information memorandum re business of … · business of extraordinary general meeting . september...

INFORMATION MEMORANDUM RE BUSINESS OF EXTRAORDINARY GENERAL MEETING September 2013

This Information Memorandum provides further information to assist Members in considering the business to be conducted at the Extraordinary General Meeting to be held on 16 October 2013.

As not all Members will have a close understanding of the Constitutional and operational requirements and systems currently in place, this Information Memorandum:

(a) sets out the existing Constitutional position against the proposed Constitutional amendments; and

(b) provides factual information regarding those current requirements and systems.

Contents

Requisition of Extraordinary General Meeting _____________________________________ 3

Item of business A2: Presidents and Vice Presidents _______________________________ 4

Summary of existing and proposed provisions _______________________________ 4

Background information ___________________________________________________ 4

Item of business A3: The Council _________________________________________________ 7

General Council matters___________________________________________________ 7

Comparison of existing and proposed provisions _______________________ 7

Background information _____________________________________________ 8

Council election matters__________________________________________________ 10

Comparison of existing and proposed provisions ______________________ 10

Background information ____________________________________________ 11

Item of business A4: Recommendation re procedures ____________________________ 13

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Information Memorandum re Business of Extraordinary General Meeting to be held on 16 October 2013 September 2013

(a) Develop a mission statement and submit it for approval by the Members __________________________________________________________ 13

(b) Base resource allocations and future strategic initiatives on the mission statement __________________________________________________ 13

(c) Open committee meetings as much as feasible to attendance by all Institute members _________________________________ 13

(d) Withdraw delegated powers from committees and allow them to organise their own affairs ___________________________________ 14

(e) Permit committee representatives to attend and make recommendations at Council meetings ______________________________ 14

(f) Publish non-confidential records of committees and Council meetings on the Institute website ____________________________________ 15

(g) Allow Council members access to all committee meetings and records ________________________________________________________ 15

(h) Reimburse reasonable costs incurred by Council members in carrying out their roles ______________________________________________ 15

Items of business B3 and B4: Council meetings ___________________________________ 17

Item of business B5: Quorum for general meetings _______________________________ 17

Further information _____________________________________________________________ 17

Annexure A: June 2006 report of the Internal Governance Review Taskforce ______________________________________________________________________ 18

Annexure B: Extract from the final report of the Internal Governance Review Taskforce ______________________________________________________________ 23



Requisition of Extraordinary General Meeting

1. Under clause 20.4 of the Constitution, and section 249D of the Corporations Act 2001 (Cth) (“Corporations Act”), Council is bound to call an Extraordinary General Meeting upon a requisition in writing signed by at least 20 Members specifying the purpose for which the meeting is to be called.

2. On 19 August 2013, a valid requisition was received signed by the following Members (in alphabetical order from left to right):

Peter Carroll Stephen Defina Geoff Dunsford Rosanna Ede

Jonathan Eriksen Ian Ferres Shauna Ferris Dimity Gartzionis

Colin Grenfell Bronwyn Hardy David Liney Andrew Leung

Richard Mitchell Ben Ooi Thomas Purcal Eric Ranson

Ted Rudge John Shepherd Nicholas Stolk Brent Walker

David Watson Jason Yu

3. The requisition specified that the meeting was to be called for “the purposes of receiving a report from Peter Carroll and of considering reforms to the governance and procedures of the Institute of Actuaries of Australia”.

4. The matters which are the subject of the requisition form Items A1, A2, A3 and A4 of the business stipulated in the Notice of the Extraordinary General Meeting.

5. It is noted that item A4 (recommendation re adopting certain procedures) is not a matter properly to be put before a general meeting of members for resolution1 and, as such, the Institute is not required to include it in the notice of the Meeting. However, in the interests of transparency, and without including a resolution, the item has been tabled for reference.

1 See, for example, NRMA Ltd v Parker (1986) 6 NSWLR 517 and Queensland Press Ltd v Academy Investments No 3 Pty Ltd [1988] 2 Qd R 575.



Item of business A2: Presidents and Vice Presidents

Summary of existing and proposed provisions

6. In summary, the current Constitution provides for:

(a) a Vice President to be elected at the last meeting each year by Council from amongst its members. Such person cannot be someone who has served a full year’s term as President in the previous 5 years;

(b) the Vice President takes office from 1 January of the following year and, in the year after, becomes Senior Vice President. In the year after that, the person becomes President; and

(c) a procedure to follow should any of the offices of President, Senior Vice President or Vice President become vacant for any reason.

7. In summary, under the proposed amendments:

(a) all 3 Presidential roles – President, Senior Vice President and Vice President – would be elected each year by those members of Council who were not appointed to fill a casual vacancy on Council;

(b) the election must be held at the first Council meeting in a year (in recent years, generally held in March), but Council may also conduct an election at any other time;

(c) the individuals elected would hold office in accordance with the Constitution and on such other terms as the Council determines from time to time; and

(d) no person could hold office as President for more than 2 years in a row.

Background information

8. As far back as records reveal, when the Institute was first incorporated in 1963, its Memorandum and Articles of Association provided for a President and a President-Elect to be elected by Council at its first meeting held after the Annual General Meeting.



9. In 1993, the Memorandum and Articles of Association were amended to introduce the current system of the Presidential trio.2

10. The role of the President in a professional association is a complex and challenging one. Annexure A to this Information Memorandum is a report given to Council in 2006 by the Internal Governance Taskforce which provides a useful summary of the Presidential role, as well as other background information for Members. As may be surmised by the summary, successful performance in the role (particularly where the incumbent has rarely, if ever, been a board chair previously) involves a learning curve as for any other senior role.

11. The Presidential trio system was devised as a means to:

(a) provide continuity in the governance structure of the Institute so that, for example:

(i) there is consistency in the approach taken to the strategy approved by Council;

(ii) the direction, guidance and support the CEO receives is more likely to facilitate long-term planning of initiatives and strategic implementation. In turn, this assists in minimising the reliance of Council and the profession on the CEO; and

(iii) there is no period where the Institute is without either a President or an incoming President, including for international meetings;

(b) ensure that, to the extent reasonable, corporate memory is preserved across different Councils; and

(c) provide what is considered an appropriate period of time for the learning curve associated with the Presidential role.

12. Finally, it is noted that the Australian corporate governance framework makes very clear that the Presidential trio (as for other Councillors and company directors) are accountable, not to each other or to those Members who voted for them, but to all Members regardless. That is reflected in the legal duties and responsibilities they have (as does any other company director), including to exercise their powers and discharge their duties: (a) with the degree of care

2 For Members’ information:

(a) The Society of Actuaries has a system of President and President Elect, the latter being elected by the members at the annual meeting to serve from the close of that meeting for one year, before automatically becoming President for a further year. The Society’s Board also comprises the Immediate Past President whose responsibility is to serve as the Chair of the Board and preside at all meetings of the Board; and

(b) The Institute and Faculty of Actuaries has a President and President-elect system, the former being appointed, and the latter being elected, by the Council from amongst Fellows and Associates a set period of time before the annual meeting. The Council also comprises the Immediate Past President. It is a matter between the President, the President elect and the Immediate Past President as to who chairs the Council’s meetings.



and diligence that a reasonable person would exercise; and (b) in good faith in the best interests of the company and for a proper purpose.



Item of business A3: The Council

13. For ease, the following tables set out only those aspects where there are material differences between the existing provisions and those proposed. The provisions relating to general Council matters and those relating to Council elections have been split for convenience.

General Council matters

Comparison of existing and proposed provisions

Existing provisions Proposed provisions

Number of Council members

Target of 12 12 (existing members to serve out their terms)

Term of office of elected members of Council where an election is held

4 years The terms of office of newly elected Councillors would be either 3, 2 or 1 years depending on the expiry dates of the continuing Councillors. The proposed amendments would provide for (from the beginning of the calendar year following the election) Council to comprise: (a) no more than 4 Councillors with unexpired terms of 3 years; (b) no more than another 4 Councillors with unexpired terms of 2 years; and (c) the remaining Councillors with unexpired terms of one year

Term of office of elected members of Council where no election is held, because the number of nominees is less than the number of vacancies

4 years 1 year

Term of office of casual vacancy appointees to Council

The unexpired term of the Councillor he or she is replacing

The end of the calendar year in which he or she is appointed

Conditions on which cease to be eligible to remain on Council

A Councillor ceases to be such if s/he: (a) becomes disqualified from

managing corporations under the Corporations Act;

(b) is found to suffer mental illness or mental incapacity under mental

Resignation from Council



Existing provisions Proposed provisions health legislation;

(c) resigns from Council; (d) ceases to be a Member; (e) holds any office of profit under the

Institute; (f) is absent from Council meetings for

five (5) of the previous eight (8) meetings without leave of absence.

Eligibility of Councillors to stand for, and vote on, Presidency

1. Cannot be someone who has served a full year’s term as President in the previous 5 years; and

2. no restrictions in respect of casual vacancy appointees

1. No person could hold office as President for more than 2 years in a row; and

2. Councillors who were appointed to fill a casual vacancy would be ineligible to vote for, or stand for election as, President, Senior Vice President or Vice President


14. The key changes of particular note here are the proposed changes regarding the terms of Councillors and the removal of the current conditions upon which a Councillor ceases to be eligible to remain on Council. Each of these is discussed in turn.

Change of term

15. The current 4 year term was voted in favour at the Extraordinary General Meeting held in March 2008.3 At the time, the rationale was explained in the following terms:

“In late 2005, the [Internal Governance Review] Taskforce was established to consider, in particular, the merits and demerits of changing the Presidential term to two years and to review the size of Council and the term of office for Councillors. The genesis of these questions was the Council workshops on corporate governance held in June and August 2005 and facilitated by Lynn Ralph of Cameron Ralph. …

3 The first election of Councillors for appointment on the basis of four year terms being held later that same year.



In the survey of Members conducted on the Taskforce’s report:

► 6.8% of respondents voted in favour of a two year term for Councillors;

► 59.3% of respondents voted in favour of the existing three year term for Councillors;

► 32.2% of respondents voted in favour of a four year term for Councillors; and

► 1.7% of respondents voted in favour of a five year term for Councillors.

In supporting the Taskforce’s recommendation, Council had regard to the potential benefits mentioned above, that is, that a four year term would:

► provide Councillors with more time to become familiar with the issues of the profession and so contribute more productively to the governance of the profession, with reduced call for volunteer resources; and

► lead to a more stable Council membership, with more consistency in setting the Institute’s strategy and giving leadership to the profession.”

16. For Members’ information, the relevant extract from the final report of the Internal Governance Review Taskforce is included in Annexure B to this Information Memorandum.

17. In 2008, when the Council terms were changed from 3 years to 4 years, it was recognised that vacancies would arise on Council in an uneven pattern while the transition was worked through. The decision made to deal with this was to not fill casual vacancies as they arose; rather, such vacancies would be included as part of the Vacancy Pool to be elected.

Removal of current conditions upon which a Councillor ceases to be eligible to remain on Council

18. As noted above, currently a Councillor ceases to be such if certain circumstances arise in relation to that Councillor (for example, she or he becomes disqualified from managing corporations under the Corporations Act).

19. Similar restrictions have been in place since the Institute was incorporated in 1963 and are intended to guard against the possibility that the integrity or probity of Council might otherwise be impeached.



Council election matters

Comparison of existing and proposed provisions


Number of vacancies to be filled at election

Determined by adding the number of retiring Councillors and any casual vacancies which have not otherwise been filled. The number of vacancies is not determined until after the election of the Vice President at the last Council meeting in the year, as the person so elected may otherwise have counted as one of the retiring Councillors

At least 4 members of Council to commence or continue in office

Eligibility restrictions to stand for election to Council

Voting Members other than: 1. retiring Councillors:

(a) whose term is expiring at the end of the year; or

(b) who were appointed to fill a casual vacancy and have served more than 2 years,

cannot stand until the calendar year following the year in which they retire (that is, a 1 year hiatus); and

2. Councillors who resign from office before their term expires cannot stand until 2 calendar years following the year in which they resign (that is, a 2 year hiatus)

Voting Members

Nomination requirements

Candidates must be nominated by 3 Voting Members and must supply their actuarial qualifications (including the year of qualifying as a Fellow)and details of current employment and any other relevant experience and service.

This information must be supplied to Voting Members with the election ballot papers.

No provisions




Returning Officer appointment restrictions

Cannot be a candidate for election Cannot be a member of Council nor a candidate for election

Communications during an election

No provisions Must be no hindrance or restriction to lawful communications among candidates and Voting Members

Voting method at election

Secret ballot using proportional representation

Secret ballot in favour of any number of candidates up to the limit of the number of vacancies

Voting scrutineers

No provision All candidates are entitled to appoint a scrutineer and inspect all the votes cast

Publication of results of election

Names of the successful candidates only published in alphabetical order

Publish a list of the candidates in descending order of the number of votes received. Where 2 or more candidates receive an equal number of votes, their position on the list is determined by lot

Consequences of less candidates nominating for election than vacancies

Candidates declared elected and Council may appoint additional member(s) to fill the remaining vacancies. Such person(s) deemed to have been elected as a Councillor for normal 4 year term

Candidates declared elected for 1 year


Conduct of Council elections generally

20. In addition to the requirements set out in the Constitution, Council has also published rules for the conduct of Council elections. A copy of those rules may be found on the Institute’s website here.4

4 http://www.actuaries.asn.au/Library/Council/2012/CouncilPolicyConductElectionsDec12.pdf


http://www.actuaries.asn.au/Library/Council/2012/CouncilPolicyConductElectionsDec12.pdf

http://www.actuaries.asn.au/Library/Council/2012/CouncilPolicyConductElectionsDec12.pdf


Returning Officer appointments

21. Since 2007, the Institute’s Company Secretary has acted as the Returning Officer for Council elections (previously, this role was undertaken by an Institute Member).

22. As for Councillors (being company directors), the Company Secretary is an officer of the company and has the same duties and responsibilities, including to exercise his or her powers and discharge his or her duties: (a) with the degree of care and diligence that a reasonable person would exercise; and (b) in good faith in the best interests of the company and for a proper purpose.

Voting scrutineers

23. Since 2007, Council elections have been conducted via a secure, third party facility that provides online voting. The system has had overwhelming support from Members to the point where, at the last election in 2012, only 6 postal votes were received out of a total of 896 votes cast.

24. Voting scrutineers have not been utilised (at least since 2007). As the voting facility and counting is managed and verified by an independent third party via an electronic system, scrutineering would require providing access to the entire audit trail of voting, so that the voting would no longer be conducted in secret.

Publication of results of election

25. Since 2007 at least, the results of Council elections have been made known by publishing only the names of the successful candidates in alphabetical order. The reasons for this are to:

(a) accord due respect to unsuccessful candidates by not embarrassing them in any way;

(b) not discourage candidates from nominating through concerns about possible public embarrassment; and

(c) avoid politicising the process. In particular, avoiding a Council in which particular Councillors may perceive that they have a stronger mandate on Council because they attracted more votes than another Councillor. The duty of Councillors is to act in the interests of all Members – not those from their firm, practice area, home state/country etc nor those Members who voted for the particular Councillor.



Item of business A4: Recommendation re procedures

(a) Develop a mission statement and submit it for approval by the Members

26. The Institute currently has a mission statement. The mission statement was last revised in 2007, following recommendations from the Vision 2020 Taskforce. The current Mission Statement is available here.5

(b) Base resource allocations and future strategic initiatives on the mission statement

27. Resource allocations and future strategic initiatives are currently determined by Council with the CEO’s advice and are based on a range of inputs, including:

► the mission statement, vision statement and the objects of the Institute set out in the Constitution;

► Member feedback through surveys and other initiatives;

► recommendations from committees, working groups and taskforces;

► global imperatives through the International Actuarial Association, as well as from competing actuarial associations; and

► business efficiency and effectiveness needs.

(c) Open committee meetings as much as feasible to attendance by all Institute members

28. The Institute currently has 8 Council Committees, 5 Practice Committees and some 70 other committees, working groups and taskforces.

29. Most of these Committees are managed and run by the volunteers themselves and not held on Institute premises.

30. Recent changes agreed by Council require most Committees to advertise when filling vacant positions.6 This is usually done through the weekly Institute Bulletin and, in the case of some Practice Committees, also through the Practice Committee’s newsletter. Council has a policy in place which states that:

5 http://www.actuaries.asn.au/Sitefunctions/Aboutus.aspx

6 The exceptions are the HR & Remuneration Council Committee and the Audit and Risk Council Committee.


http://www.actuaries.asn.au/Sitefunctions/Aboutus.aspx

http://www.actuaries.asn.au/Sitefunctions/Aboutus.aspx


“Regular renewal of the membership of Primary Committees is considered desirable to:

(a) ensure that Primary Committees benefit from re-invigorated participation and thinking;

(b) guard against volunteer fatigue; and

(c) encourage participation in such committees by limiting the volunteer commitment from the outset.

As such, the appointment of members of a Primary Committee is limited to a maximum of three years. By mutual consent, a member of a Primary Committee may be re-appointed for further terms of up to three years each.”

31. Some Committees – such as the HR & Remuneration Council Committee and committees associated with the Disciplinary Scheme – deal with very sensitive and confidential information. Others meet only on an ad hoc basis, as required to deal with particular business (for example, the Nominations Council Committee).

32. All Practice Committees provide regular newsletters to Members covering committee and practice-related business.

(d) Withdraw delegated powers from committees and allow them to organise their own affairs

33. The powers delegated to certain committees:

(a) de-centralise decision-making by spreading such across a number of groups of Members;

(b) capture the expertise of as broad, and as relevant, a range of Members as possible in decision-making processes;

(c) ensure, for example, that there is no duplication of effort by well defining and co-ordinating the roles of Committees; and

(d) allow Council to most effectively manage its time.

34. Within the scope of their delegated powers, committees are free to organise their own affairs.

(e) Permit committee representatives to attend and make recommendations at Council meetings

35. A Councillor is appointed to each Practice Committee to act in a Council liaison role and is in a position to bring forth any matters or recommendations by those committees and, of course, provide Council feedback to the committee.



36. Each Council Committee is comprised of a number of Councillors who are in a position to bring forth any matters or recommendations by those committees.

37. The vast bulk of other committees report either to a Council Committee or Practice Committee and therefore are in a position to feed matters or recommendations through the committee to which they report.

38. Other Committees which report directly to Council – such as the Leadership Committee and the Professional Standards Committee – raise, as a matter of practice, any items they would like to present to Council with the President or the Company Secretary.

(f) Publish non-confidential records of committees and Council meetings on the Institute website

39. As a practical matter, each committee and Council would need to consider what, if any, aspects of their meeting minutes were confidential and provide a “non-confidential” version for publication. Additional HQ/Secretariat resources would be needed to track committee meetings and follow up to receive the relevant minutes, as well as effect publication.

40. The minutes of the General Insurance Practice Committee meetings are currently advertised to members as being available from the Committee’s secretary. Council has indicated that some disclosure of meeting minutes is desirable from all Practice Committees.

41. As noted at paragraph 32 above, all Practice Committees provide regular newsletters to Members covering committee and practice-related business.

(g) Allow Council members access to all committee meetings and records

42. As part of the agenda papers for a Council meeting, Councillors are provided with minutes of all meetings of the Council Committees, the Leadership Committee and the Professional Standards Committee.

43. Apart from the Professional Standards Committee, Councillors sit on one or more of these Committees so that questions can be raised in a Council meeting (or otherwise) if there are any issues arising out of those minutes. Councillors are also free to request further information.

(h) Reimburse reasonable costs incurred by Council members in carrying out their roles

44. A policy for the reimbursement of reasonable costs incurred by Council members in attending Council meetings held outside their home city has been in place for some time.

45. In December 2012, Council also put in place a policy whereby Councillors are entitled to seek independent professional advice at the Institute’s cost and with the President’s prior written approval, for the purposes of the proper



performance of their duties as a director of the Institute. The policy further requires that any such advice obtained is made available to all Councillors, except in cases where a conflict of interest exists.



Items of business B3 and B4: Council meetings

46. Currently, clause 14.2 of the Constitution imposes a requirement for a minimum of not less than 8 days’ notice to be given of a Council meeting. This limits the facilitation of quick and effective decision-making (particularly in the context of a reduced number of regular Council meetings since 2011). The proposal is to reduce the minimum notice period to the more common practice of 48 hours. If a Councillor is not available at short notice, they retain the ability to appoint a proxy in their place.

47. In addition, for the avoidance of doubt, it is proposed to make clear that notices of Council meetings may be given either electronically or in printed form.

Item of business B5: Quorum for general meetings

48. The current requirement in clause 20.14 of the Constitution that there be 12 Voting Members present in person to constitute a quorum has led to a continual struggle in recent years to ensure a quorum for a General Meeting. Members often indicate they are attending, but do not do so. The timing for Annual General Meetings is dependent upon completion of the financial statements of the Institute and statutory requirements, so that it is not always possible to schedule an Annual General Meeting in conjunction with an event where a sufficient number of Members may be present and willing to attend the General Meeting.

49. It is proposed that the quorum requirements be amended to allow persons to be present in person or by proxy (consistent with the requirements for Council meetings contained in clause 14.4 of the Constitution).

Further information

Members seeking further information regarding:

(a) the merits of the proposals or similar substantive issues arising out of the information in this Information Memorandum, are invited to contact a Councillor; or

(b) process aspects associated with the Meeting, are invited to contact the Company Secretary.

END OF INFORMATION MEMORANDUM



Annexure A: June 2006 report of the Internal Governance Review Taskforce

“REPORT TO COUNCIL INTERNAL GOVERNANCE TASK FORCE

Terms of Reference

The Terms of Reference given to the Task Force were:

• Consider the governance issues arising from the Council Workshops conducted in July and August 2005 and the facilitation material prepared and delivered by Lynn Ralph of Cameron Ralph

• Review the President's term of office and specifically to consider the merits and demerits of changing the term of office to 2 years and how best to utilize the term in office.

• Review the implications of any change to the President's term for the Vice President roles

• Review the term of office for Councillors and an effective size for Council for it to be an effective governance body

• Review the terms of reference for Council

• Make recommendations on the above issues

• Review and as necessary make recommendations regarding the delegations of Authority tot [sic] the Executive Committee, CEO and Primary Committees

Introduction

The need for a review grew out of perceived inadequacies in the current system particularly in the practical impact that a one year presidency has on working with a Council which operates on rolling three year terms. Thus any given Councillor will in the course of three years serve under three different Presidents.

The starting point for the task force has been to look at the role of the President and how that might be differently shaped for a two year term and then to look at the consequential changes to Council and other parts of the IAAust governance. Informal input has also been gathered from Presidents of other key actuarial bodies some of whom have a two year term. The general consensus from these Presidents [Institute, Faculty, Canada, South Africa] including Canada which only has a one year term was that two year terms were preferable.

This report presents the interim findings of the task force for initial consideration by Council. The next step if the Council decides to pursue the issue further is to present the findings to the members to obtain their views.



The findings have also been circulated to a number of recent Past Presidents of this Institute to gain their views and insights. Because at the time of completion of this report many of those to who the report was circulated are overseas at the Congress or on other IAA business it has not been possible to include their comments will be covered in the presentation at the Council meeting but have not been received in time for inclusion in the report.

The Current Presidential Role

The Presidency of the IAAust consists of a number of key roles.

Ambassador- representing the profession with government, with other professions and with other actuarial bodies internationally.

Public face -the President is expected to be the public face of the profession.

Chairman/leader - chairing council meetings, providing leadership more broadly to the council and to the wider leadership of the profession such as the chairs of the major committees, and providing guidance and support to the CEO.

Reformer/driver - Most presidents bring some degree of reforming or driving zeal to the role but [as is discussed below] it is likely that the one year term and our tradition of starting the presidential term with a presidential address heavily exaggerates this role.

The Ambassador and Public face roles are key components of the presidential role and there is no question about them remaining The public face role does of course suffer from changing every year since a new face must be introduced each twelve months and this often makes it harder for media to get to feel comfortable with the incumbent. It would not of itself be a reason for contemplating change.

It is the role of the Chairman/ leader that is most impaired by the one year term whilst as suggested above the one year term may be exaggerating the reformer/ driver role and both of these are discussed below.

It [sic] considering the Presidential role it should be borne in mind that the Presidency starts in mid November and almost immediately finds that because of Christmas and summer holidays there is little or no activity on any front until February. It is often not until perhaps five or six months into the presidency the [sic] a President starts to feel "on top of things" despite the two year vice presidency and by nine months in he or she is starting to contemplate the end of the presidency and the IAAust is gearing up for the next president.

The Chairman/leader role is the least easy role to specify. To be effective it requires the President to have and be prepared to spend time with the leaders of the key committees, with the Councillors both individually and as a Council. It requires a great deal of listening rather than talking and lack of time is the greatest enemy of effective listening. It may also be that this role is in conflict with the Reformer/Driver role if time is short.

The final role is that of reformer / driver. As suggested above most Presidents will bring some for of activism or reforming zeal to their role and they would probably



not be good presidents if they did not do so. However it is worth questioning whether our traditions of one year terms and starting that term with a substantial document of the presidents views exaggerates this role perhaps to the detriment of the others.

There is a growing tradition that each President will bring to the table some initiative which marks his or her incumbency. The very act of having to write a presidential address forces the incoming President to think about the IAAust and the profession and to articulate his or her views. The two year Vice Presidency roles provide the incoming President with much opportunity to develop his or her views about needs and opportunities going forward and modern management processes also encourage those entering leadership positions to spell out there vision and objectives.

The problem is that as suggested above there is a very short window of perhaps six months to get these initiatives into place and each President's initiatives are overlaid on top of those of previous Presidents. Given that most major projects undertaking [sic] by the IAAust have perhaps a development and implementation period of three to five years then at any one time the IAAust might be struggling with the accumulated initiatives of the past four or five presidents [with another one waiting in the wings).

And experience shows that even with much better strategic planning processes which have been initiated in recent years the preferences and priorities of each President still means that the agenda is substantially reshaped year on year.

What the presidents of other bodies say

Michael Pomeroy {Institute] Two year Presidency

"Two years as president has one major advantage over one year- it certainly took me several months, maybe nearly six months, to really get "into the swing" of the job and so I welcomed the chance to benefit form that leaning period over the remaining months."

Harvey Brown [Faculty] Two year Presidency

“In my view a two year presidency is most effective. I do not believe that a one year model would give the President sufficient time to make a meaningful difference and deliver on his own agenda before his period of office was over"

Janina Slawski [South Africa] South Africa changed form a one year presidency to a two year presidency only recently

"I think the change from a one year model to a two year model has added significant ability to the ability of the President and Council to achieve change and meet the challenges facing the profession"



Charles McLeod [Canada] One year Presidency [plus one year as Vice President and One year as Past President]

"Having a two year presidency is much more effective than a one year term - but its harder to find good people willing to commit to a two year term."

Conclusion 1

There is a case for a two year presidency which lies largely in reducing the frenetic nature of the one year presidency induced by both the shortness of the term and the surrounding pressures to "leave a mark". The president should focus the Chairman/leader, Ambassador and Public face roles with agendas for change being developed through a good strategic planning process. It may be sensible to change the nature of the Presidential Address perhaps to a shorter delivered address.

Implications to the Vice President Roles

Conclusion 2

If a change was made it would be sensible to limit the Vice President [President elect] role to one year.

The Term of Office for Councillors and the size of Council

From a governance point of view it would be desirable to have a smaller Council with longer terms. Most commercial boards would have between seven and nine members and most directors would expect to remain in office for say six years.

A prescription such as this, of course, clashes with the current practice of having key components [whether geographical or practice area] represented and the general desire to limit the time demands of Council on a group of volunteer Councillors.

Conclusion 3

In our view a reasonable compromise would be to have 10 to 12 Councillors [in addition to the President and a President Elect] elected for four year terms. A smaller council imposes on its members the obligation to govern in the interests of all members rather than to be seen as "representative of a particular group. The time demands on Councillors are not great compared with demands placed on our volunteers for other aspects of the profession and a four year term would give members the opportunity to contribute more during their term as councillors.

Election of the President and Council

The President is currently elected by Councillors from amongst the serving Council members. It is possible this limits the potential candidates for Presidency whilst the election by Council obviously does not give the membership any say in the election



of the president.

All of the other bodies talked to have different models:

Institute [London] - President is elected by Council but the nominee can be a current or past Councillor

Faculty -The Presidential candidate is nominated by the President's Committee to the full Council for approval and then put to the membership at the AGM for election

South Africa - Nominated by President Elect with the advice of Council and then put to membership for election. Other candidates can be nominated

Canada - Candidates come from the membership at large and are elected by the membership

Conclusion 4

The taskforce had a variety of views on this subject but in general agreed that the existing mode - election by the Council from the Council - is accepted by the membership and works and therefore should be retained. However it should be supplemented by an effective nominations committee charged with ensuring that suitable candidates are coming forward both for Presidency and for Council in general.

Graham Rogers Convenor, Internal Governance Task Force

June 2006”



Annexure B: Extract from the final report of the Internal Governance Review Taskforce

“The merits and demerits of a smaller, four year term Council

Modern corporate governance generally favours smaller governing bodies than in the past. In public companies boards of 7 to 9 members would be the norm. This creates a greater expectation on individual board members but gives each member a greater opportunity to participate. It also provides a greater capacity for the board as whole to operate as a cohesive entity.

A smaller Council does reduce the number of candidates available for selection as Vice President and this would need to be overcome by an active and effective nominations process.

The other major argument against a smaller Council is that it will reduce the representative nature of Council. However Council even now is unrepresentative. It does not have any representatives from the one in five members that are outside Australia and often does not have any representation from actuaries outside Sydney or Melbourne or from the smaller practice areas.

It is the view of the Task Force that the Council members should [in line with modern corporate governance] be charged with governing in the interests of the profession as a whole rather than seeing themselves a representative of a particular group. This does not of course detract from the need to seek a broad base of skills and experience in seeking members of Council just as would be the case in a corporate board.

Nevertheless the Task Force thought it would be difficult to operate with too small a Council, and believes that the recommendation of twelve members plus the President is a good compromise.

The advantages of a four year term with up to three Councillors being elected each year are:

► Councillors have more time to become familiar with the issues of the profession and to contribute in an experienced way to the governance

► The Council is a more stable body

► The number of new candidate required in any year is almost halved [ five down to three] putting much less burden on the profession

The conclusion of the Task Force is that the Institute would gain from reducing the number of Council members to twelve but increasing the term of service on Council to four years. In practice this would mean electing up to three Council members each year for a term of four years. The number required might be less than three if a Council member who would normally retire is staying on in a vice presidential position.”


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