Revised draft charter proposed for 2010 merger vote

[actuary21c]

Members may not be aware (because no email has been sent out about this), but information about the revised new charter proposed for the revised merger package has recently appeared on the merger microsite at http://www.actuarialmerger.com/ShowNews.html?newsid=53

The important point here is whether members' rights are still (as they undoubtedly were under the previous failed July 2009 proposed charter, see http://www.actuary21c.com/?p=517 and related posts) being significantly reduced.

More on this soon.

[campbell]

Could you tell us non-UK people here at the AO what you think the main sticking point for people last year was?

[DW Simpson]

Originally Posted by campbell

Could you tell us non-UK people here at the AO what you think the main sticking point for people last year was?

http://www.actuarialoutpost.com/actu...d.php?t=175582

[actuary21c]

Claude is correct. A very short list of reasons why the 2009 merger plain failed is, in my opinion:
- a poor choice of name (Chartered Actuarial Profession), with a very unfortunate set of professional letters (FCAP)
- an attempt to impose a new charter with a significant "power grab" from members in favour of Councils and an unelected Management Body/ Chief Executive
- overall, a complete lack of proper consultation of members about key details such as the name and proposed new charter, and also an attempt to steamroller Councils' proposals through by a one-sided campaign.

I very much hope that any revised proposal put forward in 2010 will be much better, and will not repeat similar mistakes.

[actuary21c]

As of today, 18 Feb 2010, so far the current "consultation re governance documents" process has, on any objective analysis, FAILED.

Why do I say that?

Because the current feedback document, http://www.actuarialmerger.com/pdf/F...k_document.pdf seems to not only ignore several of the key criticisms made by members since June 2009, but seems to contain several statements which are at worst false, or at best, are so unclear that they look likely to fail the communications requirement under the Actuaries' Code:

The document is not signed, but I understand that the individuals who were most closely involved in supervising the "consultation re governance documents" process were: Andrew Chamberlain (Institute Council), Alan Watson (Faculty Council) and Caroline Instance (Chief Executive).
I invite them to either clarify the following, or if they were not responsible for the document, to explain who was.

From the document page 1 (the bold emphasis is mine)

Most of the concerns expressed, in relation to the document rather than just the concept of merger, related to a perceived shift in the balance of power between the Council and the membership or between the Council, as the central governing body, and the other parts of the organisation (committees and staff) to which the Council has to delegate responsibilities in order for the organisation to operate. As no change in the overall balance had been intended the documents have been modified to make this clear

1. The document claims that the shift in balance of power was only "perceived", but no answer has ever been received from Councils to the clear arguments made by David Wilkie last year as to how the 2009 draft charter reduced members' rights. It is not good enough to ignore such criticisms and then pretend, without answering them, that somehow they weren't valid and that therefore the reduction in members' rights was only "perceived".

2. Similarly, it is not good enough to claim that change in the balance of power had been intended: if so, why did Councils not only fail to answer the concerns raised last year by David, but also either to correct the charter at the time, or to go on record as saying that they would do so soon after the merger vote? (Update 19 Feb 2010: also, why does the latest draft still contain hidden power-grabs by Council and President?)

Secondly, from the bottom of page 1 and the top of page 2 (again the bold emphasis is mine):

• The Charter can only be changed, as now, if the Council propose such a change to members.
• The requirement for three-fourths of the Council to agree before proposing a Charter or Bye-law amendment to the members is to ensure strong support for the change within the leadership. Once a matter is put to the vote, it is the vote of the members which counts and the votes of individual Council members will be included in that process on the same basis as any other member.
• The Regulations have been divided into Rules and Regulations. Rules will cover matters on which there needs to be a membership vote before change. Regulations can be changed by the Council alone.
• In addition to the Council proposing Bye-law changes, the ability has been given for members to initiate a Bye-law change through a Special General Meeting (SGM). This is an enhancement of member-power as current arrangements only require the Councils to take strong cognisance of resolutions passed at an SGM.

3. The first statement ("The Charter can only be changed, as now, if the Council propose such a change to members") seems to be completely false. At present, Institute members can requisition a Special General Meeting at which Resolutions proposing changes to the Charter can be passed by a majority of 3/4 or more of those members voting. Similarly, members can change the Bye-Laws via Resolutions passed at an SGM by a majority of 2/3 or more of those voting.

4. The next statement follows what seems to be a completely false statement by introducing, without drawing attention to the significant weakening of members' rights involved (and therefore in what seems to be a very underhand way), a completely new requirement, namely that Council should have a veto on changes to the Charter or Bye-Laws, in that 3/4 or more of ALL Council members (not just those voting) have to agree before any such change can be passed.

5. Re "Regulations can be changed by the Council alone": this is a new development, which is a further weakening of members' rights (again not drawn attention to, therefore underhand). This is also illogical, in that Regulations would be the lowest level of governance rule, and therefore could be overruled by a member-initiated Bye-Law or Charter change.

6. The last bullet point seems again, in the absence of an explanatory statement, to be totally disingenous. Contrary to what is stated, members already seem to have the right to call an SGM to amend Bye-Law (or indeed Charter) changes, see 3 above. Furthermore the statement "current arrangements only require the Councils to take strong cognisance of resolutions passed at an SGM" seems false: where is this stated in the current governing documents?

Two further obvious reductions in members' rights are (from the current "clean exposure draft" available at http://actuarialmerger.com/pdf/chart...st_clean.pdf):

From Bye-Law 11:

11. The Council may remove any member of the Council if:
■ in the reasonable opinion of the Council the member has acted in a way that is damaging to the interests of the Institute and Faculty of Actuaries, or
■ the member has failed to carry out the duties of a member of the Council for a period of six months.
Removal of a member of the Council requires at least three-fourths of the members of the Council to vote in favour. A member of the Council removed in this way is immediately eligible for election to the Council.

This is new relative to the existing governance documents of the Institute and Faculty, and represents a further significant reduction in members' rights for the following reason. If a minority of members were to elect to Council a member who represented their views, there would be little to stop a majority of other Council members from arguing for that Council member's removal, on the grounds that the member's public representation of the views on which he/she was elected was "damaging to the interests" of the body as a whole, simply because such opposition was likely to prevent a policy being put to members for a vote from clearing a required voting hurdle. The new proposed bye-law could easily be abused by a majority of Council members to override the democratic rights of a minority of members by disenfranchising them.

Bye-laws 55 and 56:

55. If a requisition signed (including electronically) by at least 50 members entitled to vote requesting a general meeting is delivered to the Institute and Faculty of Actuaries for the attention of the President, such a meeting shall (subject to Bye-law 56 below) be convened and be referred to as a Special General Meeting (SGM). An SGM shall be held within 49 days of the request being received at a date, time and location chosen by the President or anyone else delegated by the President for that purpose and shall be subject to the Rules relating to general meetings.
56. The requisition must contain the wording of any specific Motion to be put to a vote of the membership. If it appears to the President or anyone else delegated by the President for that purpose that any resulting Resolution is not capable of implementation he or she may require its amendment or decline to accept it.

The two new bye-laws clearly reduce members' rights because at present, requisitions only need to be signed by 10 members, there is no current equivalent of Bye-law 56 (which seems both unnecessary [because if something cannot be implemented, it simply won't be] and open to abuse [in the event of a dispute as to whether a Resolution is capable of implementation or not, no provision has been added to show how such a dispute could be resolved reasonably]).

There may well be further reductions in members' rights, but there seems little point in examining the draft charter further, instead, it should simply be rejected until those proposing the new charter can explain how, contrary to their claims, members' rights are NOT being rejected.

Another way in which the consultation process can be said to have FAILED so far is that the feedback document takes no account of the detailed points made by members in pages 23-65, e.g. on page 4, the detailed response shown to Question 2 states that there were 5 substantive responses to this question and shows these, but none of the responses from pages 23-65 are included! The same applies to other questions.

Over to the authors of the current draft charter to explain please.

PS Summary of the key existing rights for members under the existing governing documents

Under the existing Institute and Faculty governing documents, although of course I am not a lawyer, it seems clear that members can effect changes even if Councils disagree:
- for the Institute, members can change the Charter via a 75% majority at a member requisitioned SGM, or the Bye-Laws via a two-thirds majority at such an SGM (see S.Ch5 and S.Ch4 on page 22 of http://www.actuaries.org.uk/__data/a...malgamated.pdf respectively)
- for the Faculty, members can change the Charter via a two-thirds majority at a member requisitioned SGM, or the Rules and Bye-Laws via a simple majority at such an SGM (see para 2 Page 4 of http://www.actuaries.org.uk/__data/a...ac_charter.pdf re the Charter, and Rule 54 [allowing members the right to change Rules], + paragraphs 11 [Council is “subject to the control of the Faculty”, which is defined in Rule 1 as the members], 12, 21, 22A (g) which taken together imply that members can direct Council via an SGM to introduce or amend specific Bye-Laws, from http://www.actuaries.org.uk/__data/a...4331/rules.pdf. Note also that the Bye-Laws are the lowest level for the Faculty, and so members could introduce a Rule to achieve anything that they wished to do and that would override any Bye-Law.)

[actuary21c]

(proposed new Charter Clause 16)
Introduction of a Veto by Council over any changes that members wish to make to the Charter:



(Charter Clause 14)
Introduction of a Veto by Council over any changes that members wish to make to the Bye-Laws:



(Bye-Law 11)
Ability of a majority on Council to tyrannise a minority who may very well have been elected to represent a minority view:



(Bye-Laws 55 and 56)
Attempt by Council to make it very much more difficult than at present for members to Requisition a Special General Meeting (the current requirement is for 10 signatures, and members have only felt they needed to do this twice in several decades, so why increase the hurdle?):



With regard to the new Presidential Veto PowerGrab, as David Wilkie said last June:

The second sentence of this is superfluous and improper. If a Resolution is in fact not capable of implementation, it will not be implemented, whether it is passed or not, and its passing will have no effect. But as the Regulation is worded, it gives the President or his representative power to decline any Resolution that might be incapable of implementation because Council would refuse to effect it. That is not acceptable. The last sentence of [Bye-Law 56] should be deleted.

What seems worse is that the feedback document on the governance documents consultation pretends that there has been no reduction in members' rights:

[actuary21c]

Commitment by Council not to reduce members' rights

Given the following statement from http://www.actuarialmerger.com/pdf/F...k_document.pdf, referring to the balance of power between members, Councils and management body:

As no change in the overall balance had been intended the documents have been modified to make this clear

Councils will presumably have no objection to remove the current "power-grab" elements that I have drawn attention to (and any others that come to light) in my immediately previous posts on this thread?

Will someone please confirm this urgently on behalf of Councils?

The new Council Veto

One point made to me privately (why wasn't this made clear in the feedback document?) with regard to the hoisting of a veto by Council on any changes that members try to make to the Charter or Byelaws is that the purpose of the veto is to protect the hard-won rights of ex-Faculty members in the new body.

If so, then why are clauses 14 and 16 of the Charter drawn up to give Council a blanket veto?
As far as I can tell (from the time I have been able to devote to this so far), the only clauses that give ex-Faculty members special rights are the Bye-Laws to do with the Scottish Constituency (including its number of members on Council) and with the right to use the letters AFA or FFA.

The relevant draft Bye-Laws seem to be 19 to 23 (about the Scottish Constituency) and 35 and 36 (about AFA and FFA letters respectively). Bye-Law 21 already has an extremely high level of extra protection built-in because of the following wording:

The number of members of the Council for the Scottish constituency cannot be changed from those stated above unless at least three-fourths of the whole number of the members entitled to vote have agreed to such a change at a general meeting arranged by the Council for that purpose

(To get 3/4 of the total membership eligible to vote voting in favour of a change, not just 3/4 of those actually voting, is probably an impossibly high hurdle in practice.)

If the concern is that the other Bye-Laws mentioned above could be changed by a majority of members (e.g. ex-Institute members) soon after the merger was agreed, surely the solution is to either restrict the veto aspect of Charter Clauses 14 (which deals with Bye-Law changes) to those specific Bye-Laws (and remove the Veto from Charter Clause 16 entirely), or to add additional wording to those specific Bye-Laws protecting them from change?

PS I have just received a copy of an email from one of the Council members involved in the drafting of the revised charter, in which it is stated that the intention is indeed not to weaken members' rights, and anything which does so in the revised draft charter is down to drafting errors rather than intentional. I accept this explanation, and look forward to the draft being corrected accordingly in the near future.

[actuary21c]

Am having a rare two way discussion on the official forum (http:/www.actuarialforums.com, login required; in the past, questions I and others have asked there have tended to be largely ignored, so it is very good that responses seem to being provided).

One of the arguments being made (by one of the authors of the revised current draft charter) is that a chartered body has all the powers of a "natural person" and hence that:
1. Chartered bodies have the power to do anything that doesn't contravene its charter, bye-laws, rules and other governing documents.
Therefore,
2. The Council of each body has such powers.

and hence (simply because the governing documents don't say that Councils can't ignore changes passed by members!) that each Council has the power to ignore any
changes to the Charter or Bye-Laws that members request and vote for.

That argument seems very suspect, for the following reasons:
1. step 2 above is flawed: the Chartered Bodies are not their Councils, but instead are their Members. In fact Faculty Rule 1 explicitly says that the Faculty consists of the Members, and Rule 11 states that Faculty Council is subject to the control of the Faculty.

2. It would make a mockery of most of the rest of the governing documentation, since Councils could apparently do practically anything they liked! (Since there are very few "Councils shall not do ..." in the current documents.)

I have asked for this question to be cleared up urgently, as it has a significant impact on what members' current rights are.

[actuary21c]

Originally Posted by actuary21c

If so, then why are clauses 14 and 16 of the Charter drawn up to give Council a blanket veto?

A fellow FIDELIS member has pointed out to me that Clause 15 of the current draft effectively negates the Council Veto with regard to Bye-Laws, but it is still present (in the current draft) with regard to Charter changes.

[actuary21c]

I attended what seems to be a very constructive meeting yesterday at the Institute with one other Fidelis member (David Wilkie) and representatives of both Councils.

As a result, I am very hopeful that many of the criticisms that I (and others) have been making of the revised charter (and other aspects of the process) can be resolved.

I look forward to seeing what arises from the meeting Joint Councils are having today.