How and why to safeguard your membership before the Annual General Meeting
Some disputes at the Annual General Meeting are unavoidable, but having an up-to-date constitution with all the rules laid out will make your life a lot more straightforward.
This is why not-for-profits should clearly define their membership in their constitution, i.e. who their members are, under what conditions they become a member and under what conditions they get a vote. Equally, your organisation should clearly articulate when people cease to be a member and/or do or don't get a vote. (See our help sheet, 'Legal requirements for Annual General Meetings')
Your constitution needs to be reviewed regularly (we recommend yearly!) to ensure that the rules stay relevant and the outcomes of your elections remain representative.
Think carefully about how your membership rules will work in practice. For example, a football team said in its constitution that membership ran for the term of football season, which meant that for more than half the year the organisation had no members at all. It is unlikely that this is what they intended.
Many organisations rely on their members paying their subscriptions at the meeting, which can cause real problems sorting out who's entitled to vote and who isn't.
One solution would be that memberships run from the date of issue to the end of the next general meeting. Try and get these matters sorted before the meeting, preferably by chasing up subs well in advance. And try not to be too picky. Once you get into issues of legal interpretation you rapidly lose the good feeling you need to extricate yourself from these ambiguities.
Non-members can attend only if the meeting votes to allow them.
What are the issues?
- If a constitution does not define the membership term, i.e. how long membership remains valid, in most jurisdictions it defaults to a financial year basis.
- If it is based on a financial year and you hold your Annual General Meeting after June 30 - which most not-for-profit organisations do - you will need to specify that those who were financial members prior to June 30 are still eligible to vote at the AGM.
What should you do?
- Clearly define your membership structure, who is eligible to vote and under what conditions.
- Clearly articulate the term of membership in your constitution.
- Clearly state when a membership lapses. A membership may lapse, for example, if members do not pay their fees within a specified number of days or weeks from the date of renewal. But be sure to define exactly what you mean by 'lapsed' - will people who have not paid be struck off the members' register or ineligible to vote?
- If your memberships are free, clearly articulate that if a member cannot be contacted or otherwise fails to renew their membership, it will lapse. If you do not do this it can become extremely difficult to keep your members' register up to date (and know who is actually voting), or to get a majority vote where that is required.
Organisations should be accountable to the public and to their members. Annual General Meetings are a chance to report on what has happened over the year and what you intend to do next.
It is an opportunity for your members to raise their concerns and participate. There should be opportunities throughout the year, but the AGM provides a minimum safety net to ensure that things do not get overlooked in the rush of work.
The AGM provides a good opportunity for the board and management to interact with members - answer their questions and seek their views.
If such opportunities are not afforded, things can go very sour. Take for example, the 2009 case of the The Wilderness Society, one of Australia's foremost - and oldest - environmental groups.
What can we learn from The Wilderness Society?
It is an incorporated association governed by a board elected at the Annual General Meeting.
In 2009, a bitter internal dispute resulted in two rival groups claiming control of the organisation.
It started when a small group of disaffected members began a campaign for change of the group's national leadership.
At the time, the society's constitution required that members vote in person at the AGM and a quorum could be as few as 10 members.
The board advertised the AGM with a single notice, posted in the little-read Tasmanian paper the Burnie Advocate.
"They managed to advertise an AGM for a national organisation in the Burnie Advocate in northern Tasmania and not tell any staff, any members or campaign centres about this AGM," Felicity Wade, one of the leaders of the campaign for change, told the ABC in 2009.
"Fourteen people turned up, six of them the committee themselves, who re-elected themselves, and off they went. So it's been impossible for members and the staff to call these people to account."
At the meeting, six members of the board were re-elected and the constitution was amended so that it would require 10% of membership (around 4600 members) to call a general meeting from that point forward. It had previously taken just 20 members to call a general meeting.
Some members said they had not found out about the meeting until the month after it was held. Those members then formed a splinter group, held their own AGM and voted for a new board.
What resulted was a legal stoush between the two boards who each claimed control of the organisation. The dispute caught the attention of the media and eventually had to be resolved in Tasmania's Supreme Court, where the initial AGM was found to be invalid.
In December 2010, The Wilderness Society passed constitutional amendments to ensure that members are notified in writing, by post or email, at least 49 days before the meeting.
So, what did we learn?
Members need to be properly notified well in advance of your Annual General Meeting. Have a proper process in place and define it in your constitution.
The AGM should be a time for members to air grievances, hold management accountable and ensure good governance. To do that, they need to be able to attend!