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Board composition and operation

The composition and the manner in which the Board operates fundamentally impact on the operations of the NSO. Only a Board operating under sound principles will be effective and thereby facilitate the success of the organisation.

2.1 A staggered rotation system for Board members with a maximum term in office.

Each NSO should have a staggered rotation system for Board members with a maximum term in office of no more than 10 years to encourage Board renewal while retaining corporate memory. As a guideline, good corporate practice is for around one third of the Board to retire each year, noting that retiring Directors are able to seek re-election within term limits. Terms for Directors should be three or four years before re-election, with the ability to be re-appointed up to the maximum term.

The Chief Executive Officer (CEO) should be appointed on the basis of their perceived ability to manage the sport at a particular time, considering the priorities and strategic direction of the sport.

2.2 A Nominations Committee that nominates Directors for vacancies upon which the members vote.

It is important that Boards are comprised of members with a variety of skills and experience and who act in the best interests of the organisation as a whole.

To achieve this, a Nominations Committee should be formed with at least three people which may be a combination of Directors and external appointments. Any external appointees should be independent and have significant business and governance expertise.

The Committee should only comprise persons who are not directly involved in the management of the organisation; however, the CEO and Human Resources Manager or equivalent should have standing invitations to provide clarification where necessary.

2.3 An Audit and Risk Committee, including at least one external and independent CPA or Chartered Accountant.

An effective organisation must have a thorough system of audit and risk management, including internal and external processes. This committee must ensure there are adequate controls and systems in place to alert management and the Board to potential risks associated with the operation of the sport.

Given the strong financial focus required in this area, management and Board Directors on this Committee should have basic financial literacy that enables them to understand and actively challenge information presented. This should be supplemented by the inclusion of at least one external and independent Certified Public Accountant (CPA) or Chartered Accountant.

2.4 Chair elected by the Board.

The Chair is the chair of the Board, not of the organisation. The leader of the organisation is the Board itself, which acts collectively in the best interests of the organisation as a whole to govern on behalf of the members.

The Chair facilitates discussion among, and provides leadership to, the Board. It is important that the Chair has the respect and confidence of their fellow Directors. As such the Board should select their own leader.

The Chair is such a critical role that the ASC must be satisfied that the person is able to fulfil the role effectively.

2.5 Annual Board performance evaluation process involving external input.

An effective Board needs to monitor and evaluate its own performance annually and implement change as appropriate. This should be done with independent input. The process must be visible to the ASC.

2.6 Gender balance on Boards.

There is substantial research showing that increased gender diversity on boards leads to better corporate performance1. The ASX Corporate Governance Principles and Recommendations require ASX200 companies to set targets for increasing the number of women on their Boards and at senior executive level. ASX200 companies are required to report periodically on these targets. Further, the Australian Human Rights Commission recommended the introduction of a minimum target of 40 per cent representation of females on Commonwealth boards by 2015 with all publicly listed company boards following shortly after.

In accordance with these standards, the ASC’s position is each NSO should seek to achieve a target of 40 per cent representation of females on their boards over a similar timeframe, which the ASC will review pending progress and the overall skills mix of boards.

The ASC requires NSOs to report annually on their progress on the achievement of the 40 per cent target at board level and the disclosure on gender representation at executive management level.

2.7 All directors to be independent, regardless of whether elected or appointed.

Independent directors are those who:

  • are not elected by the members to represent any constituent body
  • are not employed by the organisation
  • do not hold any other material office within the organisational structure
  • have no material conflict of interest as a result of being a director.

The holding of state-level director or administration positions would be seen as a material conflict of interest if held at the same time as a national-level position. Where an international federation has particular requirements relating to board representation of Australians who hold a position with the international federation, these will be considered on a case-by-case basis.

2.8 Board skills mix appropriate to meet the strategic goals of the NSO, including the ability for the board to appoint a minority number of directors to obtain an appropriate skills mix.

An NSO board, through its nominations committee, should have a clear process to determine the skills mix of directors required to carry out the board’s governance role at any point in time. The board should determine the skills of elected directors and map them to the skills mix required to identify gaps.

NSO boards need to have the ability to appoint directors to address gaps, and board-appointed directors should have the same terms as elected directors (see 2.1 above).

The ASC will consider whether the skills mix of a board is satisfactory in relation to the outcomes required from funding.

2.9 CEO not to be appointed to board after leaving role (for three years).

A new CEO needs to be able to work freely to drive the sport forward. The presence of a former CEO on a board can inhibit the ability of a new CEO to implement any necessary change. This restriction can be time-bound and the standard requires a minimum of three years following a CEO’s departure.

2.10 Conflict of interest register which is enforced.

A director must not hold any official position that provides a material conflict of interest (actual or perceived). Each board should have a conflict of interest register and a process that governs a director’s involvement in any decisions in which they have a conflict of interest.

2.11 Minimum of five board meetings per year.

The optimal frequency of meetings will depend on the size of the organisation and internal
and external circumstances, including any specific issues the organisation needs to deal with
at any given time.

At a minimum, an NSO board should meet no less than five times per year and as often as required. Board and committee attendance rates for directors should be included in annual reports.

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