As an Officer or Member or employee of a Society, the assurance of indemnity and/or insurance in respect of liability can be of paramount importance.
Is your Society aware of the changes and limitations on indemnities and insurance resulting from Subpart 6 of the Incorporated Societies Act 2022? Is the indemnity or insurance expressly authorised by the Societies’ Constitution?
The relevant Sections in Subpart 6 of the Act are Sections 94 to 98.
The staring point is Section 94 which states that a society must not, indemnify or effect insurance for an Officer (or a member, or an employee) of the society for liability for any act or omission in their capacity as an Officer (or member or employee) of that society, except in accordance with Subpart 6.
The liability extends to costs incurred in defending or settling any claim or proceeding relating to that liability.
An indemnity given in breach of this subpart is void.
Hence, it is imperative that any indemnity or insurance in respect of liability complies with Subpart 6.
Section 95 clarifies that Section 94 does not prevent a society from indemnifying or effecting insurance for a member in their capacity as an employee of a third party. Thus, a trade union incorporated society is permitted to insure it’s member in respect of that member’s liability for acts or omissions as employee of a third party.
Section 96 provides that a society may indemnify an Officer (or a member, or an employee) for liability to any person other than the society (for any act or omission in their capacity as an officer, a member, or an employee of that society) if the liability is
- NOT criminal liability or
- NOT a liability that arises out of a failure to act in good faith and in what that person believes to be the best interests of the society.
While Section 96 deals with Indemnities, Section 97 deals with Insurance.
Pursuant to Section 97, a society may, with the prior approval of its committee, effect insurance for an Officer (or a member or an employee) in respect of liability for any act or omission in their capacity as an Officer (or a member or employee) other than criminal liability.
However, the officers of the society who vote in favour of authorising the insurance must sign a certificate stating that, in their opinion, the cost of effecting the insurance is fair to the society.
Sections 96 and 97 must be read in light of Section 98 which requires express authorisation in the Society’s Constitution allowing the Society to provide such indemnity or insurance for matters covered in Section 98.
Please contact us if you need to check whether your Society has in place the necessary permissions to allow indemnities and insurance for its members, officers, and employees, or if you have any queries.
