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Incorporated Societies Act 2022

Enforcement - Offences

157: Operating fraudulently or dishonestly incurring debt

You could also call this:

"Don't help a society cheat its creditors or get into debt dishonestly"

Illustration for Incorporated Societies Act 2022

You can commit an offence if you help a society operate in a way that tries to cheat its creditors. This can happen if the society is trying to cheat people or for a dishonest reason. You are doing something wrong if you help a society get credit by being dishonest. If you are in charge of a society, you can commit an offence if you trick people into giving the society credit. You can also do something wrong if you try to cheat the society's creditors by giving away the society's property or causing it to lose value. This includes doing things that cause creditors to lose money. You can commit an offence if the society gets into debt when it cannot pay its debts. This happens if you know the society is in trouble and you do not stop it from getting into more debt. You must be honest when dealing with the society's debts. If you break these rules, you can get into trouble with the law. You might have to go to prison or pay a fine. The fine can be up to $200,000 or you might get both a fine and prison time.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS101047.

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Topics:
Crime and justice > Criminal lawMoney and consumer rights > Consumer protection
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156: Falsification of register, records, or documents, or

"Don't fake or alter important society documents on purpose"

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158: Improper use of Incorporated, Inc, or Manatōpū, or

"Don't use 'Incorporated', 'Inc', or 'Manatōpū' in your name unless you're allowed to."

Part 4Enforcement
Offences

157Operating fraudulently or dishonestly incurring debt

  1. A person commits an offence if they are knowingly a party to a society operating—

  2. with intent to defraud creditors of the society or any other person; or
    1. for a fraudulent purpose.

      1. An officer of a society commits an offence if,—

      2. by false pretences or other fraud, they induce a person to give credit to the society; or
        1. with intent to defraud creditors of the society, they—
          1. give, transfer, or cause a charge to be given on property of the society to any person; or
            1. cause property to be given or transferred to any person; or
              1. cause or are a party to execution being levied against property of the society; or
                1. do any thing that causes material loss to any creditor.

                2. An officer of a society commits an offence if—

                3. the society incurs a debt (the debt); and
                  1. the society—
                    1. is insolvent at the time that it incurs the debt; or
                      1. becomes insolvent by incurring the debt; or
                        1. is insolvent at the time that it incurs debts that include the debt; or
                          1. becomes insolvent by incurring debts that include the debt; and
                          2. the officer knows, at the time when the society incurs the debt, that the society is insolvent or will become insolvent as a result of incurring the debt or other debts that include the debt; and
                            1. the officer’s failure to prevent the society from incurring the debt is dishonest.

                              1. In subsection (3), insolvent means that the society is unable to pay its debts.

                              2. A person who commits an offence under this section is liable on conviction to imprisonment for a term not exceeding 5 years, a fine not exceeding $200,000, or both.