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A new sensible governing structure for the ARU

Roar Guru
11th December, 2012
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Roar Guru
11th December, 2012
31

Australian Rugby Corporate Governance entered a new chapter this week with the board implementing changes based on the recommendations of the review run by Mark Arbib.

There were 15 recommendations in all and the full detail of the review and a summary of those recommendations can be found on the ARU website.

The fundamental change that is being implemented is a clear split between the voting members that are the ‘shareholders’ of the ARU and the board of independent directors that run it.

Arbib quotes David Crawford AO and Colin Carter OAM in their review of Cricket Australia to say that he recommends implementing “an ‘independent and well-skilled’ board that is clearly accountable to the owners and which doesn’t confuse its role with management”.

The change to this governance model is what required a 75 percent vote of support. These members of the ARU are detailed below and the distribution of the 16 votes is as follows:

One vote each for the eight member unions – QLD, NSW, ACT, VIC, TAS, SA, WA, NT.

One vote each for union with over 50,000 registered players – currently two (NSW, QLD).

One vote for each Super Rugby team – Waratahs, Brumbies, Rebels, Reds, Force

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One vote for RUPA – the Rugby Union Players Association.

Previously there were 14 voting rights, with NSW controlling five and Queensland three. Under the new structure, NSW and QLD hold three each of the new total of 16.

This is a significant shift from eight out of 14 to the new structure where they control six from 16. Hand in hand with this was that NSW had a power of veto which has now been removed.

The structure of governance can be broken down per Arbib’s recommendation:

“With respect to the Members of ARU, the Member Unions and Super Rugby teams, these core duties should be:

• The right to dismiss a Director, or the whole Board, and appoint a majority of the Board.
• The right to approve or reject amendments to the Constitution.
• The right to approve or reject changes to ARU’s core business.

“While Members have other duties, such as receiving annual reports and accounts and ensuring compliance with corporations laws and the articles of association, these three core duties are the most important of the shareholders’ rights and responsibilities.

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“In all other matters, the Board and management of ARU should have the freedom to act in the best interests of the business and, by virtue of this, the Members.”

Selection of the board is the other key change.

The proposal will see a four person nomination committee formed comprising the ARU Chair, another representative selected by the Board and two representatives selected by the members. The members representatives can hold no formal association with a rugby organisation.

The nomination committee will make recommendations to the members for the election of six directors requiring approval of a two-thirds vote from the members. In addition the directors of the board are able to appoint up to two other directors bringing their complement to eight.

There are other recommendations which will seek to have the ARU more closely engaged with both the Super sides and to clarify its position as ‘keeper of the game’. There is a recommendation that the ARU work with members to develop a National Charter of Rugby defining roles and responsibilities at all levels of the game.

The vote split is probably the most interesting facet of this.

As it stands NSW and QLD will hold 37.5 percent of the votes while other members control 62.5% between them. The voting to appoint Board Directors requires a 66% majority meaning neither the biggest states nor the other members as a block have a controlling interest.

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This along with the removal of NSW’s power of veto should create greater opportunity for the game nationally rather than allowing a conflict of interest to guide the national body.

These changes all seem sensible to me, I’ll be interested to see what impacts we see from them in the running of our game.

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