Club Constitutions:
Lessons from the
Coalface
Your club’s constitution is the
most important governance
document for your club. Once
known as a memorandum
and articles of association,
the constitution sets out the
members’ rights, eligibility for
the Board, various powers and
restrictions on the club and
other important matters. The
same principle applies for co-
operative clubs in relation to
their Rules.
For these reasons, the club’s
constitution needs regular review.
However, in our team’s collective
years of experience, we still find
clubs in trouble that do not review
their constitution frequently.
There are some classic traps. Even
more difficult to unwind are the
consequences that can arise from
those traps. Below are a few case
examples from different clubs that
we have been involved with over
the last 12 months.
Who are your members?
Last year, Ryde Ex-Services
Memorial & Community Club
Limited (trading as Club Ryde)
had to go through a long process
in the Supreme Court to obtain a
judge’s determination on what its
membership provisions meant.
The judge observed that the drafting
of their constitution led to potential
inconsistencies. The fundamental
problems were trying to work
out who fell into the category of
RSL members and which members
were eligible to stand for the
Board of directors.
Their issues were compounded
because of the complex rules
surrounding membership of RSL
state and sub branches.
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However, it also mattered greatly
because the club was trying to come
out of administration and deal
with controversial efforts to sell a
portion of its property.
The Club had to make sure it was
ready to manage itself again, and
that the persons responsible were
eligible to be appointed.
The court cases demonstrate the
need for clubs to regularly review
their constitution for inconsistencies
and remove outdated provisions.
Accordingly, Club Ryde’s members
adopted a whole new constitution
earlier this year in a step forward for
good governance.
What rights do your
members have?
A club recently approached us to
replace a very outdated constitution.
Amongst the varying issues, we
identified was that the club had
been depriving a certain class of
members the right to vote.
However, the constitution actually
specified that those members
did have voting rights based on a
resolution passed 25 years ago.
We had to explain to the club that
this class of members would need
to have the right to vote. As part
of our update, due to restrictions
under the Corporations Act, we
could not simply take those rights
away now without passing
additional resolutions.
A comprehensive review of the
constitution clarified the members’
rights – and helped to resolve some
political issues of opening up the
broader membership’s ability to vote
on decisions affecting them.
Can you sell your property?
Other constitutions contain
longstanding provisions that only a
certain class of members can vote
on a sale of the club’s property.
As these restrictions are on top of
Registered Clubs Act restrictions, it
can become very hard for clubs to
deal with their property. These are
the kinds of issues we raise when
reviewing constitutions, so that the
club is properly informed of them.
A popular bowls club underwent
a serious political stoush between
conflicting groups of members over
a development proposal.
One group of members was opposed
to the proposal that would see one
of the bowling greens used up as
part of a development project.
The club’s board and management
saw the project as highly beneficial
to the club’s future.
The club had previously passed a
non-core resolution as required
by the Registered Clubs Act to
make the land available for the
development. Unfortunately, the
constitution also required another
resolution by a small group of
bowling members in order to sell the
land. The non-core resolution was
passed as all members could vote
on it. The second resolution was
lost however, because only a small
number of members were entitled
to vote on it. The development could
therefore not proceed.
This case highlights the need
to understand what is in your
constitution and to review it yearly
to make sure it is up to date with the
law and best practice.