1. The Practical Bit - Changing your Articles of Association 20 September 2012 Tom Bruce

2. 1. Does your NGB need to update its Articles in light of changes brought in by the Companies Act 2006? 2. Focus on Board Composition The UK Sport governance criteria for NGBs (2013 – 2017) Case Study: What does your NGB need to change in its Articles to comply? 3. 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 Workshop Objectives

3. 1. 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 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

4. 2(a). Board Composition: Governance Criteria 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

5. 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?

6. 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.

7. 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.

8. 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?

9. 3(d). The process for adopting new Articles 1. Prepare draft revised Articles Working Party to draft first before a legal review? Members’ consultation meeting? 2. Circulate draft revised Articles to your members with the notice of the general meeting or AGM and an explanatory note of the changes 3. 75% majority needed to adopt the revised Articles 4. Articles to be effective immediately upon adoption? Transitional provisions? 5. File prints of the resolution and the new Articles at Companies House

10. 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