Mullins Guide to Governance Documents – Part 1 – The Constitution

As seen in Clubs Queensland’s February March Edition of Club Insight. 

The start of a new year is always a good time to review your club’s governance documents to ensure they align with current objectives, and are enabling you to run a vibrant and viable club. Over the next two issues of Clubs Insight, I will offer some tips on how to make sure that your governance documents are suitable for your club. And what better way to kick off this ‘article mini-series’ than with the club constitution?

Back to basics: club constitution ‘101’

A club constitution sets out the fundamental rules for the governance and administration of the club. The constitution is binding on both the club itself and on its members and board / committee.

Clubs must have a constitution or written set of rules to be registered as a company or incorporated association, and if they are to be eligible for registration as a charity or not-for-profit organisation.

The constitution will normally set out:

1. the objects of the club;
2. how the club operates and how decisions are made;
3. the rights held by members;
4. how meetings are called and run;
5. the process for election to and removal from the management committee / board of directors; and
6. if the club is to be registered as a charity or not-for-profit – the charitable objectives of the club.

Generally, a well drafted constitution should only include the most fundamental rules about how your club will operate. Keep in mind that most constitutions are difficult to change, so you should be wary of including rules in your constitution that are only designed for short-term use, relate to operational decisions and policies or are otherwise not required by law to be dealt with in the constitution. By-laws can be an effective way to set out rules relating to disciplinary processes, sub-clubs, sporting rules, delegations, etc., to avoid being overly prescriptive on these matters in the constitution. Similarly, other policies and procedures relevant to the day-to-day running of your club can be better implemented by management outside of your constitution, so that they can be more easily updated from time to time and more flexibly interpreted.

Most constitutions allow the board / committee discretion as to how decisions are made regarding the club and its assets, which is appropriate, but some constitutions contain reserve powers. These reserve powers generally require decisions on certain issues to be approved by the members, rather than simply being made by the board / committee. Reserve powers may relate to decisions to change the club’s name, its location, monetary limits on investments, capital expenditure or significant contracts, etc.

Making changes

As part of good governance practice, clubs should review your constitution periodically to ensure that it is up-to-date and that it meets the current needs of your club. Significant events such as the purchase of a new site, a change in your club’s activities, or a merger with a neighbouring club, might also be a catalyst for review of your constitution.

The process to change an organisation’s constitution will vary from case to case, and should be clearly set out within the constitution itself. Common provisions include that:

1. whilst most changes are usually put forward by the board / committee, a vote to change the constitution can be initiated by the members, should they meet the criteria to call a general meeting and put forward a special resolution;
2. a general meeting must be called by giving notice (usually at least 21 days in advance) to all members who have a right to vote. Such notice must include details including the time and place of the meeting and the precise wording of the proposed change; and
3. once the meeting is convened, the members present must vote on the change. Commonly, a 75% special majority vote is required for the change to be passed, however some organisations may require 80% or higher.

Don’t miss your constitution check-up!

While club constitutions are not the most exciting documents and are often left in the bottom drawer until crisis strikes, it is important to have an up-to-date, understandable and appropriate constitution, so that you can easily navigate any problems that do arise, and have peace of mind that your club has been complying with the requirements set out in the constitution. Similar to your annual check-up with your GP and dentist, clubs should set a routine ‘check-up’ of your constitution (whether it be annually or biennially), to ensure it is still fit-for-purpose and that your club is following the requirements under the constitution.

Have you got questions about your club’s constitution? Not sure where to start? Give me a call on 07 3224 0353.