Lynton and Barnstaple - Operations and Development

My point was, that spread over a year, not a massive amount. I can only speak from an Accountants perspective - preparing annual returns for Companies House and forming Companies (Companies House was then in the Old Kent Road). It took me about a week a year to deal with a Heritage Group Accounts on a voluntary basis, but about half of that time was interpreting the Treasurers' 'books' and balancing them (which would have been saved if the Treasurer was up to preparing the accounts) and putting them on a spreadsheet and extended trial balance linked to an I & E account and Balance Sheet. What really took the time was interminable evening telephone calls to other Officers to extract information to balance subscriptions with the numbers provided by the membership secretary, ascertain creditors and cash held, ascertain the interest on the bank deposit account, value stocks of unsold sales items, and a variety queries that arose during the process. A Treasurer who could deal with this process would deal with these things on a day to day basis to save them dominating a fortnight a year. No wonder the Accountants send a bill of £2,400 a year. And that is on top of the Audit Fee of a similar amount. I hope this year we shall see the CIC accounts audited in the same way as the Trust. I have written to the Company Secretary asking him to suggest it to the Board.

 

A lot depends on the number and complexity of transactions - and how readily they are linked to the accounts. My wife's experience as church treasurer was a lot more hands on, and was especially challenging in it's demands for work to be done in near enough real time.

My own views are that there are clear differences between the role of "book keeper" (who would do that chasing) and "treasurer" (who would do the higher level reporting and analysis). The important thing is that, whatever you call them and however they discharge the role, they can provide timely and accurate information to inform the board (periodically through the year) and members (for the AGM) about the true status of the organisation.

 

Modern accounts packages are available that are much easier to use than the old ones like Sage. We use Xero at work and this is quite straightforward to use for many different applications.

 

They are, but they still obey the old rules of garbage in, garbage out.

 

When you really start to dig deep into the Charity Commission documentation you soon become aware that in the case of the L&B it's a quite a bit of a headache as its not only a charity, which is governed by the Charity Commission, it also comes under Company Law, and is also a membership charity.

When there are omissions in the M&As it usually means you have to defer to the ruling body, either the Charity Commission, or if they cannot help, Company Law and visa versa.

Looking at it all from a purely a technical and regulatory point of view....

A voting membership and the pitfalls, the duties of trustees and members, and the advantages of nomination panels from Charity Commission guidines and research documentation.

Membership voted trustee contests can become popularity contests and it's a well known problem in membership organisations.

Its not inconceivable that through popularity vote we could end up with a trust full of baristas for a trust that is trying to rebuild a steam paddle boat, people may laugh, it could happen. (We would have plenty of coffee though )

When you really read into the info on membership charities, many members themselves may not realise that members also have a duty to make sure the charity is run in the best interests of the charity and therefore the public interest.

A point here to make is the differences between a corporate board and a charity board with the biggest difference is members (or shareholders) can vote in their own interest in a corporate ballot but a charity member has to vote in the interest of the charity and in the public interest

In the case of choosing new trustees, a voting member has a duty to look at the role that needs to be filled, are the candidates suitable for that role, how well they will enhance and work with the existing trust, how well their skillset compliments the board.

It could be said that at the last election (and no disrespect to Mike) that the election of another civil engineer was not of the best interests when we already had two and perhaps (in light of the animosity in the past year) what we could have really done with is someone who understands people, the relationships between groups and also between the railway, the locals and outside groups... a PR and membership liaison role, not another civil engineer.

A nomination panel in this respect is a good idea, and indeed is in the CC recommendations in finding new trustees. In any such panel you do need some directors to be able to pose questions and also relay what is involved in the role of a trustee. At least one from the trust and I would also say at least one from the CIC who can relay how the operational side of the organisation works and also other important things such as safety management etc.

The rest can be made up of perhaps a mix of management and volunteers. There is in my view of selecting any such panel at random a danger where your panel has no-one who truly understands the requirements of being a trustee.
So let's say we have four candidates, the vetting process immediately removes any that we have to legally disqualify as set out by law.

Once that is done, the remainder are interviewed and questioned on qualifications and suitability for the role in question (engineering, PR, landscaping, planning etc, whatever position has become available on the board), put into order of preference and then all legally allowed candidates are put forward to the membership to vote on with recommendations by the nomination panel who would be suitable.

In this way the the nomination panel (and the Trust and the charity as a whole regardless of who is current appointed) have fulfilled their duty in making sure the membership is aware of who they think is suitable for the vacant position in the interests of the charity.

It is then for the voting members to make the final decision being aware of their own responsibility to vote in the best interests of the charity, and that is ruled by what's best in the public interest.

Below is a passage from the Charity Commissions documentation and research on membership based charities on what they view is the responsibility of members and their view on a situation similar to ours at the moment.

One thing we haven't tried and the CC makes emphasis on elsewhere, is mediation when disputes arise.

It's pointless me rewriting it all, you may as well read it for yourselves.

**Rights and responsibilities of charity members** (RS7)

Disputes commonly arise when the trustee body and/or membership is divided or when the trustee body is at odds and each side attempts to manipulate the membership voting system to support their cause.

Approximately 50% of dispute cases that are dealt with by the Charity Commission involve a charity with a membership. In these circumstances the Charity Commission will work to enable the charity to find a resolution and get back on the right footing. We will look for evidence to support movement to a resolution and utilise all available information to understand sensitivities associated with particular cultural, political and religious beliefs.

In exercising their right to vote and influence the governance of a charity, members of a charity should ensure that their behaviour is not damaging to the running of the charity or to its good name. The Charity Commission takes the view that members have an obligation to use their rights and exercise their vote in the best interest of the charity for which they are a member. (Legal detail outlined below.)

Responsible trusteeship of a membership charity requires the ability to allow the members to exercise their right to challenge key decisions while preventing them from abusing that right. The balance of power between trustees and members is explored in more depth in Best practice in managing the balance of power (below).

• Charity members should exercise their right to vote in the interests of the charity for which they are a member.

• Charity members should be prepared to abide by decisions that are taken fairly and within the rules of the organisation, even if this does not match their own personal preferences.

*Legal detail*

A membership that is actively and positively involved in the running of a charity, exercising its right to vote and keeping itself informed about what is happening in the charity, is necessary if the benefits of having a membership are to be realised.
There is a fine line between members calling the board to account for the best interests of the charity and members asserting their power to the detriment of the smooth running of the charity. Valuable time and resources are wasted by charities in which disagreement among the membership means that key decisions cannot be made or the board is changed too frequently to be effective.

In cases where the ideological commitment to an organisation is high, or where the interests of the members in how the charity is run are significant, views can manifest themselves in strongly voiced opinions. In many cases this is not problematic so long as there are sufficient procedures setting out how members can voice their views.

Members that oppose certain decisions taken by a charity usually believe that their views are in the best interests of the charity but, if the actions of the membership are preventing the charity from carrying out its legitimate aims, the membership should try to find a solution. It is never in the best interests of the charity to prevent it from operating. Ultimately, if there is no way to come to a compromise, members should consider leaving the organisation or using their legitimate right to vote in order to achieve change. Members should remember that, in any democratic decision, the views of some people will not be reflected in the final action. Members should abide by decisions taken fairly and in good faith.

*Balance of power*

The governing document needs to be clear which rights and powers are reserved for members and which are granted to the governing body or other persons such as the founding trustee. Commonly, members of a charity have the right to elect and appoint the governing body and the governing body is given full control over the management of the charity at all other times.

Trustees are only obliged to put a resolution to the vote of the charity's members or subscribers where the governing document or any rules adopted by the charity or the general law requires it.
On other decisions the trustees may choose to do this or simply put the decision to their members for a recommendation rather than to decide the course of action.

The different powers that rest with members vary considerably from charity to charity. In some instances members are asked to vote on the appointment of the full trustee board annually, in others their decision input is limited to appointing a proportion of the body on a bi-annual basis or three-year cycle.

As we can see from above, the Charity Commission do not just look at the trustees, they will also take into account the membership and their actions and behaviour too in any disputes.

Effectively any complaints or concerns raised about a charity means the charity as a whole will be looked at rather than just the complaint in question, they will look for the causes, who is not following the rules, and will work with the trustees and the charity to find solutions.

What could be said perhaps is last year, when the fractures began to show in the Trust, that mediation should have been sought, rather than the very public accusations and fights that we have seen and the impact it has on the trust from operating effectively, none of which as the Charity Commission point out...is in the interests of the charity.

 

Mediation? Didn't the WSR try that?
And who got to appoint the mediators?
And who completely ignored the two completely independent reports on the best way forward?

 

You'll have to forgive me, I don't know nor am I really interested in what happened at the WSR. My interest is the L&B which has its own set of circumstances.

 

Absolutely true. The question is about how that guidance is then interpreted.

For me, there are two fundamental areas of concern. Firstly, there is whether the Trust board have acted in the best interests of the charity, or the law, in their pursuit of the extension plans or the purchase of OSHI. Second, there is the way that, where decisions have been taken by the board, these have not been taken "fairly" but as an exercise in power politics.

That leads to my third concern, which is fundamental to this weekend's meeting and resolutions. What is presented for this weekend's EGM confuses the concerns of the CC about refusal to accept trustees' legal duties to run the charity with legitimate scrutiny of that charity. It will undermine, fatally and permanently, the ability of ordinary members to challenge the decisions of the board over the strategy being followed by that board.

This is particularly evident in the nominations panel. In itself, that is not a bad idea. But the proposal goes well beyond the CC advice, and is clearly intended to prevent "unapproved" candidates from standing, regardless of whether they have the relevant skills.

Oh, and a final point. If fractures began in the Trust (personally, I'd suggest they became apparent in 2021 with the failure of the trustee election process due to the inability of the Company Secretary to follow rules). Legend has it that in the navy, the aftermath of a mutiny involved two actions. The mutineers were punished (usually harshly), but the commander suffering the mutiny would then lose his command - because a mutiny showed that he couldn't lead.

 

There are parallels.

 

From what you have stated above @DaveE every single existing trustee on the board should now be made to face such a nominations panel and prove they are worthy of the position they hold and also have such qualifications, many no doubt would fail, maybe 12+ years ago they were suitable for such a small project but are they suitable now and are they also suitable to 'vet' any new nominees!

 

The guidance is not for us to interpret, in my view if there are queries or grey areas then the people to ask are the Charity Commission.

Whether the board have acted within the rules and laws of the Charity Commission is for the Charity Commission to make that ruling of yes or no.

The problem you have is that we don't know what/if any communications there has been between the CC and the board, it could be that the EGM was on their recommendation. It seems to me that at least some communication has been ongoing with the trustees according to Toby's reply from them, we don't know who, what "side" or anything about those communications.

When you read the info in my post above the Charity Commission says.. Commonly, members of a charity have the right to elect and appoint the governing body and the governing body is given full control over the management of the charity at all other times.

I don't see anywhere in the M&As a clause for a complaints procedure, therefore as an omission you would fall back on company law for complaints and the associated process. This is one for a company law specialist to decide considering the various laws and the M&As we have at play.

Challenges to the board I guess should take form of the proper avenues available as in questions and challenges submitted (I think) it's 28 days prior to a meeting so it can be included in the circulated agenda of that meeting. EGMs are a little different as I believe once called they cannot be altered.

As for legends, we are not in the Navy, we don't have fore or aft, port or starboard, we don't sail on water or gang press, there is no kings Shilling nor do we live in those times. In truth the aftermath of any mutiny was of either the captain being killed or imprisoned in his ship if the mutiny was successful, or he was backed by his superiors and the mutiny was crushed being as most mutinies despite the myths and legends happened in port where there was senior staff to step in.

 

As far as I have seen any M&A changes are not retrospective.

Whether it would be normal practice to include trustees on re-election I'm not sure... In my view it's really more for prospective new trustees of which people may know little about, to find out their skills and if suitable for any vacant position.

 

I'm glad to hear it. I came across Sage with a company I acted for as a very part time activity after retirement in 2002 and concluded it was a system designed for non-accountants. It had not been properly thought through. It was worse than Kalamazoo which was the system used up to the 70s with carbon impressions to achieve double-entry book-keeping. Sage was exceedingly time consuming to 'write up' and it would have been far simpler (at least for an accountant) to use an Excel spreadsheet. But then people these days are not brought up to ledgers, analysis paper and mental arithmetic (and no adding machines, calculators or computers) as I was in the early 60s. (Debit or Credit nearest the window)

 

Do they even teach mental arithmetic in schools now?

 

Yes. But not at A-Level.

 

Guidance is precisely there because it is expected to be interpreted - it's why so many government documents very carefully differentiate between "shall/will" and "must", on the one hand, and "should" or "may" on the other. In the case of the L&B, that requires looking at both company law and charity law.

The EGM has been called because the board have chosen to present a "Special Resolution" seeking to amend the M&As. Opinions vary as to whether the nature of the change is sufficient to require Charity Commission approval before being presented; the board consider that they are within their rights to do so and the EGM shall proceed on that basis. That Special Resolution needs 75% of those voting to approve it; it is my intent to vote against because I believe the changes being proposed are the wrong ones, put forward in the wrong spirit.

The company secretary, acting independently of the board, has then chosen to permit 6 ordinary members (who happen also to be trustees) to present motions against two members of the board. He has then, in defiance of company law, refused to permit any other motions to be tabled - despite these two motions themselves being just requests by members for consideration.

I don't care whether the subjects of these motions do or do not deserve to be dismissed. Instead, I believe that the fact of these motions is in itself an indictment of the failure of the chair to manage the board he leads, and achieve an effective working team. The six board members who signed those motions are themselves culpable, as individuals and as a group, for failing to work effectively as a team with their colleagues; the chair is especially culpable because it is his job to achieve that end.

It is extremely revealing that these motions are being put forward at the same time. The cumulative effect is to say to ordinary members "get lost - this is our trust and you don't matter".

I therefore hope that all members will vote "no" to all motions, regardless of their view of the individuals or proposed M&As.

 

Are you sure about the accusation that the Company Secretary's refusal was defiance of company law? Any other motion would have to be tabled in accordance with company legislation pursuant to s 168 0r s 303. My reading of company law is that the statutory notice periods could not been met in time for the meeting in which case the Secretary's refusal was correct.

 

His assertion, before the statutory notice periods were up, was that no further motions could be considered. As the motions in items 1 and 2 themselves followed the calling of the meeting, he had taken it upon himself to limit the scope of the meeting in an entirely partisan manner. This, which should have been corrected by the Chair, is contrary to the legal duties of all directors under Section 172 (1), especially (a), (e) and (f):

​

 

@Lineisclear @35B is correct. There were more than 28 days' notice for special notice of an ordinary resolution (CA 06 s312(1)) (let alone the attenuated 14 days under s312(3)) when the Company Secretary illegally refused to add it.

It's open and shut.

 

Sadly the 2023 'AGM' is a perfect example to show that the Chairman/Secretary/Board either do not understand or choose to ignore deadlines defined in the M&AoA or elsewhere. So it comes as no surprise to find them yet again "making it up as they go along".

As for the farce of the proxy voting, goodness knows what chaos awaits those of you who are lucky (?) enough to be able to attend on Saturday :-(