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Sport Governance Principles

Principle 5: The rulebook

documents that outline duties, powers, roles and responsibilities

Principle

An organisation should clearly define and document its structure and the duties, responsibilities and powers of members, directors, committees and management.

Benefits
  • Organisations meet their legal and regulatory obligations and responsibilities for fulfilling these are clear and documented.
  • There is more time to focus on the direction and oversight of the organisation as rules and structures result in the systematic and efficient handling of procedural matters.
  • Staff operate efficiently as they understand their level of autonomy and will engage the board where necessary.
  • Board committees provide a value-add to the governance of the organisation as they exist for a specific purpose and operate under regularly reviewed terms of reference. They provide an important learning opportunity for people considering board membership.
Questions to ask
  • Have we documented how we govern?
  • How does our structure ensure members and directors can fulfil their duties under the relevant incorporating act now and in the future?
  • How do we ensure our constitution is aligned with contemporary governance practices?
  • How much authority and power should be delegated to the CEO and how do we determine and review this?
  • What committees are needed and appropriate for our organisation?

Why are governance documents important?

Just as the rules of a sport outline how a sport is played, a set of documents outline the rules for governing an organisation. These documents should provide a clear set of rules about when things happen and how things are done. Additionally, a good set of governance documents explicitly outline the duties, responsibilities and powers of members, directors and management. These rules are in place regardless of who is in charge and ensure continuity in the organisation.

What documents are needed?

The two most important documents are an organisation’s constitution and the legislation under which an organisation is incorporated. Every constitution should outline an organisation’s objects and powers, members and membership conditions, board structure, director appointments, meeting procedures, management of company documents, auditors, accounts, indemnity and insurance of directors, and the process of winding up. The incorporating act may also impose requirements concerning the duties of directors, powers of members, meetings and meeting procedures, and other critical information which binds the organisation and should therefore be considered. Organisations may also have a set of regulations, which are usually created under a power located in the constitution. These provide more detail or specifics on areas outside the fundamental governance matters found in a constitution.

Generally, a combination of the constitution and the incorporating act will divide duties, responsibilities and powers between members and the board. However, the board may wish to delegate some of its powers to management or committees. These delegations should be explicitly outlined in writing in a delegated authority document for management and a terms of reference for each committee.

Why is documentation important?

Unclear, incomplete or poor documentation can lead to serious problems. As an extreme example, some sports have ended up in costly legal battles over who is actually a director of the organisation because of different interpretations of the constitution. Furthermore, confusing or poorly written documents can lead to conflict because of perceived overlaps in the duties, responsibilities and powers.

Ultimately, these documents are both the rules of an organisation and a reference point for members, directors and management. People should be able to read these documents and understand what responsibilities they have and when they are expected to fulfil them. Also, these documents provide the foundation for both raising and resolving disputes and so must be written as clearly as possible.

Example behaviours and actions

Board
  • Discuss the effectiveness of the structure in meeting the sport’s current and future needs
  • Refer to and use the governance documents regularly to ensure the board is conforming to its rules
  • Develop and adhere to a board calendar that outlines when documents are reviewed
Directors
  • Regularly review documents (e.g. constitution, regulations, terms of reference)
  • Engage in learning and development regarding governance, legislation and contemporary practices
  • Challenge ‘it’s always been done that way’ attitudes
Organisation
  • Consults with members regarding structural changes which may impact their rights and responsibilities
  • Seeks alignment across governing bodies of the sport
  • Refers to and uses the governance documents to ensure the organisation is meeting its responsibilities
CEO
  • Adheres to the delegations set by the board
  • Works with the chair to prevent director involvement in operational activities and matters
  • Ensures sufficient flow of information from management to the board

Recommendations

A set of good practice suggestions, which should underpin the Board’s considerations in applying this principle.

Organisations should be incorporated under the legislation which best fits their size and needs.
The board is responsible for all powers and responsibilities of the management of the organisation aside from those duties and powers required to be held by members by the constitution or incorporating act.
The board structure should reflect contemporary understanding of effective board structures around independence, term limits, rotation systems, and appointment methods. These structures include:
  • Size of five to nine directors
  • All directors should be independent
  • A mix of elected and appointed directors
  • Staggered rotation system
  • Maximum tenure of 10 consecutive years
  • Three-year cooling-off period
The board documents and regularly reviews the delegated authority to staff.
All committees are accompanied by a written terms of reference which outlines the committee’s purpose, scope, responsibilities, powers, requirements, roles of the chair, timelines, duration of effect and a schedule for board review.
Organisations should have and use a nominations committee and a finance and risk committee.

Resources and tools to help

Below are some resources to assist with this Principle. For guidance, or to discuss how your organisation may best implement good practice in this area, please contact your state or territory agency for sport and recreation. For NSOs, email your query to SportsGovernance@ausport.gov.au and a consultant will contact you.

Commonwealth legislation:

Associations Incorporations Acts for each jurisdiction:

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