Finance & Governance Forum

1. Finance & Governance Forum Managing Change 18th October 2012

2. Chair’s Introduction Mark Palios

3. Doing What is Right When Things go Wrong Hilary S Carty

4. Overview • Sensing what is Wrong • Judging what is Right • Just Do It! • …………. Leadership Resilience

5. Assumptions • The answers are in the room • Opportunity to step back from the coalface • Draw from own/shared experiences • Reflect, Review and Refresh

6. Learn from Everything • The Good • The Bad • The ‘Shouldn’t be shared’

7. Leadership Resilience • Recover quickly from setbacks • Absorb impact… and keep going • Spring back quickly into shape after being bent, stretched or deformed • Cope with stress and adversity • Drive forward the vision

8. When Things Go Wrong • Expectations Unmet • Early Warning Signs? • …Emotional Intelligence

9. So What’s Right? Finding Authenticity Faith Trust Community Individual Freedom Ends? Or Means? Authenticity through Values

10. Just Do It! Courage is ….. not the absence of fear – it is the determination to act despite it. ….. a transaction with fear.

11. The Seven Acts of Courage • Courage to dream • Courage to see current reality • Courage to confront • Courage to be confronted • Courage to learn • Courage to be vulnerable • Courage to act Staub: The Seven Acts of Courage: Bold Leadership for a Wholehearted Life

12. Working with Courage • Judgement / Reputation / Personal Brand • Listen / Engage / Inspire / Enlist Support • Leadership…

13. When Things Go Wrong • Opportunity – new knowledge, new equilibrium, new strategies • Reflection • Emotional Intelligence • Authenticity • Courage • Leadership Resilience

14. Governance review Fiona Twycross AM Former Head of Governance, Diabetes UK

15. Governance reviews • (Why) do you need a governance review? • Steps to take: Case study of Diabetes UK • ‘Banana skins’ (pitfalls and ways round them) • What does success look like? • Moving on from a governance review

16. Do you need a governance review? • Are your processes and structures getting in the way of what you are trying to achieve? • Is changing them likely to make you more likely to reach your goals? • Do you have the time and resources to carry out a review?

17. Steps to take • Plan a realistic timescale (we didn’t) • Identify the problem and what impact it is having on your organisation • Be clear (very clear) on what you are trying to achieve • Benchmark with similar organisations but be clear what will work for you

18. Steps to take • Consultation • Consultation • Consultation • Make sure you keep people on board (as far as possible) and that you understand and address stakeholder concerns

19. Plan realistic timescales

20. Identify the problem • What is it that isn’t working? • How do you know it isn’t working? • What impact is it having?

21. So what was wrong? Finance Committee Governance Committee Board of Trustees Audit and Risk Committee Research Committee Scotland Advisory Council England Advisory Council UK Advisory Council Council of Healthcare Professionals Council of People Living with Diabetes Wales Advisory Council Northern Ireland Advisory Council Expert Working Groups Task and finish groups Task and finish groups Involvement Network Decision making Advisory/engagement

22. You don’t need to continue exactly as before in the meantime • Introduced Board audit • Introduced Annual Review of Board performance • Strengthened information we gave to prospective trustees and induction/training process • Put elections on hold

23. Identifying what we needed Appointed Board of Trustees

24. Learning from others • Spoke to other organisations • Research online • ICSA documentation (eg on accountability) • Advice from the experts • Learning from others internally

25. Consultation, consultation, consultation

26. Be as open as you can • If you need to change for funding purposes, say it • But where the changes also have wider benefits, also say that • If you are having a consultation, be as open as you can about submissions • Explain why points are/aren’t taken on board

27. Avoiding banana skins • Lack of champions on Board • Blockers • Hidden opposition • Don’t take it personally • Don’t just change things for change’s sake

28. Life after governance reviews …

29. What does success look like? • Felt simpler • Not discussing governance any more • All members on councils wanted to stay on

31. BreakTime

32. Workshop session:Changing your Articles of Association Tom Bruce Farrer & Co

33. Workshop Objectives • Does your NGB need to update its Articles in light of changes brought in by the Companies Act 2006? • Focus on Board Composition • The Sport England and UK Sport governance criteria for NGBs (2013 – 2017) • Case Study: What does your NGB need to change in its Articles to comply? • Drafting the changes and adopting new Articles • How to draft the changes to your Board provisions • Managing the transition from an existing Board to a new Board • The process for adopting new Articles

34. 1(a). Does your NGB need to update its Articles? • Memorandum of Association • Name, Objects, Powers, Guarantee and Dissolution provisions now deemed to be included in the Articles • Board Composition • Company Secretary no longer compulsory • Conflicts of Interest • Directors with situational conflicts or conflicts with a proposed arrangement or transaction

35. 1(b). Does your NGB need to update its Articles? • General Meetings • AGM optional • 14 days’ notice of general meetings • 5% or more of your voting members can call a general meeting • Chair casting vote (only if he/she had one prior to 1 October 2007 which is to be retained) • Proxies • Written Resolutions • Electronic Communications

36. 2(a). Board Composition: Governance Criteria • Sport England and UK Sport governance criteria for NGBs (2013 – 2017) • To be included in your NGB’s Articles: • Ideally the Board should not exceed 12 members • Terms of office should be limited, usually to a maximum of 2 x 4 years • To be included in your NGB’s [Articles] / Rules / Bye Laws: • A balance of skills and experience on the Board • An open recruitment process to the Board • At least 25% of the Board and ideally 1/3 to be independent • Requirements to be met by October 2014

37. 2(b). Board Composition: Case Study • Organisation “NGB” has 20 Board members who are elected by its membership and can hold their positions for as long as they choose to. In order to comply with its funding requirements, NGB needs to change to a Board of 12 individuals, 6 of whom are elected by its membership and 6 of whom are appointed by the Board (of which at least 3 must be independent). All 12 directors must only be able to serve on the Board for 2 terms of 4 years before they are required to retire. (A) What does NGB need to change in its Articles? (B) NGB wants some of its existing Board members to continue on the new Board. Can NGB do this? If so, how? (C) NGB may wish to apply the 2 x 4 year maximum term to existing Board members so they can’t be re-elected or appointed to the new Board. Can NGB do this? If so, what would the drafting in NGB’s revised Articles look like?

38. 3(a). Drafting the Changes • What does NGB need to change in its Articles? • Maximum of 12 Directors on the Board; • 6 Directors to be elected by its membership; • 6 Directors to be appointed by the Board (of which at least 3 must be independent); • Maximum of 2 x 4 year terms for all 12 Directors.

39. 3(b). Drafting the Changes • NGB wants some of its existing Board members to continue on the new Board. Can NGB do this? If so, how? • Yes. Transitional provisions can be included in the new Articles to manage the change from the existing Board to new Board. • For example:- • All existing directors retire at the AGM at which the new Articles are adopted but are eligible for re-election / appointment; OR • Staged implementation: Board members retire but are eligible for re-election / appointment in rotation (e.g. 1 immediately, 1 at the AGM next year etc.) to avoid the sudden loss of a substantial number of the Board.

40. 3(c). Drafting the Changes • NGB may wish to apply the 2 x 4 year maximum term to existing Board members so they can’t be re-elected / appointed to the new Board. Can NGB do this? If so, what would the drafting in NGB’s revised Articles look like? • Yes. Transitional drafting can be included in the new Articles to provide that a Director who has already served for at least 2 x 4 years will either: (a) not be eligible for re-election / appointment for any further terms; (b) be eligible for re-election / appointment for one further term of 4 years; or (c) be eligible for re-election / appointment for two further terms of 4 years. • Should Board members be appointed / elected in rotation (e.g. 4 elected directors, 1 to be elected for a 4 year term at each AGM?) to manage the transition?

41. 3(d). The process for adopting new Articles • Prepare draft revised Articles • Working Party to draft first before a legal review? • Members’ consultation meeting? • Circulate draft revised Articles to your members with the notice of the general meeting or AGM and an explanatory note of the changes • 75% majority needed to adopt the revised Articles • Articles to be effective immediately upon adoption? • Transitional provisions? • File prints of the resolution and the new Articles at Companies House

42. Contact Details Tom Bruce Associate, Sports Group Farrer & Co LLP 66 Lincoln's Inn Fields London WC2A 3LH Tel: +44 (0)20 3375 7192 tom.bruce@farrer.co.uk www.farrer.co.uk

43. LunchTime

44. Governance News Update Joy Tottman, Governance and Compliance Officer Sport and Recreation Alliance

45. Initiatives • Code of Good Governance – case studies • Board Members for Sport • Board Skills for Sport – working with the IOD • Leadership Convention 2012 • Legal Panel Framework • Shared Services

46. Voluntary Code of Good Governance for the Sport and Recreation Sector Case Studies: • What do you want case-studies on? • Do you want to help us create a case-study on your organisation?

47. Board Members for Sport • Launched on 25th September 2012 • Network of interested people 75+ • Advertise to the full network or to targeted skill sets within it Tell us: • The skills you are in need of? • Would you be interested to present to the network at a future event? • Do you have links with companies to help us expand the network?

48. Board Skills for Sport • First bespoke training course for board members in sport and recreation organisations. • Fully booked for January – setting up a second date – waiting list Tell us: • What is it important for Day 2 to cover? • Do you want us to explore bespoke courses for your full Board with IOD?

49. Leadership Convention 2012 • 14/15 November – Stratford Upon Avon • 100+ booked on already • Chairs and Chief Executives • Theme = ‘Innovative Leadership’ • Session specifically for Chairs It’s just a wonderful opportunity to be in a relaxed environment with so many key influencers in the sports sector Tell us: • What topics do Chairs need us to work with them on?

50. Legal Panel Framework • 20 minute free helpline for all organisations • Pro-bono legal fund – applications open • Newsletter • Conference – 4th December – Leicester – book your place! Tell us: • What topics do you want covered in the legal workshops?