SCOTTISH RUGBY UNION GOVERNANCE REVIEW PANEL FINAL REPORT ... · GOVERNANCE REVIEW PANEL FINAL...

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SCOTTISH RUGBY UNION

GOVERNANCE REVIEW PANEL

FINAL REPORT – MAY 2014

SRU Corporate Office May 2014

RH: Scottish Rugby Union- Gov Review Panel Final Report

16-05-14

Scottish Rugby Union Governance Review Panel Report 2014

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FOREWORD I would like to express my thanks to Alan Brown, David Kilshaw, Ian McLauchlan and Ian Rankin, each of whom kindly volunteered to assist with this Review and gave up a substantial amount of their time to do so. Their experience, from within Scottish Rugby and outside it, has been of great value in discussing the issues that led to the establishment of the Review, and in reaching the conclusions and recommendations that are set out in this Report. I am also grateful to those Board and Council members who contributed and for doing so in a constructive and clear manner. We also acknowledge the very valuable work that was done in the course of the Dunlop and Flockhart Reviews in 2005 and 2006. While it is appropriate that elements of that work are revisited, the fact that some changes are recommended now does not in any way detract from the conclusions reached in the earlier reviews. The changes made to implement the Dunlop and Flockhart reviews were significant and of material benefit to Scottish Rugby. Many remain equally valid now. Our remit was deliberately quite narrow – governance is a wide-ranging subject, applicable at many levels within an organisation – and having made the necessary and fundamental changes in earlier reviews, best approached in more manageable steps. The President of the Union, Dr Donald Macleod and Chairman of the SRU Board, Sir Moir Lockhead, have made clear that the Board and Council are committed to achieving and maintaining high standards of governance, with a willingness to support initiatives that enable those objectives to be satisfied. We trust this report will be useful and provide the basis for continuing improvement in governance structures and standards within the Scottish Rugby Union. Robert M. Howat General Counsel & Company Secretary Chair of the 2014 Governance Review Panel 16 May 2014


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INDEX

Page FOREWORD 2 EXECUTIVE SUMMARY 4 1. INTRODUCTION AND BACKGROUND

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1.1 The Dunlop Report 7 1.2 The Flockhart Report 7 1.3 Changes to Byelaws since 2005/2006 8 1.4 Future Changes 9 2. PANEL MEMBERS 10 3. REMIT 10 4. METHODOLOGY 11 5. DOCUMENTATION 11 6. ISSUES, CONCLUSIONS & RECOMMENDATIONS

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6.1 Council electoral divisions and constituencies 12 6.2 Churn/turnover 14 6.3 The President and Vice President 23 6.4 International Representatives 26 6.5 Board Composition 27 6.6 Role of the Rugby Operations Department 27 6.7 Other wording and drafting points 28 7. FURTHER CONSULTATION 29


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EXECUTIVE SUMMARY The approach adopted has been one of a “light touch” and pragmatic, recognising that

some of the issues submitted may be fundamental and that a wider consultation with stakeholders on those would be appropriate.

The conclusions and recommendations reached by the Panel have taken account of

previous efforts to make reforms, and potential developments arising from current policy initiatives, and the new linear leagues.

A number of the submissions from Board and Council members were relevant in the

context of various elements of Dunlop and Flockhart and in turn the contents of the Byelaws and Election Rules.

The comments submitted fell broadly into 7 categories:

Council electoral divisions and constituencies;

“Churn” or turnover of representatives on the Council and Board;

The President and Vice-President;

International Representatives;

Board Composition;

The Role of the Rugby Operations Department; and

Miscellaneous and minor wording issues. Change to the composition of the Council, such as in relation to greater regional

representation, should first require wider and detailed consultation with member clubs and stakeholders.

Whatever the structure of the electoral constituencies, it is worth re-emphasising the roles

of Board and Council members and the need for effective and regular review of performance.

On the subject of “churn”:

the benefits of continuity must also be weighed with the need to ensure that the

Council and Board have the appropriate balance of skills, experience and knowledge to enable them to discharge their duties effectively;

orderly succession and progressive refreshing are important principles; office

holders should not become embedded for so long that their independence or attitude is affected, or that they are perceived to have been around forever;


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outcomes had been influenced and in some cases, exacerbated by the application of a combination of various rules and Byelaws, leading to results which were unsustainable and in some cases close to absurd, when considered against the backdrop of the intended 3-year terms and maximum 6-year periods;

preservation of the 6-year maximum term of office for Council members other than

the President and Vice President is fundamental, as is the concept of the 3-year periods, subject to legitimate interruptions;

provided the maximum period of 6 years is retained and that re-election is required

after 3 years at the latest, the requirement for a maximum of 2 terms can be removed in order to reduce the risk of anomalous outcomes;

any consideration of change to the 3-year or 6-year periods should first be subject

to further and wider consultation with member clubs and stakeholders;

a constituency should be entitled to choose whether or not to retain a Council member in the event of promotion or relegation of that Council member’s club, without interrupting the appointment;

that a Council member, if willing to continue to serve, should be able to continue in

office for the remainder of the 3 year term but only if the remaining members in that constituency vote to reaffirm the initial appointment; and

a person elected in succession to a Council member or Council nominated director

who has not fulfilled his or her full term should, subject to the recognised interruptions, serve for 3 years in their own right.

In relation to the length of term for the President and Vice President:

the Presidency and Vice Presidency should each continue to be for a 1 year period

meantime and any change to that first subject to a further and wider consultation with stakeholders;

the President should automatically be Chairman of the Council, and by reason of

that, serve on the Board for the period of his or her Presidency. The Vice President should automatically be the Vice Chair of Council; and

if the Vice President has not been elected to the Board, the Vice President should

be entitled to attend Board meetings during that year as an observer.

In relation to international representatives, there is no need to amend the current Byelaws permitting the appointment of ex officio members but the Council and Board should continue with their consideration of appropriate mechanisms for reporting and accountability for the international representatives.

A number of minor changes should be made to the Articles of Association at the 2014 AGM

relating to the appointment of executive directors.


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Appropriate amendments for a number of other minor items and consequential

amendments should be brought forward for potential inclusion in resolutions to be presented to the members at the 2014 AGM.

The issue of how best to effectively manage relationships with clubs and schools, and the

performance of this aspect of the organisation are operational questions for the Board and Council, and outside the remit of the Panel.

2015/2016 appears to be an opportune time for the further consultation to be conducted.

Sufficient time should be allowed for that to be done on a widespread basis, the findings

to be published and any recommendations for changes then capable of being taken to the AGM in 2016.

All members and stakeholders should be provided with the opportunity, whether

individually or through league or regional fora, to comment as part of that consultation process.


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1. INTRODUCTION AND BACKGROUND

In the latter part of 2013 the Board and Council of Scottish Rugby Union decided, as result of some continuing concerns, that a focussed review of governance issues ought to be undertaken, following on from the work done by the Dunlop and Flockhart review panels and the Union’s Standing Working Party on Governance. This was to be done on an internal basis, with comments from Board and Council members. It was accepted that some of the issues raised may be of such importance that wider consultation with member clubs might be needed. This resulted in the remit which is set out in Section 3.

The starting point for the review was the Dunlop1 and Flockhart 2 Reports. There have been various Byelaw changes since then. Further amendments to various structures may be required following on from the linear league proposals approved at the 2013 AGM and which take effect in 2014, and the policy initiatives announced by the Union in December 2013, particularly in relation to the club game.

1.1 The Dunlop Report

This report was prepared early in 2005, and put before members with consequent Byelaw changes approved at a Special General Meeting in April 2005. It resulted in significant progress in Scottish Rugby’s governance and Byelaws, including among other things, the establishment of the Scottish Rugby Council in place of the previous General Committee, a new Scottish Rugby Board structure, clarification of the roles and responsibilities of Council, Board and other office holders and changing the role of the President.

A great deal of the current Byelaws continue to reflect the recommendations and changes made at that time, although some further alterations were made later (see Section 1.3).

1.2 The Flockhart Report

Changes were made to the Byelaws at a Special General Meeting in March 2006 following on from the Report in January 2006. The Report (and an interim version) had commented further on the nature and structure of representation on the Council, including geographical issues, the creation of high performance structures, a community structure, a competition commission and Championship Committee, and a structure to deal with the recruitment, training and administration of referees.

Those elements relating to Council representation and composition are properly part of the governance issues considered by the Panel and are commented on further below. Large segments of the recommendations in other areas have been applied and mostly now fall into operational responsibilities overseen by the Board and the supervisory jurisdiction

1 Report and Recommendations of Scottish Rugby Union Working Party – Governance, 28 February 2005

2 Final Report and Recommendations of the Scottish Rugby Union Second Working Party – Governance January 2006

and Interim Report 14 June 2005.


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of the Council. Accordingly they are outside this Panel’s remit. The relatively limited time available also precluded consideration in this review of topics that are very wide-ranging.

1.3 Changes to Byelaws since 2005 / 2006

A number of changes have been made to the Byelaws in the years following the Dunlop and Flockhart reviews. Some, although not all, have undoubtedly had an effect on and in some cases have contributed to, the issues commented upon in this Report. An outline of the Byelaw changes is set out in Table 1 below.

AGM Byelaw / Articles Affected

Nature of Change

2007 General Reprint following Flockhart Review approved

Board/ Council – immediate effect

2008 11.1 Removal of position for player representative on Council

Board/ Council – immediate effect

Article 47 Identification of executive directors

Board/ Council – with immediate effect

2009 1.7 Addition to role of President Board/ Council – with immediate effect

6.1.4 Eligibility for full membership Board/ Council – with immediate effect

11.1.3 and consequential

Integration of SRU and SWRU Board/ Council – with immediate effect

11.4 President to be able to choose whether chairs Council

Member requisition – immediate effect

15.2.1 Specific function of Board (discipline rules and regulations)


18 Timing for submission of AGM motions


24 Club Accident insurance Board/ Council and Requisition – immediate effect

2010 11 and consequential amendments, 12

Introduction of office of Vice President

SRU Board/ Council – immediate effect

11.6 Introduction of ex officio Council members


12 Hold office as President on one occasion only

Board/ Council- immediate effect

17.3 President to Chair AGM irrespective of being Chair of Council


18 Change to threshold for SRU Board/ Council


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member requisitions – immediate effect

Appendices Elections Rules for Scottish Women’s Rugby Representative to Council


2011 11.1.1 Changes to Council representation (Premier, National & Championship)

SRU Board/ Council – Effective from 2012 AGM

11.1.4 Change to Council Representation (Introduction of Exiles Club Representative)

Member requisition -Effective from 2012 AGM

2012 18 Restriction on motions making directions on finance matters


19 Number required for member requisitions Restriction on re-examining AGM decisions


2013 11.1.1

Changes reflecting linear league proposal and Council representation for adjusted structure.

Member requisition- effective from 2014 AGM

Byelaw 11.5

Clarification of commencement of directors’ service

SRU Board/ Council- immediate effect

Byelaws 16 and 18

AGM timing – backstop date of 31 August and meeting and associated dates


Byelaw 17 Updated procedures for management of general meetings


Table 1: Outline Byelaw changes since 2005

The Panel was also aware that other changes to Byelaws and Election Rules relevant to issues discussed in this Review had been proposed at Annual General Meetings in recent years but were not approved by members.

1.4 Future changes

1.4.1 Linear Leagues At the AGM in June 2013 a members’ requisition for the creation of linear leagues at the National and Championship levels was approved, with implementation to take place from the AGM in 2014. This will have an effect on Council membership, due to the change in league structures.


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1.4.2 Policy Initiatives A number of significant policy initiatives were announced by the Union in December 2013 covering Academies, Youth and Schools Rugby, the Women’s Game, Coaching Pathways and Working with Clubs. A further report on Referee Development is close to completion. Working parties have been set up to consider issues associated with the implementation of several of these initiatives.

The policy initiative relating to Clubs incorporated proposals for some restructuring at the top of the domestic club game. The Clubs working party has been tasked with revisiting that proposal and potentially considering alternatives. Its recommendations are awaited.

The conclusions and recommendations reached by the Panel have taken account of these potential developments.

2. PANEL MEMBERS

The following individuals kindly volunteered to assist as members of the Panel: Robert Howat SRU Company Secretary and General Counsel (Chair) Alan Brown SRU Council Member Ian McLauchlan SRU Independent Non-Executive Director and former President David Kilshaw Independent member, solicitor Ian Rankin SRU Council Member and Vice President (2013/14)

3. REMIT

The remit of the Panel was limited, as follows:

Firstly - to consider the relevant terms of the Dunlop and Flockhart Reviews and identify whether, having had the benefit of implementation over a number of years, there are deficiencies, or improvements that could or should be made.

Secondly – if it is considered that there are improvements that could be made, to identify whether those are relatively minor, or are sufficiently significant that a more comprehensive review and wider consultation should be undertaken. Thirdly – if improvements are considered to be relatively straightforward, to make recommendations on the steps that could be taken to be taken to address the deficiencies or implement improvements, including suggesting changes to Byelaws and other documents.

The approach adopted has been one of a “light touch” and pragmatic, recognising (i) that some of the issues submitted may be fundamental and that a wider consultation with stakeholders on those would be appropriate; and (ii) that difficulties have been


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experienced in the past in making what might otherwise seem to be relatively straightforward governance-related changes.

4. METHODOLOGY

A number of the submissions from Board and Council members were relevant in the context of various elements of Dunlop and Flockhart and in turn the contents of the Byelaws and Election Rules. These were considered against a matrix that identified each of the recommendations from the Dunlop and Flockhart reports, whether those recommendations had any continuing application within the governance remit, and whether the recommendation related to a fundamental matter or one which was secondary.

A number of points were raised by the Company Secretary in relation to potential inconsistencies, anomalies and ambiguities within the wording of the existing documents and which would normally be dealt with as part of a regular “housekeeping” exercise in keeping these documents up to date. Some are relevant to the Panel’s remit and are therefore commented upon here.

In order to make best use of the time available and remain within the remit, while the individual recommendations from Dunlop and Flockhart were identified, only those recommendations that remained relevant and where a comment had been made or issue identified relating to it, were discussed. Governance is influenced by 2 key elements: firstly, the framework in place and secondly, the behaviour and performance of the individuals involved. The Panel has focussed on the former and has made no comment upon how well the Board or Council as a whole, or any individual members of either body have carried out their responsibilities, other than to reinforce the importance of both bodies and their constituent members being committed to achieving good standards and respecting the requirements that these frameworks create.

Real examples of situations involving individuals and previous experiences have been useful in identifying and understanding the issues but the Panel has stressed that governance frameworks have been considered on an objective basis.

5. DOCUMENTATION The Panel members were provided with copies of the summary matrix, Dunlop and Flockhart Reports and other constitutional documents including the Byelaws3, Election Rules4 and Articles of Association5, together with the UK Corporate Governance Code6,

3 Byelaws of the Scottish Rugby Union as approved at 22 June 2013.

4 Voting Regulations referred to as Appendices to the Byelaws and including the Election Rules for Election of

Representatives to Scottish Rugby Council for: (i) Premier, National and Championship Divisions Fora; (ii) Fora of


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Board and Council Rotation Plans and reports from the Governance Working Party over the last several years.

Copies of the submissions from Board and Council members have been retained by the Panel Chair and were summarised within the overall matrix but were not otherwise circulated due to the request of some individuals not to be identified.

6. ISSUES RAISED The comments submitted fell broadly into 7 categories, as follows:

(i) Council electoral divisions and constituencies;

(ii) “Churn” or turnover of representatives on the Council and Board;

(iii) The President and Vice-President;

(iv) International Representatives;

(v) Board Composition;

(vi) The Role of the Rugby Operations Department; and

(vii) Miscellaneous and minor wording issues.

Each of the issues was discussed by the Panel, some by necessity at greater length than others.

6.1 Council electoral divisions and constituencies

The composition of the elected members of Council is set out in the Byelaws.7 As of the AGM in 2014 (following on from the changes introduced by the linear leagues approved at the 2013 AGM) the Council will consist of 16 members:

The President and Vice President;

One person elected by the Clubs in the Premier Divisions and 3 further people elected by the 3 National Divisions;

Six people elected on a geographical basis by clubs not eligible to elect someone under the Premier and National Divisions category above;

Clubs Represented by Regional League Representative Members; (iii)Scottish Rugby Referees Association and Scottish Rugby Union Schools Divisions; and (iv) Scottish Women’s Forum Representative. 5 Articles of Association of Scottish Rugby Union plc at 27 June 2008.

6 UK Corporate Governance Code – September 2012.Published by the Financial Reporting Council. Available to

download at https://www.frc.org.uk/Our-Work/Codes-Standards/Corporate-governance.aspx. 7 Byelaw 11.1.

https://www.frc.org.uk/Our-Work/Codes-Standards/Corporate-governance.aspx


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Three people, one elected by each of the Scottish Women’s Rugby Forum, the Scottish Rugby Referees’ Association and the Scottish Rugby Union Schools Division; and

One representative of Scottish Exile Clubs. The Council also includes several (currently 3) ex officio members who participate on international bodies but do not have voting rights at Council. This is discussed further in Section 6.4. The structure for the voting members of Council was introduced and amended following the Dunlop and Flockhart reviews and has experienced some changes since then but those alterations have not affected the fundamental components of the model significantly: representatives elected from leagues; regional representatives; and representatives from other wider constituencies and stakeholders such as the referees, schools, the women’s game and exiles. The submissions to the Panel also included questions about the effectiveness of Council with its current structure and suggestions that full regional representation might be a better model.

The Panel recognised that there are a number of legitimate and credible arguments relevant to that debate, including:

Disparity in size – in terms of the number of clubs or individuals represented - between the various constituencies.

Disparity in size - in geographical terms, population and club numbers - between league constituencies and regional constituencies.

The associated workloads on Council members and their ability to be able to visit and work effectively with the clubs or stakeholders in their constituency.

The extent, within a constituency, that the interests of one element of the club game, for example first XVs, dominates other important aspects within clubs such as youth and women’s rugby.

The potential conflict between representation of the interests of a Council member’s constituency – which in some cases will be far narrower than others – and responsibilities to the wider game.8

The instability of league representation on Council by comparison to regional representatives and those from the other stakeholders.9

8 See in particular Byelaw 14.2 setting out the responsibilities of the Council.

9 See Tables 2 and 3 below.


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Whether the structure itself, rather than the performance of individuals, is impeding the Council from functioning as effectively as it could.

The Panel discussed these issues at some length.

6.1.1 Composition of Council

The composition of Council (excluding the ex officio members) was regarded as an issue of fundamental importance. It is clear to the Panel that change to the composition of the Council, such as in relation to greater regional representation, should first require wider and detailed consultation with member clubs and stakeholders. The Panel therefore makes no recommendation in relation to those elements of the comments submitted, other than to suggest how that wider consultation might be undertaken (See Section 7.)

6.1.2 Council and Board Effectiveness

The Panel noted that issues relating to the day-to-day effectiveness (rather than the governance framework) of the Council and the Board were being considered by both bodies in any event. Steps are already being taken to assist in better defining roles and responsibilities and assessing performance through the introduction of role descriptions, new Council Standing Orders, updated Terms of Reference for Board Committees, and increased focus on succession planning and representation on international bodies.

The Panel nevertheless considered that whatever the structure of the electoral constituencies, it was worth re-emphasising the roles of Board and Council members and the need for effective and regular review of performance. Conclusions and Recommendations 1. That change to the composition of the Council, such as in relation to greater regional

representation, should first require wider and detailed consultation with member clubs and stakeholders.

2. That the roles of Board and Council members, and the need for effective and regular

review of performance be re-emphasised. 6.2 The issue of “churn”/ turnover

This was raised by a number of those submitting comments and is influenced by various of the Byelaws, the Articles and the Election Rules.


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This has been a long-standing concern; in essence, that the terms of office of some Council members, and by extension some of the Board directors nominated by Council, are regularly interrupted prior to their intended expiry. This can be for various reasons, either singly or sometimes in combination. The intended term of office is capable of being cut short artificially, rather than due to the quality of an individual’s performance. Continuity in office is an important part of good governance. It helps to provide stability, ensuring that the office holders have sufficient opportunity to learn more about the organisation and apply that knowledge in carrying out their responsibilities, to influence policy and strategy and to carry it through consistently. Crucially, it also assists in assessing performance and applying accountability for decisions made – it is an easy excuse for any office holder that he or she was not involved in the decision-making process, or indeed that he or she was forced to walk away mid-term. However, the benefit of continuity must also be weighed with the need to ensure that the Council and Board have the appropriate balance of skills, experience and knowledge to enable them to discharge their duties effectively. Orderly succession and progressive refreshing10 are important principles; office holders should not become embedded for so long that their independence or attitude is affected, or that they are perceived to have been around forever. 3 year terms with a potential cut-off at 6 years are common in corporate entities and seen as good governance practice 11 in achieving a good balance between these competing objectives. The Dunlop Report and subsequent Byelaw changes introduced 3 year terms12, a limitation on the number of terms to 213 and therefore an overall maximum period (other than for the President or co-option to Council and subsequently also including the Vice President) to 6 years. The Election Rules for the Premier, National and Championship clubs, and those with regional representatives14 require a representative to step down if that representative’s club ceases to be entitled to vote in its constituency election. This may be due to promotion or relegation but also may arise from restructuring. The Election Rules also provide that where a vacancy is created during a Council member’s term of office, the successor is appointed for the remainder of the term of the person demitting office.15 Similarly, Byelaw 11.5 requires that if a Council nominated director ceases to be a member of the Council, he or she then ceases to be a member of the Board. Any person elected in his or her place only serves for the remaining period of the initial appointment.

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See UK Corporate Governance Code. 11

See UK Corporate Governance Code, Sections B1, B2 and B7. 12

Byelaw 11.2. 13

Byelaw 11.3. 14

Rule 4. 15

Election Rules - Rule 8 or 6 depending on the set of Rules.


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The Panel examined the rotation of Board and Council members since the new approach was adopted in order to better understand the extent of the volatility in Council membership, and any consequent effect on Board membership. In the 9 years that the main changes have operated a benchmark minimum position would in theory see 3 terms of office being served, by 2 different individuals, assuming 1 individual serving 6 years and the other 3 years, therefore averaging 4.5 years each. The actual position is summarised in Table 2 and includes the original “stagger” when the rules were first introduced The position of the Exiles representative is different and has been excluded, having only been introduced in 2012/13, as has that of the players’ representative, which ceased at the end of 2006/07. P3 ceased at the end of 2011/12 (therefore 7 years overall), with Glasgow North having been applied for 8 years.

Representative Number of terms

Number of different

individuals

Average length of term

Average length of term per individual

Premier 6 5 1.5 years 1.8 years

National 6 5 1.5 years 1.8 years

P316 6 6 1.16 years 1.16 years

Championship 1 5 4 1.8 years 2.25 years

Championship 2 5 5 1.8 years 1.8 years

Regional (Edinburgh)

5 3 1.8 years 3 years

Regional (Borders)

4 3 2.25 years 3 years

Regional (Glasgow South)

4 2 2.25 years 4.5 years

Regional (Glasgow North)17

3 3 2.67 years 2.67 years

Midlands 4 3 2.25 years 3 years

North 5 3 1.8 years 3 years

Schools 4 2 2.25 years 4.5 years

Referees 4 2 2.25 years 4.5 years

Women 5 3 1.8 years 3 years

Table 2: Lengths of Council term- Council Members

The various league representatives’ positions have been the most volatile, with regional representation and that with the other stakeholders rather more stable.

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7 years only, having ceased at the end of 2011/12. 17

06/07 onwards, so calculated against 8 years only.


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Excluding those occupying the offices of the President and Vice President, 43 individuals have served on the Council in that 9 year period. The maximum period served has been 6 years, with the minimum being 1 year. The average length of term per person has been 2.9 years. Over 50% of the office holders have served for 2 years or less, with the largest single block being 1 year.

Total Length of service (years)

Number of people % of total number of people serving

1 13 30 %

2 9 21%

3 3 7%

4 8 19%

5 6 14%

6 4 9%

Total 43 100% Table 3: Length of Council service – Council Members

In relation to the Council nominated representatives on the Board other than the President/ Chair of Council, 10 individuals have occupied Board positions, with the average length of time in post being 2.7 years. The maximum period served by any individual has been 5 years, and the minimum 1 year. 60% of the Council nominated Board members, excluding the President/ Chair of Council have served for 2 years or less, although it would be expected that a Council member would not normally be elected to the Board immediately on becoming a Council member.

Total Length of service (years)

Number of people % of total number of people serving (excluding President)

1 2 20%

2 4 40%

3 1 10%

4 1 10%

5 2 20%

6 0 0%

Table 3: Length of Board service – Council members excluding President/ Chair of Council


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The following factors were considered relevant and examined in more detail with conclusions and recommendations on each then made: (i) 3 year terms of office;

(ii) maximum period in office of 6 years;

(iii) number of terms restricted to 2 and ineligibility after the 2nd term;

(iv) replacement of representatives; and

(v) filling the remainder of a predecessor’s term.

6.2.1 3-year terms of office 18 The Panel regarded the principle of 3-year terms of office as being fundamental and a core part of good governance. There were no suggestions from the submissions that the 3-year term of office was an issue. The Panel concurred and considered that the concern was the interruption of the period, rather than the 3-year period itself.

The Panel noted however the language used in Byelaw 11.2 – “shall be elected for a period of 3 years” did not recognise the possibility of that period being interrupted later and could lead to conflict with the interpretation of other rules. This could be rectified at the 2014 AGM by some straightforward wording changes.

Conclusions and Recommendations: 1. That no change is needed to the principle of 3-year terms.

2. That existing wording should be updated to recognise the possibility of interruption*.

(* suggested that appropriate resolution be taken to the 2014 AGM.)

6.2.2 Maximum period in office of 6 years The maximum period of 6 years, excluding the periods of the Vice Presidency and Presidency, 19 is considered to be of primary importance and accordingly any change to that should be consulted upon more widely. There were no submissions on this point and the Panel concluded that no change was needed. It should be noted that the exclusion of the Presidency and Vice Presidency from the 6-year period means that a maximum period on Council of 8 years is possible

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Byelaw 15.2. 19

This is the effect of Byelaws 11.2 and 11.3, assuming two terms of three years each.


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if a Council member serves a full six years, then a further year in each of the Vice Presidency and Presidency (see Paragraph 6.3 below). The provision requiring a gap period of 3 years was also not the subject of any comments. The Panel considered this provision to be appropriate and accordingly that no change was needed. Conclusions and Recommendations: 1. The maximum 6-year period remains appropriate and no change is needed. Any

consideration of change should first be subject to further and wider consultation with member clubs and stakeholders.

2. The gap period of 3 years should also be retained.

6.2.3 Number of terms restricted to 2. Ineligibility after 2nd term.20 With terms of office of 3 years and a restriction to 2 terms, the Byelaws enable a 6- year maximum to be achieved but in practice the periods of office have regularly been interrupted and therefore end earlier than the 3 year deadline for a variety of reasons. If the Council member stands and is elected again in another constituency, perhaps because of promotion or relegation or restructuring, a new – his or her second term of office - then commences. The combined period of both terms of office inevitably cannot reach 6 years. Similarly, as the Byelaws stand currently, the successor to the vacancy is appointed only for the reminder of that initial term, notwithstanding the wording in Byelaw 11.2. This becomes the successor’s first term in office and in that situation he or she cannot fulfil a 3 year term. It is impossible, in certain circumstances, for 6 years to be reached and there are many real examples of this. Indeed, when combined with other provisions, it is entirely possible for a Council member to be precluded from further service for 3 years after serving for less than 2 years, notwithstanding the intended maximum of 6 years.21 Some constituencies are more stable than others, with the result that the interruption of terms of office is more prevalent in the Premiership, Championship and National leagues than in others. This revolving door may well limit the number of people willing to step up to fill the remainder of a period of office, or indeed serve at all if their club is a prospective candidate for promotion or relegation.

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Byelaw 11.3. 21

For example, a Council member whose club is promoted in the second year of his or her term must stand down. The successor then fills the remaining year, then stands for re-election. The successor’s first term of office is for 1 year. If successfully re-elected, the second term begins and ought to be for 3 years but if the successor’s club is promoted or relegated in the first season of that term, he or she must step down and cannot stand again for another 3 years because 2 terms of office will have been served.


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The Panel considered these potential outcomes to be anomalous and in the most extreme cases, verging on the absurd. They are in all probability unintended consequences of the combination of a series of rules. Preservation of the 6-year maximum was considered to be fundamental, as was the concept of the 3-year periods, subject to legitimate interruptions as discussed above. Provided the maximum period of 6 years is retained and that re-election is required after 3 years at the latest, the Panel concluded that the requirement for a maximum of 2 terms could safely be removed in order to reduce the risk of anomalous outcomes. Some consequential changes to wording would also be required to ensure the 3-year fallow period is retained after the aggregate 6-year period is reached. Conclusions and Recommendations: 1. That the principle of a maximum period in office of 6 years be retained.

2. That the limitation in the number of terms be removed, subject always to an

aggregate maximum period of service of 6 years (excluding the service periods of the President and Vice President.)*

3. That after 6 years of service, whether calculated on a continuous basis or

aggregated following a series of shorter periods, the 3-year fallow period should continue to apply. *

(* suggested that appropriate resolutions be taken to the 2014 AGM.)

6.2.4 Replacement of representatives

The Election Rules and the Byelaws (in connection with positions on the Board) recognise that a Council member may step down voluntarily. This may be through retirement, ill health, or workload. Withdrawal or removal of a representative following the deselection provisions of the Election Rules 22 or disciplinary steps was also regarded as appropriate and uncontroversial.

The Panel concluded that these elements did not require further scrutiny. The automatic cessation provisions under the Election Rules due to promotion/ relegation are more problematic. These have been considered by previous governance working parties with unsuccessful efforts made to change the relevant provisions.23 The Panel considered these provisions, as currently drafted, to be unhelpful and leading to artificial outcomes, having no relevance to the quality of the individual’s performance in the role, exacerbating (particularly when taken with other provisions) volatility and

22

Rules 18 or 9, depending on the set of Rules. 23

AGM 2010.


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potentially prejudicial to some stakeholders more than others. Clubs in the Premier, National and Championship divisions see less continuity, and consequently potential for a detrimental effect on the consistency of their representation, contribution and influence, than other stakeholders.

This also may extend to the Board, with the possibility of those holding Council positions within these groups being either less willing to stand or less likely to be elected if their Board tenure is thought likely to be subject to interruption. The provisions also ignore the fact that a Council member, once elected, serves an entire constituency and not just the interests of his or her original club, yet that original club’s success on the rugby pitch determines whether he or she can continue in office. The Panel recognised the underlying intention of these provisions, namely to address a concern that a Council representative might be less committed to promoting the interests of a constituency if his or her club was not a part of it. The deselection processes still remain.

The automatic element of the requirement in the Rules was considered to be particularly unhelpful, denying the constituencies concerned the ability to make an informed choice. This assumes, of course, that the Council representative concerned would still wish to continue in office in these circumstances. Account was taken of the points made when this issue was discussed at the 2010 AGM. Particularly when taken with other provisions, such as those restricting the number of terms of office (see Paragraph 6.2.3) the Panel concluded that some changes to the provisions in the Election Rules ought to be considered.

The Panel discussed how best to achieve this, identifying two main options:

(i) the Council member continues automatically, unless voted down; and (ii) the Council member steps down automatically, unless re-affirmed.

The recommendations below reflect the conclusions reached and several consequential points.

Conclusions and Recommendations:

1. That the provisions relating to voluntary cessation, formal disciplinary steps and

deselection should be retained, without any change being required.

2. That the constituency should be entitled to choose whether or not to retain a Council member in the event of promotion or relegation of that Council member’s club, without interrupting the appointment.


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3. That a Council member, if willing to continue to serve, should be able to continue in office for the remainder of the 3 year term if the remaining members in that constituency vote to reaffirm the initial appointment. *

4. That the meeting to reaffirm, if one is held, should be treated as an Election Meeting,

with the same requirements for a proposer and seconder for the motion, and for the quorum.

5. That those entitled to vote should be those at the level they will play in the immediately following season.24

6. That the vote should be on the same majority as within the current rules - a simple

majority25. 7. That if there is no motion to reaffirm, or the quorum is not reached or the required

majority is not achieved, the Council member must step down, with an election then held for a new member. (* suggested that appropriate resolution be taken to the 2014 AGM.)

6.2.3 Filling the remainder of a predecessor’s term26. These provisions appear to have been intended principally to preserve the original “stagger” when the new Byelaws were first introduced and to avoid a situation when all of the Council members would have to demit office at one time. But the stagger has long since unwound, with interruptions having occurred – on at least 14 occasions - for various reasons. The requirement to fill the predecessor’s remaining term of office has exacerbated the volatility caused by the initial requirement to step down, whatever the reason for that may have been, and utilising the remainder as the successor’s first of the maximum 2 terms. It also contradicts the Byelaw wording requiring that election is for a 3-year term – plainly in some circumstances it cannot be. The Panel considered that this provision could be safely removed. A person elected in succession to a Council member or Council nominated director who has not fulfilled his or her full term should, subject to the recognised interruptions, serve for 3 years in their own right. The other changes recommended in this Report should assist in improving continuity while still providing the protection of 6-year maximum periods and the 3-year re-election cycles provided for in the Byelaws and Election Rules.27 The Panel recognised that the 3-year cycle may still be interrupted by promotion and relegation or deselection, or for example, early retirement.

24

Election Rule 1. 25

Rule 9 and Appendix to Byelaws section 1. 26

Election Rules 8 or 6 in relation to Council and Byelaw 11.5 in relation to Council nominees for the Board. 27

Rule 1.


23

Conclusion and Recommendation:

That the requirement to fill the remainder of a predecessor’s term be removed.* (* suggested that appropriate resolution be taken to the 2014 AGM.)

6.3 The President and Vice President

Several submissions were received in relation to the length of the President’s and Vice President’s terms of office and their potential service on the Board. The changes following Dunlop allowed for a 2-year Presidency, with no Vice President. This became a 1-year Presidency, with the introduction at the 2010 AGM of the office of Vice President for season 2011/2012. Several of the comments received suggested that the President’s period of office should be 2 years, rather than 1 and correspondingly that of the Vice President should also be 2 years, rather than 1. This would mean, among other things, a 4-year period in office for the individual, taking account of the Vice Presidency. Alternatives include, although are by no means limited to (i) the introduction of 2 Vice Presidents, each serving for one year and then an election between them for the post of President with that being a 2–year period; and (ii) the removal of the Vice Presidency and reversion to a 2-year period, as before. It was also suggested in the comments that the immediate past President might sit on the Board for a year. A number of these possibilities have been contemplated by members and stakeholders before. The Panel recognised that there were legitimate arguments both for and against change, including:

The “churn” inherent in the Presidency being a 1–year appointment.

The potential length of term and aggregate involvement of the individual concerned.

The time pressure and commitment that a period beyond 1 year involves and the effect that might have on the supply of appropriate candidates.

The importance of having contested elections for the Vice-Presidency.

The original intention of the Presidency being principally an ambassadorial appointment.

The importance of the President and Vice President being well-informed about the organisation’s affairs.


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The potential for confusion and lack of clarity in relation to responsibilities if there is a President, a Vice President, a separate Chair of Council, the Board Chairman and Chief Executive.

The 4-year cycle that applies to changes to the Laws of the Game and between Rugby World Cups.

The other cross-border bodies working to differing cycles and there being other tournaments which are on an annual basis. In the case of the 6 Nations, a 2-year rotation allows home and away matches over that 2 year period.

The Panel discussed the issue at some length and made a number of observations on the current rules and the suggestions:

(i) the introduction of the Vice Presidency and consequent application of 1-year terms

is a relatively recent change (2010 AGM with the first individual serving as Vice President in the 2011/12 season and becoming President for 2012/13 );

(ii) if the suggested 2 year terms for each of the Vice President and President were

applied this could, if implemented without other changes to the Byelaws, mean an individual potentially serving up to 10 years on Council;28

(iii) under the current rules it is possible that if the President declined to chair the

Council and the Vice President was not elected to the Board, neither of the directly elected representatives of the member clubs would serve on the Board;

(iv) with one exception, since the Dunlop reforms the President has actually chaired

the Council; (v) it is possible under the current Byelaws for the Vice President to be elected to the

Board, albeit for 1 year, if a vacancy in one of the 3 other Council-nominated positions exists at the time; and

(vi) current practice is for the Vice President to be invited to attend Board meetings as

an observer but this is not an entitlement or requirement. The Panel was concerned over the potential for confusion and uncertainty both internally and externally over roles and responsibilities if there was a split between the Presidency and the Chairmanship of Council. The ability, in that situation, of the President and Vice President to be sufficiently informed so as to enable them to carry out their functions is important. However, the possibility of both the President and Vice President attending Board meetings for information purposes, in addition to the formal appointment of 4 other Council members (Chairman of Council plus 3 others) would become increasingly unwieldy

28

Byelaws 11.2 and 11.3 exclude the President and Vice President from the provisions for Council members relating to 3-year terms of office and a maximum 2 terms.


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and inefficient in relation to the size of the meeting and has the potential to shift the balance of influence at Board meetings, even if without formal voting entitlement, from the model created following the Dunlop Report. The expectations of those voting on the Vice Presidential appointment are also key. The Panel believed that stakeholders would ordinarily expect the President to chair the Council (the President is already the nominated chair of the AGM29) and thereby sit on the Board. Candidates for the Vice Presidency are also asked to declare whether they intend to chair Council, if elected. The Panel also considered that it was appropriate that a person directly elected by the stakeholders should sit on the Board. The Vice President being entitled to attend Board meetings as an observer, even if not a director and able to vote, was seen by the Panel as an important part of the induction process and preparation to become President. It was considered that this benefit outweighed the limited risk of upsetting the balance of influence on the Board. It was clear to the Panel that the issue was a significant one and that any substantial change should only be made following a wider consultation with the stakeholders, bearing in mind the holders of these offices were directly elected by those stakeholders. Accordingly, no change to the current 1-year terms of the Presidency and Vice Presidency is proposed. The Panel did consider that some elements of the current Byelaws were of a secondary nature and could be amended to improve the situation meantime.

Conclusions and Recommendations: 1. That the Presidency and Vice Presidency should each continue to be for a 1 year

period meantime and any change to that first subject to a further and wider consultation with stakeholders.

2. That the President should automatically be Chairman of the Council, and by reason of

that, serve on the Board for the period of his or her Presidency. The Vice President should automatically be the Vice Chair of Council. *

3. That the approach to the remaining 3 Council-nominated positions on the Board be

preserved, with the Council choosing who is to occupy the vacancies but reminded that it is possible for the Vice President to be elected to occupy one of those positions, if a vacancy exists.

4. That if the Vice President has not been elected to the Board, the Vice President

should be entitled to attend Board meetings during that year as an observer.*

(* suggested that appropriate resolutions be taken to the 2014 AGM.)

29

Byelaw 17.3.


26

6.4 International Representatives

The issues raised related mainly to the role and accountability of international representatives. This was viewed as a secondary issue and not one requiring wider consultation. The Panel’s discussion focussed on the rationale for the international representatives to be appointed to the Council on an ex officio basis,30 this principally being the need to have some means of formal association with the Union, particularly in relation to the iRB, and accountability. The Panel concluded that the ex officio mechanism was a reasonable means of enabling that association to be created and maintained. Ex officio members are non-voting members of Council, with straightforward procedures laid out in the Council Standing Orders. Attendance at some Council meetings for the purpose of reporting and information was considered necessary, although the number of meetings that an ex officio member should attend is an open question. Issues of performance and how best to manage reporting and accountability were considered to be a matter for the Board and Council, falling outside the Panel’s remit. It was noted that various changes to the Union’s international representation had been made recently to include greater executive presence and operational skills and experience within the representation, and that consideration was already being given to the issue of appraisal.

An anomaly in the nomination process was identified that provides the Nomination Committee with the right of approval over the appointment by the Council of the ex officio members. This was not considered appropriate, bearing in mind the role of the Nomination Committee as a sub-committee of the Board. Therefore any approval should be provided by the Board (not its Nomination Committee), as well as by the Council.


1. That there is no need to amend the current Byelaws permitting the appointment of

ex officio members but the Council and Board should continue with their consideration of appropriate mechanisms for reporting and accountability for the international representatives.

2. That the Byelaws be amended so as to make clear that the appointment of ex officio

members by Council requires the approval of the Board, on recommendations from the Nomination Committee.*

(* suggested that appropriate resolution be taken to the 2014 AGM.)

30

Byelaw 11.6.


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6.5 Board Composition

Among the points raised by the Company Secretary is the issue of Board composition, as set out in the Articles. The structure is prescriptive: a Board of 12 members, with 4 representatives from Council, 4 independent non-executive directors and 4 executive directors. In reality, the Board has functioned in recent years with 1 executive director, and more recently with 3, rather than the prescribed 4. The elements in the Articles relating to executive directors were regarded by the Panel as overly prescriptive; it should be for the Board to determine the number of executive directors required, within a maximum of 4. The Panel also considered that it is not necessary, other than in relation to the Chief Executive, for the Articles31 to stipulate which posts are to have Board director status – that too should be for the Board to decide. The Nomination Committee is involved with the independent non-executive appointments as a requirement of the Articles, and in practice has been with recent executive director appointments. The wording in the Articles relating to executive directors refers simply to appointment by the Board. While this is correct, for consistency of interpretation with other provisions the Panel concluded that appointments of executive directors should also be clearly stated to be subject to Nomination Committee involvement.


1. That the Articles32 should be amended to allow for a maximum of 12 directors, of whom no more than 4 to be executive directors.*

2. That the references in the Articles to specific titles should be removed, other than in

relation to the Chief Executive.*

3. That the appointment of executive directors should be by the Board, on recommendation from the Nomination Committee.*

(* suggested that appropriate resolutions be taken to the 2014 AGM.) 6.6 The Role of the Rugby Operations Department

One submission suggested that the Rugby Operations Department managed clubs and schools rugby on behalf of the Council, and that a greater degree of partnering with the Council was needed. The premise of this suggestion is incorrect – that department falls within the operational responsibilities of the Chief Executive and through him to the Board and ultimately the overall supervisory and monitoring role of the Council.

31

Article 47.2. 32

Article 47.


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The issue of how best to effectively manage relationships with clubs and schools, and the performance of this aspect of the organisation was considered to be an operational question for the Board and Council and outside the remit of the Panel.

6.7 Other wording and drafting points

A number of more minor points were identified in advance of the review relating to the Byelaws, Articles and Election Rules. That detail would normally form part of a separate list for the Board to consider. Elements are however relevant to the work of the Panel and there may also be consequential amendments arising from the Panel recommendations.

By way of example:

(i) There are 4 sets of Election Rules, with significant duplication. It would be sensible

to amalgamate these into one set with derogations as required.

(ii) The Election Rules refer to constituencies whose names have changed following the introduction of linear leagues and may change in future depending on the outcome of other consultations. These should be updated and drafted in such a way that straightforward league name changes in future do not require the rules to be amended.

(iii) The Election Rules are attached to the Byelaws as Appendices with the inference that they are part of the Byelaws. Previous motions to amend them have been presented to members on that basis. Yet the Byelaws also refer to procedures approved by Council33. This would benefit from clarification.

The Panel considered that while it might be sensible for basic electoral methods and processes – for example, how an election was to be conducted, balloting and the like – to be subject to Council approval, it was not appropriate for the Council to have the ability to change the Election Rules so as to be able to control the requirements on eligibility or continuation in post of the Council members elected. These were subjects for the members and stakeholders as a whole. The Panel considered that the Election Rules should clearly be stated to be part of the Byelaws – as an Appendix - in order to remove this ambiguity. Changes should require a two thirds majority vote, as for the other Byelaws and approval of changes to the Articles of Association. While it is possible to separate out straightforward procedural elements from the more fundamental parts of the Election Rules the Panel was of the view that such separation over-complicated matters and was unnecessary.

33

Byelaw 11.1, last sentence - “The foregoing elections shall be in accordance with procedures approved by the Scottish Rugby Council.”


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(iv) The Election Rules permit postal voting for some stakeholders, subject to a 75% majority agreeing to that step. Due to the geographical extent and size of some of the constituencies in order to make the process more efficient the Election Rules should be updated to permit the signed ballot form to be submitted electronically.

(v) The right to deselect a Council member requires a petition from at least 50% of the

constituency members, then a two thirds majority vote. It is not clear whether the actual meeting at which the vote is then held is regarded as equivalent to an “Election Meeting” in which case there is a separate quorum requirement (also of 50% of the constituency). This would be benefit from being clarified.

(vi) Various dates – for example, for nomination of candidates for Vice President and for

conducting Council elections - should be updated to reflect the change to the AGM deadline.

(vii) The Byelaws do not explicitly state that electronic service of notices for general

meetings is permissible. They are currently silent on the method.

(viii) The Byelaws would benefit from the introduction of a more user-friendly layout, with greater separation of the provisions, the use of defined terms and consistency of definitions with other documents and rules.

The Panel suggested that appropriate amendments for these items also be brought forward for potential inclusion in resolutions to be presented to the members at the 2014 AGM.

7. FURTHER CONSULTATION

The Panel concluded that further and wider consultation involving the stakeholders should be conducted in relation to the following issues before any further changes were contemplated:

1. Council electoral constituencies; and

2. the length of the Presidential and Vice Presidential terms of office.

The 10 year anniversary of the Dunlop reforms occurs in 2015. By then most of the new policy initiatives announced by the Union should be well underway and a pathway for the upper end of the Club game ought to have been identified and be progressing. The first season of the restructured linear leagues will be in 2014/2015. 2015/2016 therefore appears to the Panel to be an opportune time for further consultation to be conducted. Sufficient time should be allowed for that to be done on a widespread basis, the findings to be published and any recommendations for changes then capable of being taken to the AGM in 2016.


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The Panel considered that a consultation paper outlining the issues, various options and alternatives would be beneficial. All members and stakeholders should be provided with the opportunity, whether individually or through league or regional fora if preferred, to comment. Edinburgh, 16 May 2014 Robert M. Howat Chairman On behalf of 2014 Governance Review Panel

SCOTTISH RUGBY UNION GOVERNANCE REVIEW PANEL FINAL REPORT ... · GOVERNANCE REVIEW PANEL FINAL...

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