Board Election Preparedness

From a legal perspective, any due diligence carried out before introducing something new must include consideration of any legal impacts or consequences. 

For example:

• If a club wants to introduce new gaming technology, this may involve the collection of more information than is currently collected and the club will need to consider if its Privacy Policy needs to be updated; or
• If a club wants to outsource its catering then it will need to have a properly prepared Catering Agreement in place which reflects what the club expects from the contract caterer.

 
From our recent experience, one of the ways clubs are looking to introduce change relates to the process by which the board is elected. We have received a number of enquiries from clubs about the possible introduction of the Triennial Rule as the means of electing the board of the club.

The Triennial Rule is set out in Schedule 4 to the Registered Clubs Act.

It is effectively a rotating system whereby a third of the board retire each year and persons are elected to a three-year term.

In our experience, clubs that adopt the Triennial Rule report the following benefits:

1. greater stability on the board; and
2. greater continuity on the board;
3. reduced chance of members making wholesale changes to the board;
4. greater ability to prepare and implement strategic plans;
5. greater opportunity to pass on valuable knowledge between the directors (which is becoming increasingly more important as the laws relating to registered clubs become far more complex); and
6. allows one-third of the board to be refreshed each year.

 
Notwithstanding this, clubs that adopt the Triennial Rule also report the following disadvantages:

1. possibility of a person being elected who is not the right “fit” for the board; and
2. a three-year term may appear daunting for some members.

 
In order to adopt the Triennial Rule, the club’s constitution will need to be amended by a special resolution passed at the AGM or at a specially convened general meeting of the club.

Members must receive at least 21 days written notice of the exact wording of the special resolution and it must be passed by at least 75 per cent of those members who are eligible to vote and who do vote at the meeting in order for it to be passed. 

If your club is considering the introduction of the Triennial Rule, then we will be able to assist and guide the club through the process, including preparing the necessary special resolution together with a summary for members so they can understand the effect and the nature of the proposed change.

For more information, contact Bruce Gotterson, Pigott Stinson Partner, via email.