Board members – directors and trustees
An overview of the roles and responsibilities of board members
Benefits of being a director or trustee
While occupying a place on a board is a serious undertaking, there are various positive aspects to the role that can help an individual on both a personal and professional basis, including:
- the knowledge that you are contributing to a worthwhile cause – promoting sport and physical activity and bringing its benefits to your community
- building self-confidence
- gaining experience of committee work
- acquiring new skills – personal and professional – through training and information sharing
- the enjoyment to be had from working with a group of individuals from different backgrounds who share a similar passion for sport and for the purpose and impact which your organisation can have
The role is one that can offer considerable satisfaction, challenges and experiences, but it is worth remembering that it can be quite onerous and require a significant time commitment. Careful consideration as to whether you can meet that commitment should be given before taking up a position.
Responsibilities of board members
According to the Code for Sports Governance, the board is ‘collectively responsible for the long-term success of the organisation and exclusively vested with the power to lead it’ (Principle 1).
Broadly, members of the board should provide leadership to their organisation and should contribute to its overall governance and strategic direction. They play an integral role, through their decision making, in developing the organisation’s aims, objectives and goals, in accordance with the governing document, legal obligations and regulatory guidelines.
Board members need to work in partnership with the chief executive, management team and the governance lead to ensure that their decisions are acted upon and the organisation is managed effectively. All, especially the chair, should fully understand the difference between the role the board plays in governing, developing and agreeing the strategic direction of the organisation and that of the senior management team in applying that strategy to day-to-day operations. (For more on the differences between governance, strategy and management please refer to section 1 of the knowledge base – introduction to sports governance.)
Board members should scrutinise the performance of the management in meeting agreed goals and objectives and monitor the reporting of performance in key areas. They should satisfy themselves as to the integrity of financial and other information, and that quality, robust controls and systems of risk management are in place. They are responsible for determining appropriate levels of remuneration of staff and have a prime role in appointing, and where necessary removing, senior staff, and in succession planning.
Accountability
As the board are responsible for and liable for the governance and functioning of the organisation, they are accountable in varying degrees to a variety of stakeholders, including: members (where applicable), employees, beneficiaries, customers, suppliers, funders (including Sport England and UK Sport), regulators (e.g. the Charity Commission), and registrars (e.g. Companies House). Close attention must be paid to the governing document to ascertain the type of organisational structure and to the relevant legislation. These may indicate who some of the primary stakeholders might be. However, careful consideration must be given to the range of parties which have a legitimate interest in the organisation.
There is a growing demand within the sports sector and the wider general public for organisations to be open and accountable for their actions and inactions. Principle 3 of the Code for Sports Governance requires that ‘Organisations shall be transparent and accountable, engaging effectively with stakeholders and nurturing internal democracy’. The Charity Governance Code recommends that charities are open in their work unless there is good reason not to be (Principle 7) and that organisations take seriously their responsibility for building public trust and confidence in their work. The board should lead on this.
It could be argued that this is of even greater importance for organisations which receive investment from the public purse, or where particular benefits are derived from their status, such as those available to charities.
Evolving good practice should therefore lead board members to consider the wider implications of the decisions they make and to communicate effectively the formal reasons behind such decisions or actions. Above all else, they must adhere to any legal and regulatory requirements applicable to their organisation’s activities.
Now that we have covered the broad nature of the responsibilities held by directors or trustees, let’s look at some specific tasks of the role, starting with statutory duties and then more operational duties and responsibilities.
Statutory duties
Depending on the structure of the organisation, for example whether it is a company and/or a charity, and what is contained within its governing document, certain duties are defined legally.
| Directors duties (Companies Act 2006 ss. 171-177) | Trustees duties (Charity Commission CC3) |
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SGA says
It is clear that there is a considerable degree of overlap between these two sets of duties. Of course, the board members of some organisations will be both directors and trustees.
It is worth noting the full text of s. 172 of the Companies Act as this indicates the range of stakeholders to which directors may have to give consideration when making decisions:
‘A director of a company must act in the way he considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to –
- a) the likely consequences of any decision in the long term,
- b) the interests of the company’s employees,
- c) the need to foster the company's business relationships with suppliers, customers and others,
- d) the impact of the company's operations on the community and the environment,
- e) the desirability of the company maintaining a reputation for high standards of business conduct, and
- f) the need to act fairly as between members of the company.’
Directors must use their judgement as to which of these factors are most likely to promote the success of the company and the weight to be given to each of them.
From January 2019, directors of ‘large’ companies under the Companies Act 2006, including private and AIM-listed companies, are required to produce a statement in the strategic report describing how they have had regard to the matters set out in s. 172 a)–f) when performing their duties under that section. ‘Large’ is defined as meeting two of the following:
- A turnover greater than £36m net
- A balance sheet total greater than £18m net
- More than 250 employees
Operational duties and responsibilities
The main duties and responsibilities of board members can be grouped under strategy, compliance, performance monitoring and general board activities. Let’s look at each of these now.
Some of the key tasks of board members are to facilitate the development of a strategy for their sports organisation. These can be summarised as:
- develop and agree the strategy – with input from staff, who will implement it – by which the organisation aims to promote its interests or fulfil its purpose
- establish clear objectives to deliver the agreed plans and strategy in accordance with short, medium and long-term plans and regularly review performance against those objectives
- contribute to constructive debate regarding the organisation’s strategic development and any other material and significant issues facing it
- hold to account the chief executive (where one is in place) and the management team for the effective delivery of the organisation’s strategic aims and objectives
- where the organisation is a charity, to promote and develop the charity in order for it to grow and maintain its public benefit, recognising the situation when it may be more appropriate to wind the charity up where there is no longer a need for it to provide the services it does or because the charitable objects are no longer relevant to contemporary social situations
- safeguard the organisation’s property and resources, including its good name and reputation - by ensuring high standards of conduct, rather than by putting reputation ahead of other considerations
- build and maintain close relations between the organisation’s various constituencies and stakeholder groups to promote the effective operation of its activities
- agree an effective communication strategy that includes the needs of all relevant stakeholders
- agree the organisation’s values and ensure that they are reflected in the conduct and activities of the organisation and those who work in and for it
- set the tone for the organisation through leadership, behaviour and performance
Aside from strategy, board members have some more immediate responsibilities around compliance, including:
- ensure that the organisation complies with its governing document, all applicable legislation and regulations including, where applicable:
- company and/or charity law
- health and safety
- employment law
- money laundering and the proceeds of crime
- data protection
- safeguarding
- whistleblowing
- work to achieve the purpose of the organisation
- ensure the solvency and effective and efficient administration of the organisation and its resources, striving for good practice in governance in order to optimise impact and delivery of its objects and strategy
- maintain the fiduciary duty invested in the position, undertaking duties in a way that adds to public confidence and trust in the organisation
- ensure that robust financial and other administrative controls are in place, are regularly reviewed, and that the board is kept fully informed through timely and relevant information
- identify and assess risks and opportunities, determining which are appropriate or desirable, and establish effective risk management mechanisms in order to monitor and mitigate these
- ensure that those working on behalf of the organisation, including, staff, volunteers, contractors, suppliers, fundraisers, etc. abide by the standards which the organisation sets and also by the relevant requirements of legislation
- ensure that there is a transparent, well-publicised and effective mechanism for making and handling complaints
- act as a counter-signatory on cheques (including any electronic transactions) and any applications for funds
- with the assistance of the governance lead, promote the highest standards of corporate governance in compliance with the Code for Sports Governance and other regulatory requirements and good practice, where appropriate
- ensure that proper minutes are kept, recording the deliberations and decisions of the board and any committees
- maintain appropriate records relating to accounts and financial matters and ensure that they are audited/independently examined. This may include accounts being filed at Companies House and/or with the Charity Commission. Presentation of accounts should be in line with the standards required
- take appropriate professional advice in all matters where there may be a material risk to the organisation, or where the board members may be in breach of their duties
- uphold the values of the organisation by example, and ensuring that it promotes equality and diversity for all its stakeholders.
- where the organisation is a charity, ensure that board members do not personally profit from their position (reimbursement of out-of-pocket expenses is a reasonable entitlement) unless relevant permission has been gained from the Charity Commission or the governing document gives express permission
Board members have a responsibility to:
- ensure the effective implementation of board decisions by the chief executive and the senior management team, where appropriate
- ensure a fully effective and appropriate system for the recruitment, appointment and monitoring of the work and activities of the chief executive officer and, where applicable, other members of the senior management team
- ensure that any duties delegated to an executive officer do not impinge on those of the board
- set challenging objectives for improving performance and monitoring performance against those targets
- pay due regard to ensure that any key performance indicators (for performance, finance, commercial activity, etc.) are in alignment with the ethos of the organisation and culture it promotes.
- uphold the highest standards of integrity and probity, adhering to the Nolan Principles and observing the recommended practice of Principle 4 of the Code for Sports Governance, relating to Standards and Conduct
- participate fully in the work of the board, ensuring the collective responsibility of the board members
- attend, and possibly chair, committees and ad hoc meetings of the main board where appropriate
- represent the organisation at functions, meetings and in the wider media, in line with the agreed media strategy
- participate in a board induction, any training and other evaluation identified as an individual and as part of the board or committee
- maintain the board’s commitment to board diversity, renewal and succession management in line with the governing document, the Code for Sports Governance and/or current good practice
- facilitate an individual and board performance appraisal, and attending any additional training highlighted as a result of the evaluation process
- maintain absolute confidentiality about all aspects of the board members’ business, bearing in mind the overriding legal obligations placed upon them
Liability
Liability can be incurred when board members or, in certain circumstances, staff and members have acted illegally, entered into contracts which the organisation can no longer fulfil, or if the organisation faces losses due to a lack of appropriate insurance.
A board is generally seen as a collective or unit. As such, board members are considered to be jointly and severally liable for their actions. This means that where board members are in breach of their responsibilities, each may be personally liable for all or part of an obligation incurred by the organisation.
In unincorporated organisations, contracts are entered into and property held on behalf of the organisation by the members of the board (or whichever term applies, such as ‘management committee’, etc.). This leaves them more susceptible to personal liability. For organisations which are incorporated – such as a company limited by guarantee – liabilities can be met out of the organisation’s assets as long as it can be demonstrated that board members acted reasonably and honestly. Personal liability can still be incurred where board members are in breach of their fiduciary duties or, for example, where wrongful trading was found to have taken place.
Non-executive board members cannot be reasonably expected to have the same detailed knowledge and experience of the organisation’s affairs as executives. However, when determining whether a non-executive board member has breached his or her duty to exercise reasonable care, skill and diligence, a court would consider the steps a reasonably diligent non-executive director or trustee in the same position would have taken to familiarise themselves with the organisation’s business and operations.
It is worth noting that where a board member has special skills such as legal or financial expertise, they may be subject to a higher duty of care by the courts or regulator.
For further details on the role and responsibilities of directors/trustees, check out our tools below.
The role and duties of charity trustees (England & Wales)
Specimen code of conduct for board members
Now that we have a better understanding of the roles and responsibilities of the members of the Board, we can consider if one is eligible for such a position.
