A presentation on governance in sport. This presentation was given from Farrer & Co as part of the Sport and Recreation Alliance's, Sport and the Law Conference 2015.

1. Governance in Sport
Tom Bruce and David Hunt, Farrer & Co

2. Topics for Today
1. Filling skills gaps on Boards
2. Equality and diversity on Boards
3. Conflicts: Board members and NGB members

3. Filling skills gaps on Boards
• How are you going about this?
• Who? Appointed / Elected Directors?
• What? An openly advertised, transparent, independent,
skills-based process?
• How? Candidates nominated by the Board or an
Appointments Panel?
• Where should the process be set out? Articles or Rules?

4. Equality and Diversity on Boards
• Sport England's governance guidelines include
an expectation that 25% of NGB Boards
should, by 2017, be women;
• Overall percentage of women on NGB Boards
risen from 23% in 2013 to 27% in 2014 (WSFF
NGB Leadership Audit 2014);
• 49% of NGBs still not currently meeting the
25% target (WSFF).

5. Case study
• "Slowball UK" (a fictitious NGB) has a Board made up entirely
of white males;
• It therefore, conscious of the Sport England target, issues
an advertisement in
Women Leaders in
Sport for two new
independent Board
members, stating only
women may apply.

6. Case study – cont.
• What do you think about the approach taken
by Slowball UK from both a legal and non-
legal point of view?

7. Meeting the Sport England Guidelines
– the legal considerations
• Section 49 of the Equality Act 2010 prevents
women only recruitment drives (or indeed
selecting a woman applicant over a man on
grounds of gender (subject to s.159 (more
below)) when recruiting to any "Personal Office";
• "Personal Office" for these purposes will include
membership of an NGB Board but only where
membership brings with it an "entitlement" to
remuneration.

8. Meeting the Sport England Guidelines
– the legal considerations – cont.
• Where Board membership is unpaid and
therefore, in effect, a voluntary role, an NGB
can run a women-only recruitment drive or
prefer a woman candidate over a man without
breaching the Equality Act.
• However, clearly there are also wider political
considerations involved in doing so.

9. Case study – cont.
• Slowball UK decides it does not want to limit
applicants to just women;
• However, it does want to try and encourage a
greater number of women applicants;
• How might it do that in both the short and
more medium term?

10. Positive action
• Even where it applies, the Equality Act allows
for two types of "positive action" aimed at
improving the representation of any under
represented group;
• Positive action, unlike positive discrimination,
is lawful.

11. Positive action – general power (s.158)
• First of all, the Equality Act allows "proportionate"
steps to be taken to encourage participation in an
activity where participation by persons of a
particular protected characteristic (e.g. sex, race,
etc.) is disproportionately low (section 158).

12. Positive action (s.158)
The Equality and Human Rights Commission's guidance entitled
"Appointment to Boards and Equality Law" suggests such steps might
include:
• Reserving places for women on training courses in Board
leadership;
• Providing targeted networking opportunities for women;
• Providing networking and sponsor programmes;
• Offering appointments to women to shadow existing Board
members and/or observe Board proceedings;
• Placing adverts where women are more likely to read them; and
• Setting aspirational targets for increasing the number of women on
Boards with a particular timescale.

13. • If Slowball UK advertises and the two best
applicants, one a man and one a woman, were of
equal merit, would you advise it to appoint the
woman given the current make-up of the Board?
Case study – cont.

14. Positive action in recruitment (s.159)
• As a second type of positive action, the
Equality Act allows an NGB to select an
applicant from an under represented
protected characteristic where two
candidates for membership of the Board are
of "equal merit" (section 159).

15. Positive action in recruitment (s.159) –
cont.
Government guidance on section 159 indicates that the
assessment of whether applicants are of equal merit can
take into account a candidate's:
• overall ability;
• competence;
• professional experience;
• relevant formal or academic qualifications; and
• other qualities required to carry out the particular job.

16. Conflicts:
Board members and NGB members
1. What duties are owed by NGB Board
members?

17. Duties of NGB Board members
• Board members have an overriding statutory
duty to:
– act in the best interests of NGB
– avoid situational and transactional conflicts
• Includes avoiding and/or dealing appropriately
with potential, actual and perceived conflicts
of interest and conflicts of loyalty

18. Consequences of getting it wrong
• Decisions/agreements can be challenged by third
parties
• May cause significant reputational damage to the
NGB
• May be personal liability if there is loss to the
NGB

19. How to manage Board conflicts
• What do your Articles say?
• Adopt and remember to use a conflicts policy
• Identify and declare conflicts and keep a conflicts register
• Prevent the conflict from affecting a decision
• Record the conflict in minutes

20. Conflicts:
Board members and NGB members
2. What duties are owed by NGB's members?

21. Duties of NGB's members
In theory: members are free to vote on the basis of their
own personal interests and do not have to have regard to
the interests of other members or the NGB as a separate
entity
However members must comply with obligations set out
in NGB's Articles and Rules
Therefore very important to include mechanisms within
NGB's constitutional documents to deal with membership
issues

22. Consequences of getting it wrong
• Likely to cause significant reputational damage
to the NGB
• Significant time and cost
• A distraction to the day job

23. How to manage Member conflicts
1. How should a Board deal with member conflicts?
Minimise the risk
- Prevention is better than cure
- Communicate effectively
- Maintain good corporate governance standards, in
particular transparency, independence
- Seek to understand and address member concerns on an
ongoing basis
- Monitor press, social media etc. to ensure you quickly and
effectively correct any misconceptions

24. How to manage Member conflicts
Include relevant provisions in your Articles and Rules
- Articles to deal with automatic termination of membership
and expulsion
- Membership subject to NGB's Rules – which should contain
clear disciplinary procedures
- Include deemed resignation if subscription / entrance fee in
arrears (Board discretion)

25. How to manage Member conflicts
Natural Justice
- Unless NGB has an Article allowing expulsion, a member
cannot be expelled.
- The provision must set out a fair process:-
E.g. "It shall be the duty of the Board, if at any time it shall be
of the opinion that the interests of the Company so require, by
notice in hard copy form sent by prepaid post to a member's
address, to request that member to withdraw from
membership of the Company within a time specified in such
notice…"

26. How to manage Member conflicts
Natural Justice
- the provisions must also give a member the opportunity to
answer the complaints against him before a decision to
expel him is taken
- any relevant disciplinary procedure will need to be followed
- Expulsions Committee?

27. Dealing with a difficult Board member
2. How should members deal with a difficult Board member?
• Speak to the Chair or CEO
• Vote of no confidence: NB. no legal standing
• Company law procedure to remove a director (last resort)
- Requested by at least 5% of members, special notice (28 days)
- general meeting, majority of members to approve, right to be
heard

28. David Hunt
Partner
020 3375 7214
david.hunt@farrer.co.uk
Tom Bruce
Associate
020 3375 7192
tom.bruce@farrer.co.uk
Next steps:-
• Please let us know if you would like to see a copy
of our Model Articles of Association for NGBs
• Do come and ask us if you have any questions