When Clubs Lose Control

Hostile Takeovers, Asset-Stripping, Bank Accounts, and Why the Law Has Finally Caught Up

Derelict netball and tennis courts

Introduction

I have been an active member of community clubs for more than half a century. Sports clubs, cultural clubs, volunteer groups. They are often rich in history, land, buildings, cash reserves, and goodwill, but poor in time, energy, and governance support. That imbalance has left some of them vulnerable. Very vulnerable.

One of the least talked-about risks facing community clubs is the hostile takeover. Not by a rival team, but by outsiders with an eye on land, buildings, and sometimes the quiet prize sitting in plain sight: the club's bank account.

This article explains how those takeovers happened, why they were possible under the old law, and how the Incorporated Societies Act 2022 makes them far less likely. It warns about what happens to a club's assets if membership is too low to continue. It also tells why clubs that are not doing anything right now must act now.

New Zealand was once the most club-centred nation on earth

There is an important cultural context to all of this. New Zealand was once the most clubified country in the world. Whether it was a bridge club, tennis club, bowls club, netball club, rugby club, athletics club, rowing club, table-tennis, amateur theatre, or fishing club, every community, no matter how small, had its clubs.

They were not optional extras. They were the social glue.

Clubs were where families and individuals met, competed, argued, reconciled, volunteered, and learned how to govern themselves. They taught responsibility, cooperation, resilience, and belonging (community) long before those words were fashionable.

Today, when I drive through heartland New Zealand, I see the evidence of what we have lost. One derelict tennis court after another. Old bowling greens slowly reverting to weeds. Netball courts are cracked, fenced off, or used only a handful of times a year. Clubrooms locked or falling apart. And then, very occasionally, one facility that is still maintained and in occasional use, a quiet survivor.

I find that really sad. When I was young in Putaruru, my brothers and I played tennis more than we did sitting at school. We just loved playing tennis. Netball was part of that same ecosystem. It was simply there, woven into everyday community life. Clubs have shaped us physically, socially, and mentally. They gave structure, standards, and a sense of place. The decline of clubs is not just about sport. It is about the erosion of community life.

How hostile takeovers of clubs happen

This is rarely dramatic. It is slow, procedural, and often invisible until the damage is done. The pattern tends to look like this:

• A club owns valuable land or facilities, often in a prime location

• It has built up cash reserves over decades through subscriptions, grants, raffles, and bequests

• Membership numbers are low and ageing

• AGMs are poorly attended

• The committee is tired and grateful for "help"

Into that vacuum steps an interested party. Sometimes a developer directly, sometimes associates, sometimes well-meaning "friends" who are not what they seem. What follows can include:

• Rapid enrolment of new members

• Stacking of committee positions

• Gaining signing authority over the club's bank accounts

• Control of voting at an AGM or SGM

• A proposal to dissolve or "restructure" the club

• Sale of land and drainage of cash reserves under the guise of necessity

Under the old law, this could be frighteningly easy.

Bank accounts are the silent prize

Land attracts attention, but cash is often the first and easiest target. Under weak governance arrangements:

• Committee capture can lead to new signatories being added to bank accounts

• Large balances built up for maintenance or future projects can be re-labelled as "surplus"

• Funds can be spent, transferred, or committed before members fully grasp what is happening

• Once money is gone, it is far harder to recover than land

Sometimes, the club's finances are left in such bad shape it must be shut down.

Why the old law failed clubs

The Incorporated Societies Act, 1908 belonged to another era. Under it:

• Committee members had vague or poorly defined duties

• Conflicts of interest were largely unmanaged

• Controls over bank accounts were left almost entirely to internal rules

• Asset disposal rules were weak

• Dispute resolution was often absent

If a takeover complied with a weak constitution, it could continue even if it was ethically rotten. That is the gap the new legislation was designed to close.

What the new law changes, in practical terms

The Incorporated Societies Act 2022 fundamentally shifts the balance of power.

• Clear legal duties for committee members

• Committee members must now:

• Act in good faith and in the best interests of the society

• Use powers only for proper purposes

• Avoid private benefit

• Act with care and diligence

That applies equally to decisions about land, buildings, and money. Conflicts of interest are no longer optional.

Conflicts must be:

• Declared

• Recorded

• Managed

• And excluded from decision-making where appropriate

Asset-stripping includes cash, not just land

Assets include:

• Land

• Buildings

• Equipment

• Cash and investments

On dissolution, none of these can be distributed for private gain.

What happens if a club simply runs out of members? Even if only a handful of members remain:

• The land does not belong to them

• The buildings do not belong to them

• The bank account does not belong to them

• Assets are held in trust for the club's purposes.

On closure:

• Debts are settled

• Assets are transferred to another qualifying community or sporting body

• Land and money stay within the community system

  
  

Closure does not mean capture. It means a handover.

A message to clubs that are dragging their feet

If your club has not yet updated its constitution, you are exposed. Old constitutions are easier to manipulate. Weak rules invite bad actors. Unclear asset clauses increase confusion when membership declines. Failure to re-register risks automatic dissolution.

Updating your constitution is not a bureaucracy. It is a protection. Of your land. Your money. Your legacy.

Why updating the club's constitution right now really matters

The slow death of clubs is one of the quieter tragedies of modern New Zealand. Once, clubs were where children grew strong, adults learned responsibility, and communities held together. Tennis courts, bowling greens, and netball courts were not luxuries. They were foundations. The derelict facilities scattered across the country tell a story of neglect, not inevitability.

The new law gives clubs a chance to defend what remains. But it will only work if people care enough to use it.

In Finishing

Weak law and weak governance enabled hostile takeovers, asset-stripping, and quiet raids on club bank accounts. The Incorporated Societies Act 2022 gives communities a fighting chance. But it cannot save clubs that fail to act.

If your club is tardy, get moving. Update your constitution. Re-engage your members. Protect what generations before you built. Because once a club is gone, it rarely comes back.