Characteristics of different organisational legal structures

Created: July 23, 2013 at 11:38 AM | Updated: April 13, 2026 | By Community Resource Kit

Setting up a new organisation?

To find the most appropriate structure, you'll need to consider which of the legal options is the most suitable.

We've set out the options below, exploring unincorporated groups, incorporated societies, trusts, charitable trust boards, companies, industrial and provident societies, and Māori land trusts.

The characteristics covered are: best suited for, legislation, minimum number of people required, tax status, decision-making, members, liability of trustees/management committee, reporting requirements, disposal of assets on liquidation, advantages and disadvantages.

You'll find descriptions of each characteristic, covering each organisational structure, presented as easy-to-read lists.

A PDF version, in a compact table format, can be downloaded below in the Supporting Documents section.

This resource is now extensively informed using recent information developed by the Community Toolkit. We thank the team at Wellington and Hutt Valley Community Law for their mahi in this space.

For additional information on legal structures, refer to the Community Toolkit by Community Law Wellington and Hutt Valley

Best suited for:

Unincorporated group - informal and emerging groups with no staff; one-off situations
Incorporated society - not-for-profit membership-based groups
Trust - using property/ funds for charitable or community purposes (minimal people involved); more about trusts here
Charitable trust board - not-for-profit organisations with a charitable purpose
Company - good for groups with a commercial purpose (such as a community business) – minimal people; have limited liability and easy ownership transfer
Industrial and provident society - good for co- operatives, generally with a business/commercial purpose (such as craft or workers–co-ops)
Māori land trust - only for Māori landowners or shareholders of incorporations

Legislation:

Unincorporated group - none
Incorporated society - Incorporated Societies Act 1908; Incorporated Societies Act 2022
Trust - Trustees Act 1956; Charitable Trusts Act 1957 (Part 1)
Charitable trust board - Charitable Trusts Act 1957 (Part 2)
Company - Companies Act 1993
Industrial and provident society - Industrial and Provident Societies Act 1908
Māori land trust - Te Ture Whenua Māori Act 1993 (Māori Land Act)

Minimum number of people required:

Unincorporated group - 2 individuals
Incorporated society - 10 individuals (a member that is a corporate body counts as three individual members)
Trust - 1 trustee (but usual to have 2)
Charitable trust board - 1 trustee (but usual to have 2)
Company - 1 shareholder, one director (can be same person)
Industrial and provident society - 7 individual members
Māori land trust - 1 trustee (trustees are appointed by Māori Land Court)

Tax status:

Unincorporated group - income is not taxed if group has charitable status with DIA Charities and IRD; can also operate under a range of exemptions from IRD
Incorporated society - income is not taxed if group has charitable status with DIA Charities and IRD; can also operate under a range of exemptions from IRD
Trust - income is not taxed if group has charitable status with DIA Charities and IRD; can also operate under a range of exemptions from IRD
Charitable trust board - income is not taxed if group has charitable status with DIA Charities and IRD; can also operate under a range of exemptions from IRD
Company - charitable status possible
Industrial and provident society - tax paid on profits over wages and expenses
Māori land trust - charitable status possible

Decision-making:

Unincorporated group - by members at general meetings and/or by the management committee
Incorporated society - usually by members at general meetings and/or by the management committee – depends on the society’s rules
Trust - by Trustees
Charitable trust board - by trustees (trust board)
Company - by directors mostly or by shareholders (based on proportion of shares held) at AGM
Industrial and provident society - usually by members at general meetings and/or by the management committee – depends on the society’s rules
Māori land trust - by trustees

Members:

Unincorporated group - made up of members with spoken or written agreement between members
Incorporated society - membership rules around joining or leaving the organisation
Trust - no members – has trustees appointed under trust deed
Charitable trust board - no members – has trustees appointed under trust deed
Company - no members, just shareholders
Industrial and provident society - membership rules around joining or leaving the organisation
Māori land trust - no members – has trustees appointed by Māori Land Court

Liability of trustees/management committee:

Unincorporated group - personal individual and joint liability for debts, statutory obligations etc.
Incorporated society - limited liability if decision-makers act legally, prudently, within the rules, and not for personal gain
Trust - trustees will be personally liable, but trust deed usually grants them the right to be indemnified
Charitable trust board | Company | Industrial and provident society | Māori land trust - likely to be limited liability if decision-makers act legally, prudently, within the board’s / directors / decision-makers rules or objectives, and not for personal gain. (Check for further information - specific legislation provisions for directors and Māori trustees)

Reporting requirements:

Unincorporated group - none unless registered under the Charities Act 2005
Incorporated society - Registrar of Incorporated Societies requires: annual financial statements, changes of rules, register of members
Trust - none unless the trust has charitable status (reporting to DIA Charities)
Charitable trust board - Registrar of Incorporated Societies requires notification of: change in trustees or officers, change of rules, changes to the trust deed (often involving property)
Company - Companies Office requires: annual return and changes of constitution, name or office (and for some, annual accounts)
Industrial and provident society - Registrar of Industrial and Provident Societies requires: annual financial return
Māori land trust - Registrar of the Māori Land Court requires: annual financial statement

More about reporting: All organisations registered under the Charities Act 2005 (also known as charitable entities) need to file an annual return (including financial statements) with Charities Services and notify changes to the name, address, balance date, rules, purposes, or officers of the charity to Charities Services.

Disposal of assets on liquidation:

Unincorporated group - surplus assets will be disposed of according to the group’s rules or as agreed by the members - unless charitable status
Incorporated society - if a society is liquidated or removed from the register, the society can’t distribute surplus assets to its members. It must distribute them to a not-for-profit entity
Trust - assets disposed of as provided by the trust deed; usually distributed to another trust or organisation with similar charitable purpose
Charitable trust board - all surplus assets (after costs, debt and liabilities have been paid) are disposed of as provided in the trust deed or as ordered by the courts
Company - surplus assets are distributed among shareholders unless the company has charitable status
Industrial and provident society - surplus assets can be distributed among members unless the society has charitable status
Māori land trust - as the court directs, or to beneficial owners or successors

ADVANTAGES:

Unincorporated group - no external reporting requirements (unless the group is seeking tax benefits or charitable status); informal structure, with few rules or restrictions
Incorporated society - democratic, membership-based organisation structure; easy, efficient structure for non-profit organisations (particularly smaller ones)
Trust - provides a good framework for governance/ management/ members/ trust board (especially where the group has significant money or property); keeps decision-making in relatively few hands
Charitable trust board - keeps control in a few hands (the trustees), while enjoying limited liability. This provides longer-term stability (but may lead to staleness/ stagnation)
Company - easy to set up Useful where the group has some commercial activities (such as a community enterprise); keeps control in a few hands (the directors), while enjoying limited liability; often easier to obtain loans (but this may require personal guarantees from directors)
Industrial and provident society - profits can be distributed to members (unless the group has charitable status)
Māori land trust - protection of land from alienation; strong shareholder participation

DISADVANTAGES:

Unincorporated group - members may be liable for the debts of the group; not a separate legal entity; not recommended for on-going groups, where groups are employing staff or receiving external funding
Incorporated society - finding (and maintaining) 10 members may be a problem; risk of committees being overturned annually (at AGM) which may lead to short-term decision-making and limited succession planning (note this can be addressed in the rules); not suitable for groups with a commercial purpose
Trust - a trust is not an incorporated body and therefore does not have a separate legal identity; groups need to have a charitable purpose and cannot distribute profits to members
Charitable trust board - control is with the trustees - there is no accountability to a wider membership base; trustee succession planning is usually by trustee appointment
Company - generally, too complex for charitable community organisations; reporting requirements are more complex than other structures; directors may be liable if they fail to meet their obligations
Industrial and provident society - not suitable for broad membership- based organisations; because they are quite rare, many accounting and legal professionals may not fully understand how they work
Māori land trust - not suitable for commercial enterprises; can be cumbersome to operate due to the wide shareholder participation

Next page: Unincorporated groups

Previous page: Initial considerations for organisational structures

Contents of the Community Resource Kit

Supporting documents

legal structure for your group 13 April 2026
.pdf 197 KB