Club rules

[Philip Benstead]

You may find this an interesting read. You may like to read this in conjunction with Section 6.1 in Memorandum Of Association Of The Cyclists’ Touring Club As amended by the AGM on 12 May 2012 http://www.cyclinguk.org/sites/default/ ... ay2012.pdf

http://www.charityfinancials.com/charit ... s-680.html

Club rules
23 April 2010

Many charities fail to recognise the role members play in their organisations and the governance of membership organisations can be complicated. Andrew Studd examines the legal models and structures
Charities vary in many ways but one of the most striking is the vastly different role that the members play. For some organisations members seem irrelevant, while for others, the role of the membership is crucial from raising funds, demonstrating support for a particular cause to enable influence and ‘voice’ or to provide expertise. A common governance issue for charities is failing to recognise the role members’ play and avoiding the prickly question of whether the historic role of membership meets their current needs.
Why have members in the charity?
At the outset it is vital to draw the distinction between charity trustees (also referred to as directors of a company) and members. Legally they have different rights and responsibilities but confusion often arises because the roles are performed by the same or a similar group of people.

Charities are established with a number of different legal models and structures. Most commonly adopted legal structures require the existence of at least one member. Companies and similar bodies which have members, also have an executive body, generally called a board of trustees or board of directors.

Structures that require members include:
• the company limited by guarantee which must have at least one member;
• an industrial and provident society which must have at least three individual members; and
• unincorporated associations which must have at least two members.
The Charitable Incorporated Organisation (CIO) while not yet available will also have members [1]. By contrast, a charitable trust does not have members, just charity trustees.
Rights of members
It is crucial to remember that members have important legal rights. Typically the powers of members are:
power to select, appoint and remove the board of trustees or parts of it;
• control of changes in the constitution; and
• power to direct the board of trustees to do things.
These powers will depend on the legal structure, and the provisions of the constitution, of the organisation.
Models of membership structure
Once an organisation realises that it has (or should have) a membership, it needs to think carefully about what sort of membership is appropriate for it as an organisation. The nature of membership that an organisation has (or should have) shouldn’t be static. At different stages in its development it may need a different membership model to assist it in achieving its objectives. A key question is to identify the purpose of the membership and whether it needs to have a role in the governance of the organisation to ensure it is legitimate. There are often methods of achieving a ‘membership structure’, usually for the purpose of raising funds, by giving supporters a role outside governance. This has the benefit of engaging supporters and keeping them informed of the charity’s work but not giving them any constitutional rights.

A campaigning body seeking to gain recognition and influence, for example, for the rights of non-smokers, may have needed until the 1960s, a large membership in order to have credibility in raising smoking as an issue. Given where the smoking debate has reached in 2010, a large, active membership may have few real functions.

It is important to have the right membership model because having a membership can be costly in terms of management time and the actual cost of engaging with members such as communications and holding meetings. Our view is that organisations should only be incurring those costs if the members are an important part of its role in achieving its mission.

There are four broad types of member-ship structure:
• Highly restrictive or ‘foundation’ model. Highly restrictive or ‘foundation’ model. Many charities only have members because they legally have to, for example, because they are incorporated as a company limited by guarantee. Where one wants the power of the organisation clearly and unambiguously in the hands of the board of trustees, one can opt for a membership model in which the only members are those who currently sit on the board of trustees. A huge range of organisations use this sort of model from grantmaking trusts to service delivery bodies and it is very effective and efficient. If there is a criticism, it is that if the board ever becomes too small or becomes divided, the organisation may find itself with a deadlocked board unable to govern effectively. In that situation only the board of trustees itself is in a position to select new members to resolve that deadlock.
• Restricted membership. To ensure there is a wider group involved in governance, an organisation can choose to have a slightly larger membership than just the trustees from time to time. In this model the membership is often made up of the board itself, who can sometimes constitute the majority of members, and other interested parties, often retired trustees, who remain in the membership. The members often do very little by way of active governance unless there is a crisis within the organisation or a significant change, for example a merger, when the trustees can look to this smaller group of stakeholders for support.
• Qualified membership or association model. In this model the membership may be a large group, but it is not a completely open group. The organisation seeks to recruit those who meet its membership qualifications. The qualifications may be participation in some profession, interest in some activity or sport, being affected by a disability or sharing a belief or faith. While having a large membership, the organisation is not seeking an unlimited membership. This sort of model is common in professional bodies, environmental pressure groups and charities focusing on the needs of those with particular diseases or disabilities. Members may be heavily involved in the governance of the organisation taking an active part in selection and appointment of the board or providing board members through a hierarchy of interest groups or regional bodies. Members may also be seen as sources of expertise and knowledge, funds, volunteers and influence.
• Mass membership organisations. In a mass membership model, the organisation is seeking the largest possible membership. There is little or no attempt to exclude anyone from membership. Members are almost always, in addition to being interested in the work of the organisation, seen as a source of funds. The size of the membership tends to mean that they play only a small part in the selection of the executive body, even if they technically elect them. The large membership costs of such organisations are met typically from significant membership funding streams. It is also possible to replicate the mass membership structure without necessarily giving the ‘members’ voting rights.
Membership policy and criteria
Any organisation with members ought to have a clear membership policy which indicates why the organisation seeks to have the size and type of membership that it has. Many organisations are quite conscious about their membership, who qualifies and who they want but often they have never thought about how they got there, what the members are doing and why. Others fail to ‘manage’ the membership list at all.

Other organisations are very clear on their membership for example being a member of a professional body can be essential to earn a livelihood. In those situations managing the membership is much more complex – membership criteria will need to be detailed and robust and any rules and processes governing removal need careful consideration.

The main problem areas
Identification of members
One of the most common mistakes in the charity sector is to equate joining the board of trustees with joining the membership of the organisation. Legally they are quite different and the process for becoming a member is usually quite separate from that of joining the board. Only in rare circumstances will joining the board automatically make you a member of the organisation. This simple misunderstanding often leads to potentially very harmful consequences.

Certain critical decisions of a charitable company limited by guarantee for example, the election of the board or a change to the constitution, can only be taken at a members’ meeting. If you don’t know who your members are and invite the wrong people to the meeting, the meeting may not be valid. If people vote on the mistaken assumption that they are members but are not, the elections of board members may become invalid and the decisions taken by that board will then be unlawful.

This sounds simple, but our experience is that many organisations have not grasped and properly recorded who their members are.The situation is exacerbated by the fact that in most cases ending membership requires some positive steps. Many people ending a relationship with a charity, for example, leaving the board, fail to resign from membership of the organisation. In most cases membership will continue until terminated by some positive act. This can leave an organisation believing that former board members are no longer members of the organisation when in fact they legally remain members.

Members’ powers:
(a) Appointment. Many charities have constitutions that reflect a federated or regional structure and allow the members to appoint trustees to ‘represent’ regional or sector specific interests. This can cause problems for the board as a whole in trying to achieve a balance of skills and in addressing wider diversity issues. It can also be damaging where the trustees fail to recognise their responsibility to the organisation as a whole rather than their regional or sector group. The Companies Act 2006 put on a statutory footing a director’s obligation to act in the interests of the company rather than any other purpose, but this remains a common issue.

(b) Removal of trustees and the power to direct. Trustees have found themselves directed to undertake particular course of action or removed by special interest groups who want to take the organisation off in a new direction. Sometimes there is a risk that people will seek to become members of an organisation solely for the purpose of changing its policy as the National Trust found some years ago in the context of hunting. While this is often legitimate where charities operate in a contentious environment, such as organisations that use animals in medical experiments, caution must be exercised to ensure that the charity’s objects can still be fulfilled.

Similarly members of charitable but quasi-professional bodies often believe that the organisation is established to represent their interests and provide benefits to them as a group. Of course charity law requires the charity to work for the benefit of the public or a section of the public, not just a closed membership group. In either case the membership’s residual power can prevent difficult decisions being made.

The Companies Act 2006:
The Companies Act has given members new rights to propose resolutions and in particular to vote by proxy which was often prohibited in many organisations’ constitutions. This right is fundamental in that it applies regardless of what an organisation’s constitution says. This means an active group of members can much more effectively get items put on the agenda for meetings and collect proxies to vote in favour, or against, particular resolutions. Whilst in a truly democratic structure this is to be encouraged, it does make a board of trustees much more cautious in its approach to members and the strategy of the organisation.

Where tough decisions are required the membership can restrict a board’s ability to make those decisions or require a much more extensive process of consultation and persuasion.

Practicalities
Membership structures should always be carefully considered and taken seriously, not just because of members’ powers, but also because of the opportunities it offers and the costs involved if its role is not understood and appropriately managed.

[1] See also: www.charitiesdirect.com/caritas- magazine/and-they-all-cios-lived-happily-ever- after-544.html,and the news story, 'Never forever CIOs' in this issue.

[rualexander]

You may find this an interesting read....

Or maybe not.

[Philip Benstead]

You may find this an interesting read....

Or maybe not.

Can’t you see the significant of this?

Rights of members
It is crucial to remember that members have important legal rights. Typically the powers of members are:
power to select, appoint and remove the board of trustees or parts of it;
• control of changes in the constitution; and
• power to direct the board of trustees to do things.
These powers will depend on the legal structure, and the provisions of the constitution, of the organisation.

[gaz]

POWERS OF THE COUNCIL
6.1 The transaction of the business of the Club and its entire management shall be vested in the Council, who in addition to the powers and authority expressly conferred on them by these Articles may exercise all powers and do all such acts and things as may be exercised and done by the Club and are not hereby or by statute expressly directed or required to be done by the Club in General Meeting.

To sum that up, the Trustees are in charge subject to obeying the law and our Articles of Association. Where our AoA say a decision must be taken at an AGM, the Trustees must put that matter to the AGM.

An example of what is "expressly directed or required to be done by the Club in General Meeting" is setting membership fees.

4.4 The subscription for each class of Member shall be such and shall be payable at such time as the Club may determine, from time to time in General Meeting. Every subscription so determined shall be subject at the time of payment to the addition of Value Added Tax at the statutory rate then applicable

The AoA state that changes in membership fee must go the AGM. In respect of membership fees, the Trustees can neither fail to implement a change that the AGM voted for, nor implement a change that the AGM voted against.

It is important to note that it is the AoA that limit the powers of the Trustees, not the AGM decision per se. Article 6.1 does not bind the Trustees to the outcome of every AGM motion.

[Bonefishblues]

How would members seek redress if Trustees failed to uphold their obligations?

[meic]

I thought the point of the vote a few years ago was that the club would become a charity and then the trustees and everybody else would answer to the charity commission instead of the members from then on.

[Philip Benstead]

POWERS OF THE COUNCIL
6.1 The transaction of the business of the Club and its entire management shall be vested in the Council, who in addition to the powers and authority expressly conferred on them by these Articles may exercise all powers and do all such acts and things as may be exercised and done by the Club and are not hereby or by statute expressly directed or required to be done by the Club in General Meeting.

To sum that up, the Trustees are in charge subject to obeying the law and our Articles of Association. Where our AoA say a decision must be taken at an AGM, the Trustees must put that matter to the AGM.

An example of what is "expressly directed or required to be done by the Club in General Meeting" is setting membership fees.

4.4 The subscription for each class of Member shall be such and shall be payable at such time as the Club may determine, from time to time in General Meeting. Every subscription so determined shall be subject at the time of payment to the addition of Value Added Tax at the statutory rate then applicable

The AoA state that changes in membership fee must go the AGM. In respect of membership fees, the Trustees can neither fail to implement a change that the AGM voted for, nor implement a change that the AGM voted against.

It is important to note that it is the AoA that limit the powers of the Trustees, not the AGM decision per se. Article 6.1 does not bind the Trustees to the outcome of every AGM motion.

what you make say that

[gaz]

The AoA begins with a set of definitions:

1.1.6 “the Club” means the company governed by the Articles; ...
1.1.10 “Council” and “Council of Management” mean the directors of the Club who are also its charity trustees and ‘Councillor’ means an individual director; ...
1.1.16 “Member” means member of the Club; ...

"The Club" has powers defined in the AoA

1.8 The Club has the following powers, which may be exercised only in promoting the Objects: ...

[My commentary]

POWERS OF THE COUNCIL
6.1 The transaction of the business of the Club and its entire management shall be vested in the Council ["Council" is empowered to run "the Club"], who in addition to the powers and authority expressly conferred on them by these Articles may exercise all powers and do all such acts and things as may be exercised and done by the Club ["Council" are the body that may exercise the powers of "the Club", see AoA 1.8] and are not hereby [by the AoA] or by statute [by law] expressly directed or required to be done by the Club in General Meeting. ["Council" cannot transact business that either our AoA or the law direct or require to be done by "the Club" at AGM]

I gave an example earlier in the thread of where the AoA require business to be transacted by the AGM. I believe the appointment of our auditors would be an example of where it is required by law.

Above all else Council's powers are set by law, then comes our AoA. The AoA does not so much instruct Council what to do, rather they set the limits of Council's powers.

Philip provided a link (I've lost track of which thread it was in) to a Charity Commission document, Charities and meetings (CC48) (my underline) which explains it quite clearly.

Annual General Meetings

81. Whether the charity is required to have an AGM or simply organises a users’ meeting, the charity trustees are only bound to act on decisions taken by the members where the governing document directs that those matters have to be decided at such a meeting. It is important that charity trustees are clear about the status and purpose of the AGM and that this is clearly communicated to those attending.

Council are not bound by Ordinary motions passed at AGM. Or to put it into simpler terms*.

PHILIP BENSTEAD COMMENT The AGM does not matter you just make up the rules as you go along.

*Except for cases where the rules say the AGM matters.

Edit: Typo

[gaz]

Whilst I remember I'll just add that AoA 6.1 appeared word for word as article 15 in the Pre-Charity edition of the CTC Memorandum and Articles of Association.

[mjr]

How would members seek redress if Trustees failed to uphold their obligations?

Court, one way or another

[Bonefishblues]

How would members seek redress if Trustees failed to uphold their obligations?

Court, one way or another

Would the Charities Commission not take an interest?

[gaz]

How would members seek redress if Trustees failed to uphold their obligations?

If you believe a Trustee has failed to uphold their obligations I'd suggest presenting your evidence in a complaint to Cycling UK.

You can take your grievance and supporting evidence to the Charity Commission.

Philip took his own complaint about the current Council elections to Council and also the Charity Commission. Neither upheld his complaint.

As mjr says, redress may also be available through the courts subject to an assessment of the evidence.

[Philip Benstead]

The AoA begins with a set of definitions:

1.1.6 “the Club” means the company governed by the Articles; ...
1.1.10 “Council” and “Council of Management” mean the directors of the Club who are also its charity trustees and ‘Councillor’ means an individual director; ...
1.1.16 “Member” means member of the Club; ...

"The Club" has powers defined in the AoA

1.8 The Club has the following powers, which may be exercised only in promoting the Objects: ...

[My commentary]

POWERS OF THE COUNCIL
6.1 The transaction of the business of the Club and its entire management shall be vested in the Council ["Council" is empowered to run "the Club"], who in addition to the powers and authority expressly conferred on them by these Articles may exercise all powers and do all such acts and things as may be exercised and done by the Club ["Council" are the body that may exercise the powers of "the Club", see AoA 1.8] and are not hereby [by the AoA] or by statute [by law] expressly directed or required to be done by the Club in General Meeting. ["Council" cannot transact business that either our AoA or the law direct or require to be done by "the Club" at AGM]

I gave an example earlier in the thread of where the AoA require business to be transacted by the AGM. I believe the appointment of our auditors would be an example of where it is required by law.

Above all else Council's powers are set by law, then comes our AoA. The AoA does not so much instruct Council what to do, rather they set the limits of Council's powers.

Philip provided a link (I've lost track of which thread it was in) to a Charity Commission document, Charities and meetings (CC48) (my underline) which explains it quite clearly.

Annual General Meetings

81. Whether the charity is required to have an AGM or simply organises a users’ meeting, the charity trustees are only bound to act on decisions taken by the members where the governing document directs that those matters have to be decided at such a meeting. It is important that charity trustees are clear about the status and purpose of the AGM and that this is clearly communicated to those attending.

Council are not bound by Ordinary motions passed at AGM. Or to put it into simpler terms*.

PHILIP BENSTEAD COMMENT The AGM does not matter you just make up the rules as you go along.

*Except for cases where the rules say the AGM matters.

Edit: Typo

6.1 The transaction of the business of the Club and its entire management shall be vested in the Council, who in addition to the powers and authority expressly conferred on them by these Articles may exercise all powers and do all such acts and things as may be exercised and done by the Club and are not hereby or by statute expressly directed or required to be done by the Club in General Meeting the charity trustees are only bound to act on decisions taken by the members where the governing document directs that those matters have to be decided at such a meeting

Also, see the article above it clearly states that the members can direct the trustee to do thing.
So the AoA state that the general meeting an direct.

[Philip Benstead]

The AoA begins with a set of definitions:

1.1.6 “the Club” means the company governed by the Articles; ...
1.1.10 “Council” and “Council of Management” mean the directors of the Club who are also its charity trustees and ‘Councillor’ means an individual director; ...
1.1.16 “Member” means member of the Club; ...

"The Club" has powers defined in the AoA

1.8 The Club has the following powers, which may be exercised only in promoting the Objects: ...

[My commentary]

POWERS OF THE COUNCIL
6.1 The transaction of the business of the Club and its entire management shall be vested in the Council ["Council" is empowered to run "the Club"], who in addition to the powers and authority expressly conferred on them by these Articles may exercise all powers and do all such acts and things as may be exercised and done by the Club ["Council" are the body that may exercise the powers of "the Club", see AoA 1.8] and are not hereby [by the AoA] or by statute [by law] expressly directed or required to be done by the Club in General Meeting. ["Council" cannot transact business that either our AoA or the law direct or require to be done by "the Club" at AGM]

I gave an example earlier in the thread of where the AoA require business to be transacted by the AGM. I believe the appointment of our auditors would be an example of where it is required by law.

Above all else Council's powers are set by law, then comes our AoA. The AoA does not so much instruct Council what to do, rather they set the limits of Council's powers.

Philip provided a link (I've lost track of which thread it was in) to a Charity Commission document, Charities and meetings (CC48) (my underline) which explains it quite clearly.

Annual General Meetings

81. Whether the charity is required to have an AGM or simply organises a users’ meeting, the charity trustees are only bound to act on decisions taken by the members where the governing document directs that those matters have to be decided at such a meeting. It is important that charity trustees are clear about the status and purpose of the AGM and that this is clearly communicated to those attending.

Council are not bound by Ordinary motions passed at AGM. Or to put it into simpler terms*.

PHILIP BENSTEAD COMMENT The AGM does not matter you just make up the rules as you go along.

*Except for cases where the rules say the AGM matters.

Edit: Typo

6.1 The transaction of the business of the Club and its entire management shall be vested in the Council, who in addition to the powers and authority expressly conferred on them by these Articles may exercise all powers and do all such acts and things as may be exercised and done by the Club and are not hereby or by statute expressly directed or required to be done by the Club in General Meeting the charity trustees are only bound to act on decisions taken by the members where the governing document directs that those matters have to be decided at such a meeting

Also, see the article above it clearly states that the members can direct the trustee to do thing.
So the AoA state that the general meeting an direct.

If you look in the governance document, it states the council is going to redraft the aoa I would not be surprise if the provision for the general meeting to direct the trustee was taken out.

Also, I would not be surprise if the provision to hold a poll of the club had some kind restricting clause.

[mjr]

How would members seek redress if Trustees failed to uphold their obligations?

Court, one way or another

Would the Charities Commission not take an interest?

Not in my experience, unless it impacts on one of the aspects of charity. The Charities Commission does not seem to care about any commitments from Trustees to Members. The Charities Commission seems quite happy to let Members be expropriated, although this may be because they've limited resources so they act on what they consider most important first. Their attitude towards charities that have members is disappointingly hostile in general.

There's also the possibility of getting some bit of Companies House or another BIS agency to take an interest, but they're also working with limited resources and I doubt CUK is big enough that tackling it would be considered in the most public interest.