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critical changes facing clubsPresented to you by:

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• Introduction of speakers.

• What will we cover today?

• Panel Discussion.

• Stage Two of the reforms.

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• Registered Clubs Amendment Act 2003.

• Registered Clubs Amendment (Accountability) Regulation 2004.

What is the new legislation?

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Where did it start?

• Appointment of the Honorable Grant McBride to the position of Minister for Gaming & Racing.

• Briefing by the Director General of the Department of Gaming & Racing to address the following:– Accountability and transparency;– Reporting procedures;– Attempts by private companies to take

over the operation of clubs for their own gain.

• Minister set up an industry task force to bring forward a package of reforms.

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The Club Industry Task Force was formed in August 2003 comprising:

• ClubsNSW;• CMAA;• Services Clubs Association;• The NSW Bowling Association;• The Leagues Clubs Association of NSW;• The LHMWU;• The Department of Gaming & Racing;

and• Members of the Minister’s own staff.

Where did it start?

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Where did it start?

• The aim of the Task Force was to develop a set of recommendations that would clearly identify and articulate what is expected of the club industry in NSW in the future.

• Government has said that if the legislation and regulations are not working, a review will be held.

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Where did it start?

• The Registered Clubs Amendment Act was passed through Parliament on 10 December 2003. The Act was proclaimed together with Regulations on 9 April 2004.

• This means that the Act and Regulations became law on9 April 2004

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• Clubs with more than one set of defined premises must appoint a manager to each club premises.

• The manager must be approved by the Liquor Administration Board.

• Clubs have until 9 October 2004 to obtain LAB approval and make appointments.

So what do the changes mean?

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Accountability“Close relative” of a person means

– A parent, child, brother or sister of the person

– A spouse (including a de facto spouse) of the person

– A spouse (including a de facto spouse) of a parent, child, brother or sister of the person.

“Top executive” means a person who is one of the 5 highest paid employees of the club at each separate premises of the club.

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Disclosure of interest in contracts

A director of a club who has a material personal interest in a matter that relates to the affairs of the club must declare the nature of that interest.

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Interest in hotels

• A director or top executive must make a written declaration of any interest in a hotel within 14 days.

• The secretary of a club cannot have an interest in a hotel.

• A manager of separate premises cannot have an interest in a hotel.

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Disclosure of gifts from affiliated bodies

• A director or top executive must declare any gift of $500 or more that is received from an affiliated body.

• Gift includes money, hospitality or discounts.

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Disclosure of giftsfrom persons or organisations

with contracts with the registered club

• A director of a club or any employee of a club that receives a gift from any organization that is a party to a contract with the club must submit a written return disclosing gifts received from that contractor which exceed $500.

• A gift includes money, hospitality or discounts.

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Register of interests The secretary of the club is required to keep a register of:

• Declarations of material personal interests by directors.

• Disclosures of gifts from affiliated bodies received by directors and top executives.

• Returns of gifts received by directors and employees.

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Annual reporting requirements • The club is required to provide a

written report to members each year containing the information required by Section 41H of the Act.

• The report must be sent to members within 4 months of the end of the financial year.

• Members cannot opt out of receiving a report under Section 41H.

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Contracts with clubs

A club cannot dispose of any land unless:

– The disposal has been approved at a general meeting of the ordinary members of the club.

– The disposal is by way of public auction or open tender conducted by a real estate agent.

– In the case of a sale of land the club must obtain a valuation of the land from an independent valuer.

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Contracts in which a director or top executive

has an interest The Board of the club must approve all contracts with:

– A director;– A top executive; and– Any company or other interest

in which a director or top executive has a pecuniary interest.

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Contracts with a secretary manager and close relatives • A club must not enter a contract

with a secretary, a manager or close relative of the secretary or manager or with any company in which the secretary, manager or their close relative has a controlling interest.

• In non metropolitan areas such contracts are permitted as a result of an “open tender process conducted by the club”.

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Remuneration of top executives

The remuneration of top executives must be approved

by the Board of Directors.

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Loans to directors and employees

• A club cannot lend money to a director.

• A club cannot lend money of more than $10,000 to an employee.

• Any loan to an employee must be approved by the Board of Directors.

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Controlled contracts are: • Any contract with a director or top

executive or a company in which they have an interest.

• Any contract with the club for the provision of professional advice relating to:– Significant changes to the management

or governance of the club.– Significant changes to the financial

management of the club.– Disposal of real property.– Amalgamation.

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Copies of controlled contracts must be sent to the Director of Liquor & Gaming within 14 days of entering into such contracts.

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Notification of top executives

A club must give written notice to a person who is a top executive informing them that they are a top executive with responsibilities.

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Offences by secretary and directors

in relation to contractsIf a club:• Disposes of land• Enters into a controlled contract• Fails to notify top executives of their

position

contrary to the Act then the secretary, directors and others are liable to a penalty of $11,000.

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Inquiries by Director of Liquor & Gaming

• Inquiry will be a mini royal commission

• Inquiries can be held into termination of employees of clubs

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Definition of Corporate Governance

• Doing the right thingand• Doing things right

Per Professor Michael AdamsProfessor of Corporate Law UTS

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What will Stage Two of the reforms address?

• Industry Code• Best practice for: Major capital works Tendering processes Club elections Accounting & reporting Community service obligations

Work has already started on these issues by industry working parties and hopefully all these issues will be resolved before the end of the year.

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Panel Discussion

Panel Discussion