Question

In an organisation where the Directors are self appointed with no term of office, how can an  executive committee as a body get the Directors to agree to restructuring the organisation.   Executive Committee representatives are elected by the stakeholders (membership) for a fixed term (3 yrs).  The Exec Committee are seen (on paper) to be responsible for the day to day running but are accountable to the Directors who are not elected, non representative of the stakeholders and have overruled some decisions made by the Exec. Comm.

A Finance Committee doesn't answer to anybody, are self appointed and have assumed management role.

There is a divide between both bodies with the Exec Committ keen to be in a position to sign up for the Governance Code but there is no transparency or accountability at Director level. Question finally...  Basically if the Directors don't want to address the structure of the organisation, can anything be done about it?

Comments

deirdreg's picture

This is a tricky one to be

This is a tricky one to be honest. The really accurate response would depend on what is written in the organisation's constutution, and if it is a Board of Directors, the Articles of Association. 

In the absence of that, and assuming the organisation is a company limited by guarantee, then technically, the Directors are appointed by the members of the legal entitty (which sounds like they are a different, and smaler, bunch of people then the 'affiliate type membership' you refer to which elect the Executive Committee. 

It may be that the original members of the company elected themselves as Directors of the Company, and in that sense it can be accurate to say that the Directors are self-appointed. But it is relevant to note that, if it is a standard Articles of Association, it is likely that the company's members technically elected the Directors, even though they may be the same people. 

That said, in the new Charities Act (which, in fairness although written into our laws in Ireland, is not yet actually commenced, and therefore not 'real') the concept of 'shadow directors' is introduced. This concept might well apply to the Executive Committee in the sense that, if they lead the company and do all the things that Directors would normally do, but are not techncially directors, in the eyes of the (new) law, they might be considered directors in actuality, in the eyes of the law. 

But to be honest, it all depends on what is written down as to how the organisation does its business. Technically, only company members can elect directors, so if that is a closed shop, there's not much maneuver room for the Executive COmmittee. On the other hand, there may be ways to add company members to the company (from ourside the ranks of the Directors) in which case, new people could be elected to the board from that wider group of company membership. 

This kind of dual-arrangement very often 'ends in tears' in my opinion, unless the various responsbilities and athority is tied down firmly and clearly on paper in advance of anything going wrong. It is precisely for this type of vague leadership that adoption of the new GOvernance Code should be a blessing. The new Code, allows the organisation to surface such potential risks as two groups of people who feel they run the organisation: namely the Executive Committee and the Board of Directors. This is exactly the type of confusing situation that causes problems. 

Perhaps the board of Directors could be shown the benefits of signing up to the Code in terms of ensuring the longer term viability of the organisation. 

I am not sure if I've helped at all to be honest here, but if you want to contact me directly at The Wheel, please feel free. 

Deirdre