers & Duties
This section discusses the prescribed po wers of incorporated bodies which are
or may be exercised by their governi ng and management bodies. At this
juncture, it is worth noting that the exercise of powers is often an area of
contention, thus, a breeding ground for conflicts and disputes that are normally
the subject of costly litigation. This could be attributed, among others, to the
intricacies of laws that are more or l ess based on Western legal traditions and
norms alien to the cultural circumstances of Pacific societies. In other words,
most mechanisms that traced their orig in to Western legal traditions do not
reflect the practical situations on the grounds. Pacific circumstances are thus
62 Cooperative Societies Regulations , r.21
dictated by factors such as unique nature and types of organisations,
traditional institutions and hierarchical structures, the supremacy of
communalism over individualism, small populations and landmass, and closely
knitted societies, to identify but a few.
Whilst the powers prescribed in legislat ion are general, detailed powers and
functions as recognised by law are tailore d in the rules, bylaws or constitutions
of registered societies and trust boards . These will be briefly discussed below.
(i) Incorporated Societies
Upon incorporation, the subscrib ers to the rules of the society 63 registered
under the Incorporated Societies Act
64 will become ‘a body corporate…having
perpetual succession and a common seal, and capable forthwith…of exercising all
the functions of a body corporate and of holding land ’.
65 The powers of an
incorporated society are wi de in scope and include the power to enter into
contracts under its common seal. Note however that most powers and duties of
incorporated societies are defined in th eir rules or constitutions, and the same
are purportedly more reflective of and customised towards the objects of a
(ii) Cooperative Societies
By virtue of r.9 of the Cooperative Societies Regulations , the registration of a
society renders it a body corporate ‘ with perpetual succession and with power to
acquire hold and dispose of property, to enter into contracts, to institute and
defend suits and other legal proceedings, and to do all things necessary for the
purpose of its constitution’ . A registered society can similarly make loans to
another society subject to consent of the Registrar,
66 receive deposits and loans
63 Including subsequent members 64 1908 of Niue; 1994 of the Cook Islands 65 s.11 (Nu); s.10 (CI) 66 r.31(1)
from non-members, 67 and invest its funds in approved schemes including
68 Moreover, it can distribute its annual profit by way to dividend or
bonus to members but only after transferri ng at least 25% of such profit to its
(iii) Charitable Trusts
The incorporation of a board under the Charitable Trusts Act of Niue renders it a
body with ‘ perpetual succession…and (subject to this Act and to the rules and
other documents providing for the constitution of the Board) shall be capable of
holding real and personal property of whatsoever nature…and of suing and being
sued, and of doing and suffering all such acts and things as bodies corporate
may lawfully do and suffer’.
69 A trust board is similarly empowered to dedicate
trust property for any public purpose,
70 sell or exchange any part thereof, 71 and
to purchase any property wherever situated.
72 In the event of a society being
registered as a board, such powers also include the right to apply for a variation
of the name under which the board is registered.
C Audit and Inspection of Accounts & Related Matters
The Registrar is empowered to conduc t an annual audit of the accounts 74 of
societies registered under the Cooperative Societies Regulations (CI), and may
similarly inspect the accounts, books, papers, cash in hand or securities of the
same as and whenever required .
75 Such auditing mandate also includes the
power to conduct inquiries into the constitution, working, and financial
condition of registered societies.
76 Note that any such inquiry may be instituted
67 r.32 68 r.34 69 s.13 70 s.21(1)(a) 71 s.21(1)(b) 72 s.21(1)(c) 73 s.16 74 r.36 75 r.37 76 r.38
at the Registrar’s own initiative or upon the application of a creditor who
satisfies the prescribed requirements warranting action of the Registrar.
Furthermore, for incorporated societies, the statements of a society’s income
and expenditure, assets and liabilities, mortgages, charges an d securities are to
be furnished annually to the Registrar.
78 Non-compliance by a society in failing
to furnish the Registrar with the required information will render all officers of
the same liable to a monetary fine.
No audit requirements are prescribed in the Charitable Trusts Act (Nu). In effect,
trust boards operate under a veil of secrecy as no audited financial statement is
required to be delivered annually to th e Registrar. There is however some room
for scrutiny of the affairs of trust boards, viz. the intervention of the Attorney
General by virtue of s.58 of the Act which provides:
It shall be lawful for the Attorney-Gener al from time to time, as he in his
discretion may think fit, to examine and inquire into all or any charities in
[Niue], including trusts for charitable purposes … and to examine and inquire
into the nature and objects, administration, management, and results thereof,
and the value, condition, management, and application of the property and
income belonging thereto.
The Attorney General’s power to inter vene operates as a mechanism for the
protection and advancement of public interest and policy. This accountability
and transparency mechanism is absent in the enabling legislation of most
Pacific jurisdictions governing trust bo ards established for charitable and
77 The Creditor must satisfy the following: (i) that a specific sum is due to him, (ii) that efforts seeking
payment within a reasonable time fails, (iii) that a depo sit be made with the Registrar for security of costs
for the inspection.
78 Incorporated Societies Act 1908, s.23 (Nu); Incorporated Societies Act 1994, s.25 (CI)
D Income & Profit of Organisations
This section briefly discuses the legislative approach towards the income and
profit of public and mutual benefit orga nisations that are registered under the
(i) Cooperative Societies
By virtue of r.35 of the Regulations , any profit made in any financial year may
be divided among members by way of dividend or bonus. However, such
distribution can only be made if permitted by the constitution of a society and
after a minimum of at least a quarter ( ¼) of the total profit made is carried to
the society’s reserve fund. A society is also given the option of contributing ‘an
amount not exceeding 10 per cent of the remaining net profit to any charitable
purpose or to a fund established or maintained for the common good ’.
constitutes a ‘common good’ is however not defined in the Act or any other
(ii) Incorporated Societies
Incorporated societies’ legislation in both countries prohibits members from
deriving financial benefit from the prof it of a society as the objects of any
registered society must not be one for pecuniary gain.
80 Private benefit by way
of pecuniary gain is however defined as excluding pecuniary gain earned by a
member of the society by way of salary as servant or officer of the same,
81 or a
gain to which such member would be equally entitled if he or she were not a
82 Any pecuniary gain earned by such society is likewise excluded as
gain for private benefit prohibited under the Act provided the same is not for
distribution between members as dividend or bonus.
83 Associations and
79 s.36(2) 80 s.3; s.4 (Nu) 81 s.4(d); s.5(d) (Nu) 82 s.4(e); s.5(e) (Nu) 83 s.4(a); s.5(a) (Nu)
organisations registered as incorporated societies are therefore not mutual
benefit organisations per se. This reiter ates the need to have in any Pacific
jurisdiction at least two sets of legisl ation one of which must be framed to
accommodate community organisations established to promote the
socioeconomic interest of members whilst similarly classified as civil society
(iii) Charitable Trusts
As trust boards incorporated under the Charitable Trusts Act are deemed
charitable or benevolent per se, their income including profits on investments
will not be the subject of the same regime as that of mutual benefit
organisations. Thus, the distribution of profit and gain among members or
founders is, by virtue of law, out of the question.
E Conflict of Interest & Accountability
Given the popular perception that CSOs are private organisations not subject to
the same regime of public scrutiny applyi ng to public institutions, the affairs of
such organisations are often regulated in detail by internal rules that do not
necessarily operate to serve public inte rest. Such rules nonetheless incorporate
limited forms of transparency and accountability mechanisms that purport to
protect and advance the interests of members, albeit rarely that of the public or
non-members. It is rather unfortunat e that current legislation operates to
preserve the status quo by remaining sile nt on this vital issue. As earlier
highlighted, matters of transparency, acco untability and conflicts of interest are
left to be dealt with in detail in the rules and bylaws of societies. In any event,
such matters are more or less the subject of self-regulation systems that are
applied voluntarily within the CSO sector of each country. The notable failure of
existing legislation to give sanction to such self-regulation initiatives is itself a
In general therefore, the existence of loopholes within the legislative framework
being subject of this review leaves open room for manipulation or exploitation of
organisations for personal gain. It is common knowledge that conflict of interest
situations often undermine the effecti veness of CSOs and impinge on public
confidence and trust in the CSO sector.
F Umbrella Organisations
The Cook Islands Association of Non-Governmental Organisations (CIANGO) is
recognised as the umbrella body fo r CSOs in the country. Its current
membership is estimated at 58, comprisi ng organisations with divergent focal
areas including women, youth, culture and religion. CIANGO is a non-profit,
voluntary, and non-statutory body established with the mission to pursue
cooperation between members as well as promoting a good working relationship
with the Government on behalf of CSOs. The current activities and strategic
focal areas of CIANGO are (i) strengthening of the CSO sector, (ii) enhancing
relationships, (iii) effective internal administration, and (iv) environmental
CIANGO’s counterpart in Niue is the Niue Island Umbrella Association of Non-
Governmental Organisations (NIUANGO). Its current membership is estimated at
less than 20, but in general, the active CSO community is quite small in
reflection of its small population size. Identifiable groups include the Youth
Council, Growers Association, Council of Women, Sports Association, Village
Council, and the Council of Churches. Dict ated by its small population size, the
activities and programs of the Government and CSO sector are almost
interwoven. And as reflection of this close relationship, CSOs receive annual
Government grants as base budget with which to carry out their objects and
IV ECONOMIC ACTIVITIES & TAX INCENTIVES
This part looks at the economic activities of CSOs and the tax incentives that
they may enjoy as PBOs or MBOs. Discussion will focus on (i) the types of
privileges, if any, to which a CSO may be entitled, thus, avoiding what are
otherwise strict legal requirements for engagement in certain activities, and (ii)
the types of taxes and exemptions applicable to CSOs.
A Public Entertainment
No legislation for the regulation of public fundraising activities is identified for
both countries. However, in terms of public entertainment for which a permit or
licence is required, the Films and Censorship Act 1985 (CI) and Film and Public
Entertainment Act 1992 (Nu) offers CSOs special treatment by way of
exemptions and waiver of fees and comp liance with certain requirements. Thus,
a regulatory board may for instance waive the fee payable for film exhibitions
held for charitable, education or public purposes.
84 Similarly, an exhibitor’s
license is not required for the exhibition of films ‘ by any charitable,
philanthropic, religious, education, social or sporting body or organisation where
the film is exhibited to further the bona fide objects or purposes of the body or
85 Additional privilege includes the exemption from censorship of
films used for educational and instructional purposes,
86 a category that likely
falls within objects and programs of some CSOs.
B Tax Deduction & Exemption
(i) Stamp Duty
The Minister is empowered under s.54 of the Cooperative Societies Regulations
to remit the stamp duty paid for any instrument executed on behalf of a
cooperative society or in relation to the business thereof. Similarly, documents
84 Films and Public Entertainment Act 1979 , s.4(5) (Niue); Films and Censorship Act 1985, s.7 (CI) 85 s.4(7) (Nu); s.7 (CI) 86 s.20 (CI)
statutorily required to be delivered to the Registrar by virtue of incorporated
societies’ legislation ar e exempt from stamp duty.
87 The Stamp Duties Act 1971-
72 (CI) exempts from stamp duty the ‘ conveyance of property to be held on a
charitable trust in the Cook Islands (or elsewhere)’.
(ii) Customs Duty
The Customs Tariff Act 1982 (CI), whilst falling short of expressly providing for
the exemption of CSOs from paying duty or customs or excise, nonetheless
empowers cabinet to ‘determine activities for which duty exemptions may be
granted and the conditions for granting exemptions.’
89 Note that this Act is to be
read together with the Customs Act 1966
90 of New Zealand which was already
repealed by the Customs and Tariff Act 1996 (NZ). Section 8 of the Customs
Tariff Act 1982 can therefore be invoked by CSOs that import or export goods
and material for purposes of their charitable or related programs in the country.
(iii) Income Tax
Tax benefits by way of rebates and ex emption are present in the income tax
legislation of both countries.
91 By virtue of the Income Tax Act of the Cook
Islands, exempted from tax will be
income derived directly or indirectly from any business carried on by or on
behalf of or for the benefit of trustees in trust for charitable purposes within the
Cook Islands, or derived directly or indirectly from any business carried on by or
on behalf of or for the benefit of any so ciety or institution established exclusively
for such purposes and not carried on for the private pecuniary profit of any
87 Incorporated Societies Act 1908, s.35 (Nu); Incorporated Societies Act 1994, s.38 (CI) 88 s.59 89 s.8 90 Only insofar as it applies to Niue 91 Income Tax Ordinance 1961 (Nu); Income Tax 1997 (CI) 92 s.42(1)(h); s.49 (Nu)
Exemption will similarly apply to the income derived by trustees in trust for a
charitable purpose, or soci eties and associations established for the promotion
of sports recreation entertainment or beautification of any island, village or
93 Additionally, the income of cooperative societies incorporated under
the Cooperative Societies Regulations (CI) will also be exempted from tax.
In recognition of the generosity and in terest of donors, a taxpayer making a
donation or gift to a charitable organisati on or church will be entitled to a tax
deduction or rebate.
94 There is wide disparity however as to the prescribed
ceiling or maximum deductible amount in each country with Cook Islands at
$5,000 whilst Niue at a meagre $100. Mechanisms for verifying and
authenticating such donations are prescr ibed and include the need to produce
documentary evidence such as receipts.
C Commercial Undertaking
There is no statutory prohibition that stops CSOs in both countries from
engaging in purely commercial activities. This is implied from provisions of the
income tax legislation of both countri es which exempts from tax income derived
directly or indirectly from businesses operat ed by or on behalf of trusts societies
or associations established for charitable purposes.
95 Such businesses in terms
of their incorporation and operation are subject to the legal regime governing
companies and commercial ventures.
93 ibid 94 s.47B (Nu); s.70 (CI) 95 s.42 (CI); s.49 (Nu)
The enabling legal framework for CSOs of both countries is, in general,
adequate and to some extent surpasses th at of bigger Pacific jurisdictions such
as Solomon Islands and Fiji. Issues commonly identified with the region are
however found to exist in both countr ies. These include the need for more
transparency and accountability, and outd ated legislation deemed not reflective
of the countries’ socio-cultural circumstance.
Further, the two countries also share circumstances peculiar to the micro-states
of the Pacific, viz. small populations and landmasses which contribute, among
others, to an inevitable overlap between government, civil society and the
business sector. Although appearing comp licated in theory, the situation on the
ground is however one of harmonious integration facilitated in part by cultural
homogeneity. Attempting to draw a fine line between civil society and the other
two sectors in the name of independence for the CSO community is thus an
arduous task and simply impractica l. The statement that everybody is
everything in these small islands thus bears merit.
Additionally, the small population size of both countries impinges on two issues
worth highlighting: conflicts of interes t, and restrictive numerical requirements
for incorporation. First, th e current loopholes present within the law in failing
to provide adequate, if at all, safeguards against the intricacies of small closely
knitted societies is a breeding ground for conflict of interest situations. In such
small societies the risk of conflicts of interest is ever present, compounded by
culture, traditional hierar chies and obligations, and the tendency of aligning
ownership of CSOs to family groupings or circles. Current law is framed and
made in the context of Western standard s and tradition dissimilar to that of
Pacific Island countries. The wholesal e adoption of New Zealand statutes by
both countries is an act that has to be rectified by the legislatures of the same.
An aim of any such review is to clearly define the situations that would give rise
to conflicts of interest, bearing in mind the culture, nature and types of
organisations in each country.
Secondly, the preoccupation with numerical factors as pre-requisite for certain
matters such as incorporation questions the relevance of the laws when given
some comparison with the approach in other Pacific jurisdictions. In this
connection, minimum membership requirements when seen against the
population size of each country appear to be too high. For instance, to be
eligible for registration as an incorp orated society in either country, the
minimum membership must be 15 whilst only five (5) in Tonga, a country of
almost five (5) times the population of Co ok Islands and 60 times that of Niue.
Samoa, although having 15 as its minimum requirement, has a population of
approximately 181,000 compared to Cook Islands’ 19,569 and Niue’s 1,600.
But the crucial point is that with such small populations, the imposition of a
minimum membership that is comparativ ely high is too restrictive and has
implications for an expanding CSO sector.
Finally, the existing framework lacks provisions for ensuring that assets of
liquidated or dissolved incorporated societies and trust boards established for
charitable, benevolent or public benefi t purposes are transferred to operating
societies and trust boards with similar objects. The distribution of assets, in the
absence of rules in the constitution of an organisation that provide otherwise, is
generally left to the direction or discretio n of the court or Registrar which, in
any event, provides no guarantee of contin ual use of the same for charitable or
public benefit purposes. This problem is however characteristic of the legislative
approach in the region, thus, not necessari ly confined to Cook Islands or Niue.
**the author is solely responsible for any errors (including errors of omission) found in the content hereof.
96 As for registration as a cooperative society, the minimum requirement in either the Cook Is. or Niue is
10, whilst only 7 in PNG, a country of approximately 5.8 million people!
Table of Legislation
Constitution Act 1974 (Nu)
Constitution of the Cook Islands 1965
Broadcasting Act 1989 (CI)
Broadcasting Act 1989 (Nu)
Broadcasting Amendment Act 1997 (CI)
Broadcasting Amendment Act 1997 (Nu)
Broadcasting Amendment (No.2) Act 1997 (CI)
Charitable Trusts Act 1957 (Nu)
Cook Islands Act 1915
Cook Islands Christian Church Incorporation Act 1968
Cooperative Societies Regulations 1953 (CI)
Cooperative Societies Regulations 1953 Amendment Act 1970 (CI)
Communications Act 1989 (Nu)
Customs Tariff Act 1982 (Nu))
Films & Public Entertainment Act 1979 (Nu)
Film & Public Entertainment Amendment Act 1992 (Nu)
Films & Censorship Act 1985 (CI)
Income Tax Act 1997 (CI)
Income Tax Ordinance 1961 (Nu)
Income Tax (Amendment) Act 1999 (Nu)
Incorporated Societies Act 1908 (Nu)
Incorporated Societies Act 1994 (CI)
Incorporated Societies Amendment Act 1997 (CI)
Incorporated Societies Amendment Act 1998 (CI)
International Trusts Act 1984 (CI)
Niue Act 1966
Niue Amendment Act 1968
Niue General Laws Amendment Act 2004
Red Cross Society Act 2002 (CI)
Stamp Duties Act 1971-72 (CI)
Value Added Tax Act 1997 (CI)