M1: Learner Manual

3.4. Constitution

Organisations that have a corporation structure have a Board of directors. These organisations function under a constitution, which may sometimes be referred to as the “Rule Book”. The rule book reflects the legislation under which the organisation has been set up and will:

·       state how the association is to be structured

·       detail the safeguards needed to ensure that it operates fairly on behalf of the whole community

·       be a basic requirement for applying for funding (funding bodies will require the submission of the constitution to confirm that the organisation is genuine).

A Constitution sets out:

·       the principle objectives and core function of the organisation (objects)that the Board will support and oversee

·       the incorporation laws relevant to the organisation

·       Interpretation of terms used throughout the constitution

·       the way the organisation exercises its legal powers

·       amendment of the rules and how this happens

·       the way an incorporated association can be dissolved

·       ownership of the organisation’s assets

·       who is responsible for making legal decisions on behalf of the organisation

·       rules, which cover membership:

o   how to qualify, apply and contribute

o   responsibilities, including procedures for suspension, expulsion, cancellation and ceasing membership

o   voting rights

o   liabilities

o   fees and fines

·       rules which cover meetings:

o   Annual General Meetings (AGM)

o   Special General Meetings (SGM)

o   notices

o   business to be brought to meetings and how they should be run

o   numbers required for a quorum

o   voting procedures

·       rules which cover Board directors:

o   how to qualify and retire from a Board position

o   filling a vacated position – including temporary positions

o   conditions of removal from office

o   expenses incurred

o   conflict of interest

o   duties and liabilities

·       the collective responsibilities of Board and management committee members:

o   requirements for attending meetings

o   delegation of powers

o   indemnities and insurances

o   selection and evaluation of the CEO

o   dispute resolution procedures

o   financial management and audits.

Every new member should be provided with access and/or a copy of the constitution, as they need to understand and abide by the rules it contains.

It is good practice to review the constitution from time to time. This will ensure that members are reminded of its contents and their role/s and responsibilities. Review methods may include:

·       workshops for members at which the chairperson or another member who understands the constitution can facilitate discussion and answer questions

·       engaging an external consultant to conduct a training session

·       having a column in the organisation’s newsletter in which different aspects of the constitution are discussed

·       one-to-one discussions if someone is having difficulty with a particular area (or rule)

·       orientation workshops for prospective new Board members before each AGM (Annual General Meeting)

If the constitution is to change, details of how this is done are set out in the constitution itself. This may mean a special meeting.

The different roles held by Board members need to know specific sections of the constitution in detail. For example, the treasurer needs to be familiar with the details of financial management, audit and financial reporting requirements.

Board members need to know the financial rules well enough to understand their obligations in reviewing financial statements but may not need to know how to appoint an auditor or write the financial reports.