Governance & Constitutional Committee Report of 03/04/04
The Committee has dealt with two issues since the last report.
1. Amendments to the Constitution
2. A question of potential conflict for an elected person.
Agenda item 1.
During the period since the last AGM of the Society there have been a variety issues raised that required amendments to the Constitution, the most pressing of these became a change of period within which the AGM must be held following the end of the financial year. Other matters were not time sensitive. The Committee circulated internally the list of changes and proposed wording of these. On recommendation from this Committee an e-GM was called by the President as permitted in the Constitution, Clause 10.4 Electronic General meetings (e-GM), which states inter alia "An e-GM can be called by the President, the Council.". The e-GM was held during the period 12 March to 25 March and the 5 motions requiring Member approval were put to the vote. The meeting was declared quorate, the minimum number of votes required being 35 and a total of 42 votes were cast.
The results of the ballot were agreed by the scrutineers, John Vostermans and Bill Parkin, and were published to the Members Announce list as follows:
Motion 1 Change of Period for AGM : 39 for, 2 against, 1 abstain.
Pass required 66.66% Pass achieved 92.86%
Motion 2 Reduction in elected persons from one company: 41 for, 0 against, 1 abstain
Pass required 66.66% Pass achieved 97.62%
Motion 3 Recognition of Executive Committee in Constitution: 34 for, 3 against, 5 abstain
Pass required 66.66% Pass achieved 80.95%
Motion 4 Councillor attendance at meetings: 33 for, 5 against, 3 abstain
Pass required 66.66% Pass achieved 78.57%
Motion 5 modifications for consistency: 41 for, 0 against, 1 abstain.
Pass required 66.66% Pass achieved 97.62%
In order that changes to the rules will be permitted the Constitution states:
"14.5 No motion proposing any amendment to this Constitution at a general meeting shall be deemed to have been passed unless two-thirds of the votes cast on the motion were in favour"
so resolutions must pass with at least two-thirds majority (66.66%) of those voting. In the event all the resolutions received the required pass percentage with the lowest being 78.57% for motion 4.
The Constitution has now been amended accordingly, signed by three officers and the declaration by the Secretary completed and the Constitution has now been sent to the Registrar of Incorporated Societies for ratification.
Agenda item 2.
The Committee was asked to consider a matter of potential conflict of interest and was requested to make recommendations accordingly. The matter was again dealt with via the mechanism of the mail list. The matter concerned David Farrar who therefore recused himself from any participation on the issue. The matter was raised because David is a member of Council, so it was felt that the matter is of considerable significance.
Background: Council determined that a poll of Registrants should be undertaken to elicit a range of views and to obtain clarification from a random sample on the matter of InternetNZ's fee percentage of the cost of registration of a Domain Name. David Farrar has a small polling company and because of his wide experience in the field of polling was asked to write up a series of questions to be asked (in a voluntary capacity as Vice-President of the Society). David offered to have his company quote for the work and the Executive Director requested a quote from Victoria University using the set of questions drawn up and approved by the Exec Committee.
Victoria University declined to quote for the work because it was just at a time of change-over of students and there were insufficient students of an acceptable grade available to carry out the work. It was agreed that only the Treasurer and the President would receive the quote from David to avoid any risk of David inadvertently being involved. David fully recused himself from all discussion on the poll and quotes received etc.
Discussion: Views were expressed by Dave Moskovitz, Rick Shera and Michael Wallmannsberger. Dave M forwarded to the Committee the IoD Best Practices concerning the issue of "Providing Business or other Professional Services to your company" for New Zealand Directors. The Committee determined that we see no need to put in place more stringent practices than those observed in the commercial world concerning Boards' of Directors. It is far better to be able to take advantage of expertise wherever it may lie - if that be with a Council member then so be it. What is important is for the organisation to have policy and process in place so that such activity is both disinfected by disclosure and will stand up to robust scrutiny. In other words, there must not only be a lack of any bias but INZ must be able to show a lack of bias by being able to point to objective benchmarks by which any decision has been made. So we consider it would only disadvantage the Society should we determine to ban all such activities when the Society has Councillors or Members who are determined to be the best for the work at hand. We do consider it to be necessary to err on the side of excessive prudence in cases where financial advantage goes to a Member, in ensuring full transparency to protect both the contracting party and the Society and this is even more important when the Member is elected to Council.
I include "Members" because the Constitution has a Clause on pecuniary interest. The section of relevance:
15. PECUNIARY PROFIT
No Member or person associated with a Member of the Society shall derive any income, benefit, or advantage from the Society where that person can materially influence the payment of the income, benefit or advantage except where the income, benefit or advantage is derived from:
a. Professional services to the Society rendered in the course of business charged at no greater rate than current market rates; or."
The clause is applicable to all Members and neither the Constitution nor the Bylaws make any additional distinction for Councillors (who must of course be Members).
For clarification both the President and myself were satisfied that the quote presented by David was a fair market price for the work, and particularly since there was a substantial reduction taking into account the fact that the questions were already constructed prior to the quote being formulated. We were also satisfied that David had behaved absolutely correctly in removing himself completely from all participation or discussion on any issue surrounding the poll.
The Committee is satisfied that the procedures followed best practice guidelines and that all parties behaved correctly.
This issue has revolved around a professional commercial contracting arrangement and is not related to other activities that might attract payment, for example as honorarium. Within this framework the Committee recommend that:
1. We observe proper protocol around the person bidding for a contract, i.e. they must be excluded from discussion and voting on all matters concerning awarding the contract, we do not find a need to extend the requirements to any additional levels of separation (including temporary suspension of membership of Council).
2. To ensure transparency, the affirmation of contract should be by Council vote. This to be in all instances regardless of contract size etc., and not e.g. limited to the Executive Committee.
3. Where the contracts are of a substantial size, it would be prudent to obtain competing quotes/tender responses if only to benchmark the Councillor related one. Further, where the contract is very significant or long term it would be prudent for Council to consider whether to obtain additional approval from Members (and the contractor and associated parties are barred from participating in any vote).
4. That this report be accepted.
