How is your constitution?

The National Golf Clubs’ Advisory Association advises that a poorly drafted club constitution can leave clubs at the mercy of a judge when situations with members become legal.

We are very often asked for advice in relation to the detail of a golf club constitution. This can come in two main situations: one is where a club plans a review on its’ own terms to weed out any potential problems or to update, whilst the second scenario is where the club is facing an immediate ‘crisis’ of realising that its constitution is not clear or it does not do what it wants it to do. This can be in the face of a challenge from a member or the club is trying to operate a disciplinary process or deal with officer nominations and elections.

Before we look at the typical problems, we should look at the most common golf club constitutional documents, which are dictated by the set-up of the club itself. The three main types of club that we see will be an unincorporated association, a limited company (limited by guarantee or by shares) or a registered society under the Co-operative and Community Benefit Society Act 2014 (CCBSA).

A limited company will have articles of association as its main governing document (older ones will also have a memorandum) and will often have rules and byelaws that sit below that. A registered society will be governed by a set of rules, approved by the Financial Conduct Authority. There may also be byelaws that sit below that. An unincorporated association will typically have a set of rules as its main constitutional document, with byelaws sitting below or alongside that. Like any business, policies and procedures will likely form part of the governing documentation for any club set-up.

To take advantage of some tax matters, any of those three types of golf club setups may also be a Community Amateur Sports Club (CASC).

In this article, we highlight some of the most common problems we see when clubs come to us for advice.

Consistency and clear drafting

Most golf clubs have been around for a number of years and will have had an original constitution. Through time, various changes will have been made by the club’s different committees and members, but they might not always have been sufficiently careful to check the drafting. Very often, cross-references do not match up or certain terms are not clearly defined. This then leads to difficulty in later years when it comes to interpretation.

It is important that the club has clear drafting to ensure that there is consistency between its main constitutional document (such as articles) and any ‘inferior’ document such as byelaws. Clubs should ensure that there is consistency of terminology between the documents as well as seeking to avoid contradictions. Where there are contradictions between a set of articles and a set of byelaws or rules, the articles would always take precedence but for an unincorporated association, it should be made clear which is the superior document.

For limited companies, it is important ‘to know what you’re dealing with’ in terms of the articles since the precise detail can vary. If a company incorporated without its own bespoke articles, then a template or standard set of articles will apply to the running of the company. Under the Companies Act 2006 those standardised articles are called Model Articles and under the Companies Act 1985 and its predecessors they were called Table A Articles.

Where a club has introduced its own bespoke articles, it is possible to exclude the Model Articles or Table A Articles in their entirety or in part: that can be done with a specific term to recite the exclusion. Alternatively, if a term in a set of bespoke articles is directly contrary to a provision of Table A or the Model Articles, it can be sufficient to exclude the Table A or Model Articles provision on that point.

Very often, we find that clubs will have Table A provisions applying to their club and yet they don’t even hold a copy of Table A. It is important to understand exactly what the club has for its constitution and advice should be sought if matters are not clear.

Powers to manage the club

More often than not, the powers to manage the club are vested fully in the committee or board of directors. They are a relatively small number of people who are normally democratically elected at the club AGM to run the club on behalf of the members for a specified period of time. The general idea behind it is to help with the efficient management of the club, such that the minutiae of club business does not have to be put to a vote in a general meeting of the members.

Very often golf clubs will give powers to manage the club to its committee or board, but there will be a small number of members’ reserve powers where matters might have to be referred to the membership for approval. Common examples are where the club proposes to dispose of land or where it proposes to take out lending above a certain financial level.

Members seeking to interfere with club management

We often see a group of members become unhappy with the way in which the committee or board are running the club, who will use the provisions within the constitution to requisition a general meeting in order to address a specific issue. This can range from matters such as that they are not happy with the state of the greens to the reinstatement of a sacked member of staff. Barring the subject matter being a ‘Members’ Reserve Power’, most of the time the club constitution would not empower them to do that, since the power to manage the club would encompass matters such as the hiring and firing of staff and such like.

For limited companies, the position is not such plain sailing. Where Table A or Model Articles have not been excluded (in whole or in part, per above), there remains an article to permit members to direct the board to take, or refrain from taking, specified action (although they cannot invalidate an earlier action). Note, though, that this can only be done as a special resolution on a 75 percent majority so even if the articles did have a provision to say that members could not instruct directors to do certain things, ultimately the same members could pass a special resolution to change the articles to remove that provision and get what they wanted that way.

Disciplinary matters

Constitutions will often have far too much detail on disciplinary matters contained within the main constitutional document. It is much better to have a fairly brief clause or two within the articles or main rules document to state that the club, through its board or committee has the power to discipline and regulate its members through a variety of sanctions including warnings, suspension and expulsion. There should also be a power within the main constitutional document for that board or committee to make rules, byelaws, policies and procedures as necessary for the expedient exercise of its powers. This should then allow the club to have a separate disciplinary policy, which may be contained in rules, byelaws or policies and procedures which can be amended from time to time by the board or committee and which affords more flexibility in the disciplinary process.

It is also important to include a provision to suspend a member pending a disciplinary hearing, so as to provide for a situation for the club to protect its position where, for example, serious misconduct of bullying is alleged by an employee against a member.

Another problem that we see in some older constitutions is that a member has the power to appeal to a general meeting against the outcome of their disciplinary hearing. This could cause huge problems, not least from a GDPR perspective, but also for other factors relating to natural justice and the fairness of the hearing. We would recommend that clubs review their constitutions as a matter of urgency to ensure that they no longer contain such provisions.

There is also an increasing tendency for some clubs to have adopted a disciplinary procedure that suggests that a right of appeal against a disciplinary sanction applies not only to the accused, but also to the person who put in the original complaint against them. This should never be the case, since the person who lodges the initial complaint should be no more than a witness in the club-led disciplinary investigation and hearing.

Conclusion

Whichever vehicle you have for the club constitution, it is essentially a contract between the members. It makes sense to write and agree to the contract that works for the club and to review that if there is a possibility that it does not work at the moment.

There is nothing worse than ambiguity in the contract; that can be pre-empted and resolved if the golf club committee or board look at things now, rather than trying to tiptoe around a poorly drafted constitution in the face of an urgent problem. If not, there can be disputes and because of the lack of clarity, clubs will be unable to be firm with their members and may even end up in court, essentially at the mercy of a judge for the interpretation of the wording of the contract.

For further advice on constitutional or other matters of law affecting your club, please contact Alistair Smith, CEO of the NGCAA, on 01886812943 or office@ngcaa.co.uk