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Governance Requirements and Structures
Sport and the Law Conference
Alastair Cotton, Daniella Lloyd
25 March 2013
Workshop Objectives
1. Focus on Board Composition– The Sport England and UK Sport governance criteria for NGBs (2013
– 2017)
2. Does your NGB need to update its Articles in light of changes brought in
by the Companies Act 2006?
3. Case Study: What does your NGB need to change in its Articles to
comply?
4. Drafting the changes and adopting new Articles – How to draft the changes to your Board provisions– Managing the transition from an existing Board to a new Board– The process for adopting new Articles
1. Board Composition: Governance Criteria
• Sport England and UK Sport governance criteria for NGBs (2013 – 2017)
• To be included in your NGB’s Articles:– Ideally the Board should not exceed 12 members– Terms of office should be limited, usually to a maximum of 2 x 4 years
• To be included in your NGB’s [Articles] / Rules / Bye Laws:– A balance of skills and experience on the Board– An open recruitment process to the Board– At least 25% of the Board and ideally 1/3 to be independent
• Requirements to be met by October 2014
2(a). Does your NGB need to update its Articles?
• Memorandum of Association
– Name, Objects, Powers, Guarantee and Dissolution provisions now
deemed to be included in the Articles
• Board Composition
– Company Secretary no longer compulsory
• Conflicts of Interest
– Directors with situational conflicts or conflicts with a proposed
arrangement or transaction
2(b). Does your NGB need to update its Articles?
• General Meetings – AGM optional– 14 days’ notice of general meetings– 5% or more of your voting members can call a general meeting– Chair casting vote (only if he/she had one prior to 1 October 2007 which
is to be retained)
• Proxies
• Written Resolutions
• Electronic Communications
3. Board Composition: Case Study
• Organisation “NGB” has 20 Board members who are elected by its membership
and can hold their positions for as long as they choose to. In order to comply
with its funding requirements, NGB needs to change to a Board of 12 individuals,
6 of whom are elected by its membership and 6 of whom are appointed by the
Board (of which at least 3 must be independent). All 12 directors must only be
able to serve on the Board for 2 terms of 4 years before they are required to retire.
(A) What does NGB need to change in its Articles?
(B) NGB wants some of its existing Board members to continue on the new Board. Can
NGB do this? If so, how?
(C) NGB may wish to apply the 2 x 4 year maximum term to existing Board members so
they can’t be re-elected or appointed to the new Board. Can NGB do this? If so, what
would the drafting in NGB’s revised Articles look like?
4(a). Drafting the Changes
• What does NGB need to change in its Articles?
– Maximum of 12 Directors on the Board;– 6 Directors to be elected by its membership;– 6 Directors to be appointed by the Board (of which at least 3 must be
independent);– Maximum of 2 x 4 year terms for all 12 Directors.
4(b). Drafting the Changes
• NGB wants some of its existing Board members to continue on the
new Board. Can NGB do this? If so, how?
• Yes. Transitional provisions can be included in the new Articles to manage
the change from the existing Board to new Board.
• For example:-– All existing directors retire at the AGM at which the new Articles are
adopted but are eligible for re-election / appointment;
OR – Staged implementation: Board members retire but are eligible for re-
election / appointment in rotation (e.g. 1 immediately, 1 at the AGM next year etc.) to avoid the sudden loss of a substantial number of the Board.
4(c). Drafting the Changes
• NGB may wish to apply the 2 x 4 year maximum term to existing Board members so they can’t be re-elected / appointed to the new Board. Can NGB do this? If so, what would the drafting in NGB’s revised Articles look like?
• Yes. Transitional drafting can be included in the new Articles to provide that a Director who has already served for at least 2 x 4 years will either:
(a) not be eligible for re-election / appointment for any further terms;(b) be eligible for re-election / appointment for one further term of 4 years; or(c) be eligible for re-election / appointment for two further terms of 4 years.
• Should Board members be appointed / elected in rotation (e.g. 4 elected directors, 1 to be elected for a 4 year term at each AGM?) to manage the transition?
4(d). The process for adopting new Articles
1. Prepare draft revised Articles– Working Party to draft first before a legal review?– Members’ consultation meeting?
2. Circulate draft revised Articles to your members with the notice of the general meeting or AGM and an explanatory note of the changes
3. 75% majority needed to adopt the revised Articles4. Articles to be effective immediately upon adoption?
– Transitional provisions?5. File prints of the resolution and the new Articles at
Companies House
Questions and Contact Details
Alastair Cotton
Senior Associate, Sports Group
Farrer & Co LLP
66 Lincoln's Inn Fields
London WC2A 3LH
Tel: +44 (0)20 3375 7112
www.farrer.co.uk
Daniella Lloyd
Associate, Sports Group
Farrer & Co LLP
66 Lincoln's Inn Fields
London WC2A 3LH
Tel: +44 (0)20 3375 7176
www.farrer.co.uk
Workshop locations
