Is the appointment of the new Director valid?

[nakedadmin]

In the media release Jim Dickson says:

Consistent with the Constitution, which enables us to appoint a director in circumstances such as these, I can advise that Tim Youngberry has been appointed to the Board, until 30 September.

However the constitution says:

(b) The continuing Directors may act notwithstanding any vacancy in their number, provided that not less than 6 Directors (excluding External
Directors) continue in office. If there are less than 6 Directors continuing in office, the Board must not act except in emergencies, to appoint Directors up to the minimum of 6 Directors or to call and arrange to hold a meeting of Members.

So with less that 6 Directors they must no act. Except that they can call an EGM, which they did not do. Or:

In the case of an emergency they can appoint Directors up to the minimum of 6. So the question arises is this an emergency? I can see how it may be an emergency for the Directors personally, in that they are being investigated by ASIC etc. but is it an emergency for CPA Australia?

Emergency is not a defined term of the constitution. Here are a couple definitions:

https://en.oxforddictionaries.com/definition/emergency

a serious, unexpected, and often dangerous situation requiring immediate action.

https://www.merriam-webster.com/dictionary/emergency

an unforeseen combination of circumstances or the resulting state that calls for immediate action

So there are basically 2 elements:
1. A serious situation
2. Requires immediate action

Now the constitution does say/imply in that above clause that having less that 6 Directors is not by itself an emergency.

So the questions for the board are:
1. What is the serious situation?
2. What is the immediate action being undertaken?

I don't accept that the review is the immediate action as the review is only a recommendation of what action should be taken. I can't see how a review that may take many months to complete and may recommend no action at all amounts to immediate action.

A comment on the serious situation aspect. I know they have less that 6 Directors and their credibility is shot. But the action taken which is to start a long winded review process does not immediately address that and may not address it at all. So what is the serious situation.

My view is that the appointment was not constitutional.

[brooding]

If we read the statement of Jim Dickson on the 16th, he does not himself think there is an emergency. "Nothing to see here" is basically what he said. But then I'm not sure why if there is nothing to see here, they would then launch a "fiercely independent" inquiry...

Given Dickson expressed complete confidence in the CEO and that he was carrying out his duties according to the board's directions, I'm not sure how he can make out what the emergency is...

Are there any lawyers in the room who can move this forward?

I believe that momentum is upon us and we must pursue this matter.

[nakedadmin]

Some quotes from the announcement:

My clear message to our directors was that they needed to prioritise their families and careers, and that it would be perfectly understandable if they needed to resign.

I formally advise that directors Deborah Ong, Jennifer Lang and Martin Hourigan have stepped down from the Board.

Yep that's what I expect of our Directors when the organisation is in crisis. It sounds almost like he nudged them out. Or empowered them to leave as Alex would say.

We are determined that the protracted campaign by the media and some small elements of our membership will not detract from our mission to represent and support members. To that end, we will have these issues examined independently.

I'm reading this as we are having a review to because we want to keep doing the exact same thing as we are already doing. Good thing they are approaching this "independent" review with an open mind, NOT.

The review will be fiercely independent. It will have all the resources it needs to do its work and the review team will operate independent of the executive, reporting directly to me.

So they say independent of the executive, which has been widely lampooned so I won't go into that here. But it's not even claimed to be independent of the Directors. And they are going to report to Jim. I don't think people see the remaining Directors as being independent of the executive as well.

Also the Directors actions/inactions are the subject of a lot of claims. In fact Alex's best defence is that the Directors approved that course of action and it's a good defence to as he technically reports to the Directors. So if the review is only into the executive it would be difficult for it to find fault.

I don't think there is much about an emergency in the announcement: https://www.cpaaustralia.com.au/media/b ... nouncement

[Eric Nacpa]

The split has happened despite a majority leaving (shame) the board and ceo are now as one.

Ceos package or severance are secure. Members pay.

What a mess.

[Stomper]

Former CPA divisional vice president for the ACT, Tim Youngberry, has been appointed to the board until 30 September. Mr Dickson said this is consistent with CPA Australia’s constitution, which enables the board to appoint a director in “circumstances such as these.”

60 (b) The continuing Directors may act notwithstanding any vacancy in their
number, provided that not less than 6 Directors (excluding External Directors) continue in office. If there are less than 6 Directors continuing in office, the Board must not act except in emergencies, to appoint Directors
up to the minimum of 6 Directors or to call and arrange to hold a meeting of Members.

Personally I do not believe the Directors can rely on this article to ignore

Directors
44. Appointment of Directors
(a) The Board shall be appointed by the Representative Council and shall
consist of a maximum of 12 Directors, such Directors being:
(i) up to 10 persons who are Members; and
(ii) up to 2 persons who are neither a Member nor an employee of the
Company.

In my opinion the only time the Board could appoint a director is where there is an "emergency" not when there are less than 6 directors.

Otherwise article 60(b) would have read...

If there are less than 6 Directors continuing in office, the Board must not act except, to appoint Directors up to the minimum of 6 Directors or to call and arrange to hold a meeting of Members

So my question to Mr Dickson is what "emergency" was is place to require the Board to enact article 60 (b) rather than seek new Directors per article 44?

Is Mr Youngberry's appointment constitutionally valid? I suggest not!!!!

What the Board should have done is call on the Representative Council to appoint new Directors in accordance with clause 44.

[brooding]

How do we proceed to challenge this?
Surely we can now seek help from ASIC & the Courts?

We must act swiftly before more damage is done!!

[Chris Catto]

There are some serious issues at play for CPA Australia.

Should we just stop tip toeing around and request a court to call a meeting?

CORPORATIONS ACT 2001 - SECT 249G

Calling of meetings of members by the Court
(1) The Court may order a meeting of the company's members to be called if it is impracticable to call the meeting in any other way.

(2) The Court may make the order on application by:

(a) any director; or

(b) any member who would be entitled to vote at the meeting.

Note: For the directions the Court may give for calling, holding or conducting a meeting it has ordered be called, see section 1319.

[chuck_meister]

How do we proceed to challenge this?
Surely we can now seek help from ASIC & the Courts?

We must act swiftly before more damage is done!!

Have a read of this topic.
Also there have been discusions regarding sections of the corporations act, such as the ones around directors duties and oppressive conduct. My understanding is Brett is planning to meet a lawyer who specialises in member remedies.


http://cpamembers.org/viewtopic.php?f=15&t=307

[JWheldon]

60 (b) The continuing Directors may act notwithstanding any vacancy in their
number, provided that not less than 6 Directors (excluding External Directors) continue in office. If there are less than 6 Directors continuing in office, the Board must not act except in emergencies, to appoint Directors
up to the minimum of 6 Directors or to call and arrange to hold a meeting of Members.

I would suggest that the section enables the board to determine what an emergency is, given the CPA Australia constitution does define or refer to another section within the CPA Constitution to detail what an emergency is. Given the resignation of 7 directors, the remaining directors would have concluded that an emergency had arisen and thus relying upon the section, which provided them with the power to appoint another director.

[nakedadmin]

Hi JWheldon,

The constitution being a contract between the members and the Directors, I'd suggest one party cannot simply interpret a word however they like. That does not happen with other contracts. Not being a defined term we need to look to the ordinary meaning. I'm not a lawyer by they way.

[Chris Catto]

I suspect the Board Directors have failed the "Reasonable Person Test".

When 7 of the 12 Directors resign withing 3 weeks including the original Chairman over a serious issue of governance, a reasonable person would seek a mandate to continue to govern from the members. Or at least seek approval from the members on the issue that has led to 7 Directors resigning.

Instead the remaining Board Members have chosen to continue their governance by using an undefined word "emergency".

I would interpret the word "emergency" to be operative in the case such as Sundance Resources where 6 Directors were killed in a plane crash.

An emergency is not operative when there is a conflict on the Board on a core governance issue. A material split of directors on a governance issue needs to be put to the members for approval.

For their sake I hope they have thought this through, there is the potential that the 5 remaining Directors may have to put their argument to a court one day. CPA Australia v Former Directors & Executives (!)

[nakedadmin]

An emergency is not operative when there is a conflict on the Board on a core governance issue. A material split of directors on a governance issue needs to be put to the members for approval.

Exactly this is entirely caused by the inability of the Directors as a group to govern the organisation. I don't accept that the media caused this. People on $11,000 per meeting should be able to handle it. Not to mention there would be less coverage if they'd comply with the Corporations Act.

Also I think the appointment of this new Director may have been considered before the other Directors resigned. I mean would Jim have encouraged the Directors to prioritise their family and career (other career) if he did not have a solution lined up?

[Time4Change]

we all know what is left from the board work alongside the CEO and exec. Even 7 directors resigned, CPA is ignoring members, where we are pushed in the corner. We are members. What triggered the directors to resigned. What triggered the publicity. What triggered the issues. The board ignored all these.

The board at the start email all members when Brett asked and got approved for the members register yet the blamed Brett for whatever reasons. 7 directors resigned non of the board or chairman has email and inform members. Are we for real.

+1 with Chris to request a court to call a meeting

[olennie]

We should not ask the court for a meeting of the council, unless we are sure of the outcome.

[The Nude CPA]

Should we just stop tip toeing around and request a court to call a meeting?

My initial reaction was yes, but it might be best to ensure more/all members are aware of the issues first.

Would also be prudent to first have a resolution drawn up ready to go out with the meeting notice.

[Stomper]

It looks like we are not alone in our view that the appointment is unconstitutional....

"While the [CPA's] statement advises that the appointment of director Youngberry is consistent with the constitution, it does not appear clear from the constitution that the appointment has legal standing, as the constitution states that 'the board shall be appointed by the Representative Council'," Mr Sewell said

http://www.afr.com/business/accounting/ ... 618-gwtbv5

[antiwarclan]

Whether the appointment of Mr. Youngberry is legal or not, is not our decision to make. I am glad to know that Brett and the admin team has engaged Holding Redlich on this issue. So let see what do the lawyers say.

Also CPA has members all over the world and not all members are aware of this issue. I am a member of the CPA Chinese accountants group and members in China and south east asia has no idea about what happening in CPA. However I have share this website to them, hopefully they are allowed to see this website in China, there are restriction in which website Chinese nationals are allowed to surf in China.

Nevertheless, an emergency or out of session members meeting or council election is required to get rip of all these rotten apples and bar them from the profession.

[nakedadmin]

I am a member of the CPA Chinese accountants group and members in China and south east asia has no idea about what happening in CPA.

Please share and if anyone wants to help build support in the Asian divisions that would be great.

[antiwarclan]

Nakedadmin, I did. Initially there were alot of discussions about quiting CPA. However there were some positive feedback as well such as calling for members meeting.

[Uncle_Fred]

I have been down this path with a medium size ASX listed company who clearly breached its constitution to appoint a favoured director and then failed to confirm at the next AGM or offer renewal by rotation. ASIC didn't care, ASX didn't care. So don't look to them for enforcement of the regulations.

Members need to ante up the dollars to fight CPA Australia exec. I for one offer to put up some cash if others will contribute. We need to get an injunction and call a meeting of members to wipe the exec and Board.