Governance Review - Member Consultation closed 12 Dec 10:00am

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gaz
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Re: Governance Review - Member Consultation closes 12 Dec 2016.

Postby gaz » 3 Dec 2016, 11:53am

Steady rider wrote:Thanks gaz I think you have clarified some aspects.

The Articles also mentions;
7. LIABILITY OF MEMBERS ...

...
'implementing the result' - will never be certain about costs.

I agree that 'implementing the result' will never be certain about costs, I've already done my best to explain that Clause 7 of the proposed AoA (and its sub clauses) serve only to limit the liability of all Members in the event of the Club winding up.

Those clauses have no bearing on the potential liability of any members abusing the proposed arrangements for a Poll of the Whole Club. IMO it would be wise to consider such liability to be unlimited.

Steady rider wrote:Also the members were not given the individual option if they wished to join a charity as opposed to being a member of a cycling club.

The lengthy process of our Club converting to a Charity concluded as a result of our member vote at the 2012 AGM. IIRC our Club was registered as a Charity almost immediately after, in June 2012. Since then our Cycling Club is the Charity, our Charity is the Cycling Club. There is no option to give, our structure is that of a "Membership Charity".

You may wish it hadn't happened, nevertheless we are where we are. I don't forsee the Trustees setting a course for the two tier type of structure you describe. I would have doubts that it is even possible, especially without such a Club being a subsidiary company of our Charity. The MGs are already run through such subsidiaries.
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Re: Governance Review - Member Consultation closes 12 Dec 2016.

Postby Steady rider » 3 Dec 2016, 3:13pm

IMO it would be wise to consider such liability to be unlimited


I appreciate your efforts and it seems to me if such liability may be unlimited, then the club/charity needs to act with a duty of care and make better provisions in the AoA to protect members or not introduce section 13.6 where members are exposure to potential liability.

possibly some rephrasing of 13.6 may be worth considering
Draft
Poll of the whole club
13.6 If the Trustees reasonably conclude that a Petition is not lodged in good faith and they provide detailed substantial evidence to the membership in 'Cycle', they can declare the Poll invalid. The issue raised will be tabled for the next Council meeting following the published details in 'Cycle', where the petitioners or their representatives can detail any concerns, that must be 'reported in full' for any member to read.

Currently the draft suggests
13.6 If the Trustees reasonably conclude that a Petition is not lodged in good faith or is designed to achieve aims other than the best interests of the Charity, the Trustees may require the petitioning Members to bear the reasonable costs properly incurred by the Charity in conducting the poll and implementing the result.

The suggested alternative could avoid a poll of the whole club, if it was not lodged in good faith.
Last edited by Steady rider on 3 Dec 2016, 4:44pm, edited 1 time in total.

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gaz
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Re: Governance Review - Member Consultation closes 12 Dec 2016.

Postby gaz » 3 Dec 2016, 3:43pm

Steady rider wrote:... or not introduce section 13.6 where members are exposure to potential liability.

Please look again at the commentary on a Poll of the Whole Club from the Charity Commission.
The danger in retaining this provision indefinitely is that its exercise by the members could bind the trustees into taking an action, or refraining from taking an action, contrary to what they might otherwise decide would be in the charity’s best interests. It is the trustees who are ultimately liable for their actions, so if a loss to the charity arises as a result of the trustees being so bound the question arises as to who would be liable to make good that loss – would it be the trustees, who have acted (or not acted) contrary to what they consider to be in the best interests of the charity as a result of Article 11, or would it be the actual members who voted to so bind them?

We can’t advise you where the liability would fall – ultimately that would be a decision for the courts, taking into account all the circumstances in that particular case, and we cannot predict or speculate on what decision the courts would take in any particular instance. If it is clear to the court that the trustees would have acted differently if they had not been bound by the members so that a loss would not have occurred, then the court may possibly decide that, by binding the trustees on this matter, the members who bound them were de facto trustees for this particular matter and so the liability should rightly fall on them.

IMO section 13.6 does not introduce an exposure to potential liability, rather it spells out that such a liability may arise, something that the commentary suggests should be done if the provision to call a Poll of the Whole Club is retained.
If you do decide to propose deleting Article 11 either now or in the future then you may wish to consider putting these arguments to the members at that time. Similarly, if you retain the Article and any members seek to bind the trustees in future contrary to what the trustees would otherwise have done, again you may wish to put these arguments to the membership before the Poll is conducted.

I can understand the concerns others may have over the aspect of the Trustees making the judgement as to whether or not a Poll has been called in good faith, I don't share those concerns myself.
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Re: Governance Review - Member Consultation closes 12 Dec 2016.

Postby Steady rider » 3 Dec 2016, 5:00pm

My impression is that the club needs to have provision, as at present, for any decision to be answerable to the members. If a decision resulted in a loss it would be for the whole club/charity, not for either the trustees or the petitioning members. Both would have acted within the provisions provided by the current AoA.

It is the Charity Commission advice, pitting one against the other and not part of the AoA, it is a dangerous and poor approach, for the CTC to follow.

gaz says
I can understand the concerns others may have over the aspect of the Trustees making the judgement as to whether or not a Poll has been called in good faith, I don't share those concerns myself
.

I think we are looking for a system that does raise concerns.

edited 2nd
Last edited by Steady rider on 3 Dec 2016, 9:19pm, edited 3 times in total.

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gaz
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Re: Governance Review - Member Consultation closes 12 Dec 2016.

Postby gaz » 3 Dec 2016, 5:31pm

Steady rider wrote:My impression is that the club needs to have provision, as at present, for any decision to be answerable to the members.

Be sure to express your views when you respond to the consultation.

Steady rider wrote:If a decision resulted in a loss it would be for the whole club/charity, not for either the trustees or the petitioning members. Both would have acted within the provisions provided by the current AoA.

It is the Charity Commission advice, pitting one against the other and not part of the AoA, it is a dangerous and poor approach, for the CTC to follow.

The AoA do not exist in isolation. They are part of a wider legal framework in which the relationship between the Charity, its Trustees and the Membership operates. It is not the CC pitting one against the other, they are simply explaining the complex legal situation that arises if the members succeed in binding the Trustees through a Poll of the Whole Club.

Again the Trustees will have received legal advice given in the light of the CC's statement before drafting the proposed AoA.

Be sure to express your views when you respond to the consultation.
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Re: Governance Review - Member Consultation closes 12 Dec 2016.

Postby thirdcrank » 3 Dec 2016, 5:46pm

Steady rider wrote:My impression is that the club needs to have provision, as at present, for any decision to be answerable to the members. If a decision resulted in a loss it would be for the whole club/charity, not for either the trustees or the petitioning members. Both would have acted within the provisions provided by the current AoA.

It is the Charity Commission advice, pitting one against the other and not part of the AoA, it is a dangerous and poor approach, for the CTC to follow.


In those far off days before the conversion, IIRC details of correspondence between the then Club and the Charities Commission covered the point that the trustees are answerable, in law, for acting in the best interests of the charity and the fact that they could not meet that requirement if they were obliged to adhere to the wishes of club members. The emergence of this correspondence was quoted as an example of an underhand approach by the CTC's leadership because again IIRC, they asked the CC if it would be OK to keep it quiet till after the conversion vote.

It looks to me as though this proposal is an attempt to combine "answerability to members" with the legal duties of a charity's trustees which are governed by charity law, not the CTC's own rules.

You do hear of charities making fundamental changes of direction eg RSPCA on foxhunting, but AFAIK, that's because different trustees are elected.

The simple point is that the members of a charity cannot instruct its trustees how to act, unless they take over the liabilities of trusteeship.

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Re: Governance Review - Member Consultation closes 12 Dec 2016.

Postby Steady rider » 3 Dec 2016, 6:20pm

Hi thridcrank
The CTC trustees have the AoA specific to the CTC to guide them, that has been approved in detail by members and the wider general trustees obligations under charity law. The trustees are required to act in the best interests of both in trying to meet its objectives as listed in the AoA and approved by the Charity Commission. If a situation arose where a poll was conducted requiring them to act or omit to act, and they considered it against the best interests of the club/charity they could resign, knowing that they did not represent the membership on that particular issue who had voted, who's vote would have against there opinion. They could also consider it is in the best interests of the charity that the decisions have the support of members, otherwise the charity will lose general support. They would need to consider all aspects and decide at the time what is appropriate. Trustees have in general a legal obligation having detailed specific agreements via the AoA and members joined with these details in place.

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Re: Governance Review - Member Consultation closes 12 Dec 2016.

Postby gaz » 3 Dec 2016, 6:33pm

Steady rider wrote:The trustees are required to act in the best interests of both in trying to meet its objectives as listed in the AoA.

The legal obligation on the Trustees is to act in the best interests of the Charity, which exists for public benefit as defined in our objects. Regulator expressed it a little differently here.

They must not allow the interests of the members, or any other group to override that duty. Mass resignation is not a way to fulfil their obligations, not least because any subsequent newly appointed Board of Trustees would have exactly the same obligation.
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Re: Governance Review - Member Consultation closes 12 Dec 2016.

Postby Steady rider » 3 Dec 2016, 9:10pm

http://www.companylawclub.co.uk/directo ... duties#Gen

(5) Authorisation may be given by the directors-
(a) where the company is a private company and nothing in the company's constitution invalidates such authorisation, by the matter being proposed to and authorised by the directors; or


Duties imposed by the company itself
Directors are bound by the terms of the company's articles (which may impose specific duties on them) and by any lawful decisions of the company, whether made by the members collectively or by resolutions of the board.


The main point is that the AoA were approved by the Charity Commission and they allow a poll of the whole club.
The Charity Commission state;
Ultimately, the decision whether or not to do so is one for the members of the company.

The Charity Commission has accepted the Articles, accepted a poll of the whole club can be called (but they would prefer such a Poll could not be called). The Directors are bound by the terms of the company article's. The trustees are required to act in the best interest of the charity, e.g. following the approved articles.

Trying to impose section 13.6 is not suitable for the reasons previously discussed. I see no urgent or sound reason to support the suggested changes to the AoA.
They have allowed 12 days for consultation, insufficient for all aspects to be considered in detail.
They reduce the number of trustees that can be used.
They impose unfair conditions and potential liability on members based on a red herring approach.
They do not mention a Life member section, currently provided.
They make it more difficult to hold directors/trustees to account by increasing the number required for a poll of the club.

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Re: Governance Review - Member Consultation closes 12 Dec 2016.

Postby thirdcrank » 3 Dec 2016, 9:39pm

Try looking at it from another angle: had the membership of the whole Club been bothered, as a whole, about this and similar issues, there would have been no change of status. The change took place because the membership either (a) thought it was a good thing or (b) wasn't all that bothered, depending on interpretation.

It's my impression - and nothing more, gained only from observing this forum - that the membership as a whole is even happier / less bothered now than before.

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Re: Governance Review - Member Consultation closes 12 Dec 2016.

Postby gaz » 3 Dec 2016, 10:21pm

So far as interpreting the laws that would cover such a situation I'll place my trust in the Charity Commission and I believe I have understood their view correctly.
Steady rider wrote:Trying to impose section 13.6 is not suitable for the reasons previously discussed.

Trying to impose section 13.6 is not possible for the reasons previously discussed.

13.6 cannot be imposed by the Charity Commission. 13.6 cannot be imposed by the Trustees. Any change to the AoA must be made by the members passing a Special Resolution (75% majority at AGM).

Remember this stage is a consultation. The Trustees clearly regard this provision in the proposed AoA as important and appropriate. It remains to be seen if it will remain in the version of the AoA to be presented to the members at the 2017 AGM.

Based upon the structure of the consultation I would speculate that the bulk of the amendments to the AoA will be presented as a single Special Resolution.

A Special Resolution on proposed Article 13 (13.1-13.5), to see if the members wish to retain a Poll of the Whole Club (retaining current Article 11 if the revised AoA have been rejected).

A Special Resolution to see if the members wish to add 13.6 (adding a suitably numbered clause to current Article 11 if the revised AoA have been rejected).

It remains to be seen how the proposed AoA will be presented to the AGM, other speculation is available. I have no inside knowledge on the matter.
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Re: Governance Review - Member Consultation closes 12 Dec 2016.

Postby gaz » 3 Dec 2016, 10:55pm

I've nothing further to add on 13.6. (Famous last words :wink: )
Steady rider wrote:They do not mention a Life member section, currently provided.

The current AoA includes a section on the Life Membership Account and I agree there is no reference to the Life Membership account in the proposed AoA.
14 LIFE MEMBERSHIP ACCOUNT
14.1 All money which may be received by way of composition fees from life Members of the Club shall, after deduction of any Value Added Tax payable thereon, be credited to a special reserve named the “LifeMembership Fund”. Four per cent of the amount credited in each accounting year commencing after 30th September 1982 shall be transferred to the Revenue Account and like amounts shall be transferred in each of the subsequent 24 years. No other transfers shall be made until all other reserves of the Club have been exhausted in which case the Members may by ordinary resolution approve such transfer as they may think fit.

The clause describes and demands a particular accounting practice to be followed for subscriptions received whenever somebody takes out Life Membership. Life membership subscriptions go into a pot and are drip fed into the general fund in equal amounts annually over 25 years.

The 2015 accounts show £225,452 in the pot.

Clearly the current arrangement has been in effect since 1982. I don't know if it was completely new at that time or an amendment to an existing article. IMO it is not the sort of thing I would expect to be detailed within the AoA. The fact that it is there means that the Trustees have to administer the Life Membership Account in the described manner.

Does anyone recall the background to how it came to be in the AoA?

I've no idea why the Trustees feel it is no longer required, any comments as to why it should stay in?
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Re: Governance Review - Member Consultation closes 12 Dec 2016.

Postby thirdcrank » 4 Dec 2016, 8:05am

IMO, the position of life members should have been debated more before the conversion (I was going to say "received more consideration" but perhaps it was considered and the decision was to keep it off the agenda.) I've no idea about the numbers but I suspect that if most of them had seen a common interest they could have got together to protect it.

It cannot be right for someone who pays upfront to join a member club for the rest of their life to be switched to a charity, without the personal choice to have the balance of their subscription refunded. (The possibility that some life members who joined under earlier systems got a good bargain and were effectively being subsidised is IMO irrelevant, BTW.)

Anyway, history cannot be rewritten.

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Re: Governance Review - Member Consultation closes 12 Dec 2016.

Postby gaz » 4 Dec 2016, 8:58am

gaz wrote:Does anyone recall the background to how it came to be in the AoA?

Whilst I don't feel closer to an answer I did come across some entries in a DA magazine from 1982.
Untitled2.png
Some things never change

That got my hopes up but a later entry shows that this was nothing to do with the reform group.
Untitled3.png
Was it ever thus?

Elsewhere in the magazine there was talk of boundary changes for elections to Council.

I certainly felt a bit of déjà vu whilst reading.
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Re: Governance Review - Member Consultation closes 12 Dec 2016.

Postby Steady rider » 4 Dec 2016, 10:22am

Just an obvious point on the Life membership issue, clearly without the 4% per year requirement, their contributions could be used in a short period of time. Another point on Life membership, the card provided by the CTC saying 'Life Member' only uses Cycling UK has it name, a trade name. The law as far as I know requires all businesses to use their business name on official documents. A Life membership card represents a formal document indicating in the CTC case, that the person has paid for Life membership. The CTC may have several trade names or introduce others.

https://www.gov.uk/running-a-limited-co ... l-material