Advantages of becoming an Incorporated Association and having a new Constitution:
EMTC is currently a Company Limited by Guarantee and this is not necessarily ideal for a sporting club of our size, for a number of reasons explained below. Also, there are many advantages to updating our Constitution listed below. These advantages have been advised by our Lawyers.
Advantages to migrating to an incorporated association
1. Generally the legislation (Associations Incorporation Reform Act 2012 (Vic) and government body (Consumer Affairs Victoria) regulating incorporated associations is more straightforward (therefore ensuring compliance is easier to achieve) than with a company limited by guarantee (where a small company such as EMTC is mostly subjected to similar requirements to large public companies).
2. Most compliance fees (for annual lodgements, changing organisational details and penalties for late lodgement) are significantly lower as an incorporated association (or sometimes nil).
3. Less liability will attach to the directors (committee members) where EMTC is an incorporated association as opposed to a company. Although penalties still apply for directors of an incorporated association who breach office holder's duties, the penalties are generally less severe.
4. Much less information about the members and directors of EMTC will be available to the public where the club is an incorporated association compared to a company. As a company the name, date and place of birth of all directors must be provided to ASIC which is available to the public, whilst the details of each member of the organisation must be made available to any member of the public for a small fee. An incorporated association is only required to provide the details of the Secretary (which is available to the public for a small fee). The public is not entitled to view the register of members of an incorporated association (although the members are).
There are also many advantages to updating the Constitution as set out below:
1. The current constitution does not comply with various aspects of the legislation governing incorporated associations (which requires 23 specific matters be addressed in the rules). Any migration to an incorporated association would require these matters to be included before the regulator accepted the change in incorporation. Amongst other things, the current constitution does not currently outline:
(a) the grievance procedure(s) for handling disputes between members and the association;
(b) the requirements of the association to keep a register of members and the inspection rights of members to view this information; and
(c) information regarding members' rights to inspect the documents of the association, including the rules, minutes of general meetings, financial statements etc.
2. There are several rules contained in the current constitution that relate to operational matters as opposed to governance issues. As the primary governing document of an organisation, best practice dictates that only governance related matters be included. Operational matters should be controlled by the board/committee and be contained in bylaws. This provides the board/committee flexibility to change such rules without being required to pass a special resolution (requiring 75% of the votes of members) at a general meeting of the club, with the associated hassle and expense. Examples of such operational matters currently in the constitution include:
(a) the exact wording of the new member application form;
(b) the application of the laws of tennis to the tennis played at the club;
(c) the ability of the committee to prevent play at any time; and
(d) listing particular bylaws that the committee may create.
3. The new constitution is based on template for sports which incorporates governance principles published by the Australian Sports Commission, which are guides created specifically for sports organisations. They contain suggestions and provide guidance on best practice governance that can be implemented by sports organisations. Examples of where this has been implemented in the draft constitution include:
(a) removing the requirement of the entire committee to be re-elected each year (board/committee members would be elected for a 2 year term and there would then be a staggered rotation of the most important positions within the committee over each 2 year period);
(b) reducing the number on the board/committee from the existing 13 members to 9, which allows for easier decision making and a more efficient board/committee;
(c) the introduction of conflict of interest rules where directors/committee members must disqualify themselves from voting on certain issues where they have a material personal interest in the outcome; and
(d) specific requirements to take minutes of committee and general meetings to support decision-making of the club.
4. The new constitution sets out in much clearer detail the procedural requirements for both general meetings and board/committee meetings of the association. This helps provide clarity and increases the chances that meetings are conducted correctly with proper procedure.
5. A specific indemnity is included that protects directors/committee members to the greatest extent possible by law, ensuring that people volunteering for these positions will be indemnified out of the assets of the club if they act in good faith in accordance with the relevant office holder's duties.
6. The constitution contains specific procedures to be used in situations where:
(a) a member or members have breached the association's rules or policies and need to be disciplined; and/or
(b) a member has a grievance or dispute with the association or another member relating to tennis.
The processes contained in the constitution have been drafted in such a way that affords the relevant member(s) natural justice and a fair hearing, which removes the ability of such members to challenge a decision after the fact. In this way the EMTC is protected in that it can discipline members and resolve disputes fairly, efficiently and without fear of later challenge. This is important in ensuring the smooth operation of the club as circumstances where a dispute arises between members (or a member has grossly breached the rules) can often cause significant friction, particularly where one party perceives the judicial process to be unfair.
7. The new constitution introduces the concept of "delegated powers" where the board/committee can create delegated entities such as committees to oversee certain aspects of the club. This allows for certain people with an interest in a particular area to come together and control that aspect of the club (ie a 'Pennant committee' or 'Juniors committee' or 'Night Comp committee' etc). These delegated bodies still come under the jurisdiction of the club's board/committee but provide more efficiency in decision-making and increased oversight of various operational aspects of the club.