1. Our Club’ s Constitution is up to date.
Clubs should ensure their constitution is regularly reviewed. The constitution is a club’ s primary governing document – an out of date constitution can have real impacts on the club’ s operations.
For instance, if the club is about to discipline a member, it will need to check whether the process is compliant with its constitution, and, whether the procedure in the constitution is in turn compliant with the rules of natural justice and other applicable laws. If not, the disciplinary procedure may be flawed to the extent of allowing the member to successfully challenge the outcome.
Some constitutions impose restrictions on how much the club can spend or borrow, and this may need to be changed before the club starts a major development.
As the constitution can only be amended by special resolution of the club’ s members in general meeting, there are time and cost implications involved in doing major updates. Regular review means that changes to the constitution can usually be included in the matters considered by the members at the Annual General Meeting. This may reduce the need to hold special general meetings to update the constitution over time.
2. Our Club has an effective compliance framework.
Compliance is not optional for a well-run club. Clubs are highly regulated, and it can be difficult to stay up to date with the legislation and incorporate compliance into dayto-day operations and strategic planning. However, clubs must make sure they are across this.
We can all learn several lessons about the importance of compliance and good corporate governance from disciplinary decisions handed down by the Independent Liquor & Gaming Authority. Over the last two years, clubs like Parramatta Leagues Club and Paddington Bowling Club were subjected to rigorous investigations. Ultimately, the Authority found these clubs guilty of a series of compliance breaches which led to legal sanctions, bad publicity, and in Paddington Bowling Club’ s case, the closure of the club.
Some of the issues identified in those decisions may seem like‘ technicalities’ when compared with other management issues in a club. For example, the Authority found that Parramatta Leagues Club failed to have management contracts approved by the Board or give formal notice to top executives that they were, in fact, top executives. Similarly, former CEOs at Parramatta Leagues Club and Manly Leagues Club were being paid bonuses based on the Club’ s total revenue; this meant the bonus was calculated by reference to liquor sales and gaming machine revenue, which ILGA held was a breach of the Registered Clubs Act.
Ultimately, these clubs were brought undone by a range of breaches, many of which involved regular compliance tasks that were not being completed. The Authority has taken a firm view that widespread non-compliance reflects poor management and governance across a club and is worthy of sanction. These decisions highlight the consequences of ineffective leadership and not obtaining proper and regular advice, especially as some of the breaches could have been easily resolved. Instead of being reactive, a club is best managed when systems are put in place in advance to at least minimise issues arising.
3. Our Club has an effective contracting process.
The Authority’ s decisions also show that when an issue arises which warrants an investigation of a club, it may also result in a comprehensive audit of the club’ s operations, including contracting procedures. Effective contract management involves more than just negotiating a good deal, though this is obviously the primary objective. Unfortunately, the best deals can come undone if attention is not given to ensuring the contract is properly completed and complies with the applicable law.
As an example, legislation came into effect in November 2016 regarding contracts with small businesses. Clubs must now take more care when presenting a‘ standard’ contract to a business with less than 20 employees for an upfront price of less than $ 300,000( if less than a year) or less than $ 1 million( if the contract term extends beyond a year). Any terms deemed to be unfair under this legislation may be declared void. Further, this may result in reputational damage and affect the club’ s standing in its community. Clubs may deal with many small businesses, typically including cleaners or caterers. A club should ensure that not only has it sought proper advice when negotiating that contract, but it has also done sufficient due diligence on the other party to determine whether this law will apply.
A common contracting issue is a club failing to identify when the Retail Leases Act 1994( NSW) applies. This Act sets out a number of pre-contract steps that must be followed or they can have significant consequences. For example, if a club fails to provide a prescribed disclosure statement at least 7 days before entering into a contract to which this Act applies( which might commonly include a catering
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