Classic 2CV Racing Club Ltd

Classic 2CV Racing Club Ltd Forum => Announcements => Topic started by: coxm on September 22, 2016, 13:17:09



Title: Chairman's letter to the members following the board on 20th Sept, 2016
Post by: coxm on September 22, 2016, 13:17:09
                                  
The Classic 2CV Racing Club Limited
(Incorporated in England and Wales under the Companies Act 2006 with registered number 6664407)

22nd September, 2016


Dear Classic 2CV Racing Club Member,

I am writing to you to report on the board meeting held on 20th September, the minutes of which will be published on the forum as soon as they have been approved.  Four visitors attended the entire meeting:  Alec Graham, Chris Yates, Maria Cooke and Steve Walford.

As I covered in my last letter to members, the board decided to rebate £250 to each 2CV entry in the 24hr, to reflect the eventual financial success of the race; and that this is the Classic 2CV Racing Club, so any benefits should accrue to 2CVs.  The board has also created a £10,000 fund aimed at getting new 602cc entries to the series and the 24hr.  This had been in discussion since the last board meeting, but partly came about through a suggestion by Pete Sparrow; and a separate one from Alec Graham, so thank you to both of those two for their input.  The fund will operate on a case-by-case basis, but its principle target is to get unused cars out of the garage and racing again.

Secondly, the Board established a Sporting Committee, which has the same role for sporting regulations as the Technical Committee does for technical regulations.  Historically, there has been no process or forum, other than the Board, for sporting regulation proposals.  The Board also adopted written terms of reference for both committees, which will be published on the forum shortly:  thank you to Louis for drafting the Technical Committee terms of reference.  We shall appoint the chairman and members of the Sporting Committee shortly:  please let me know if you would like to join.

The majority of the board was spent on an issue that seems to be causing a lot of misunderstanding and furore.   I apologise in advance that this is an arcane and dry area; and I would encourage you, if you have questions, to direct them to me.  For the rest of this letter it is necessary to distinguish between the Club as a legal entity; and the Company as a legal entity.  This may seem a bizarre distinction, but is important.

In 2008, the Club voted to incorporate its activities so as to protect members from the unlimited liability that we all face, if we organize the racing and social activities through a club.  Prior to that incorporation, if something untoward happened on or off the circuit, the victim could sue the club for compensation and each member would be personally liable on an unlimited basis.  By changing so that everything was organised through a company, the intention was that the victim could only sue the company, and each memberís potential liability is limited to £1.

Not only was that the right thing to do; but the club members also approved it.  Unfortunately, while the intention was correct, what was actually done did not achieve what the members voted for.  At this stage, I can only comment on what is in place and what has been done; not why, who or how?  We need to rectify the situation to achieve what the members voted for, rather than look back and question or try to apportion blame.  There are three main problems.

1.   The Clubís Rules

The Club Rules mimicked very closely what is in the Memorandum and Articles of Association of the Company.  
ē   The objects are the promotion of 2CV racing and various associated activities
ē   A board, chairman, technical committee, AGM, EGM process and all the administration of a company is covered
ē   They establish the process of membersí proposals
However, in order to demonstrate that it is not involved in the activities of the Company, the Club should not do anything except collect membership fees and pass them on to the Company.

2.   The Companyís Articles

Following the Clubís vote to incorporate, a number of things should have taken place that didnít; the most important of which was the adoption of the Companyís Memorandum and Articles of Association at a General Meeting.  As a result, none of the rules in those articles are effective, so until new articles are adopted, the board has no constraints, all forms of voting are allowed, and so on, which is a highly undesirable situation.

Separately, the intended Articles are badly drafted in a number of areas, leaving conflicts or holes.  For example, two different articles conflict on the subject of voting rights.  I could give many more examples to anyone interested.

3.   Governance / Procedure

The Companies Act (or the Articles) sets out strict procedures for the notice periods, voting and functioning of AGMs and EGMs.  Because of the confusion between the Club and the Company, these have not been followed, and it is very unclear that the AGMs that have been held have been those of the Company.  This means that all the resolutions that we think have been passed for the last 8 years have no effect.

The consequence of these problems is that it would be relatively easy, for anyone who wished to, to argue that the Club is still involved in running races, organising social events and all the other activities that we undertake.

Why does this matter?  Personally, I donít want to be liable for whatever activities we get up to, and I donít imagine you do either.  In some ways more importantly, the members have already decided to incorporate the activities of the club; and that hasnít happened properly, so we need to fix it; so that members are no longer facing an unlimited liability on anything that goes wrong.

What do we need to do about it?  The first point to make here is that none of the steps will have any material impact on the way the club is run; however the forum in which the members take decisions will change in some cases; and the main thing that members lose is the liability that they currently face.   I have had to spend considerable time with lawyers to understand fully the issues; and to make sure that what is being proposed deals fully with the problems we all face.

The first and most important step is to change the Club Rules.   The Club Rules can be changed by the Board of the Company, which unanimously elected so to do with immediate effect.  The new rules are now available on the forum; and are attached to this letter.  They will also be the subject of a membersí vote at the Club AGM on 19th November.  The Board elected to change the rules with immediate effect for two reasons:  firstly, everything which was in the old Club Rules is either covered in the Articles (with one exception which will be added to the new Articles); or in the new written terms of reference for the Sporting and Technical Committees; secondly, as the Board was now aware of the liability issues, if it did not act immediately to protect members, and the worst were to happen, it could have been accused of negligence; lastly, the members will have the ability to vote on this matter, so no one would be deprived of a say.

The second step is for the Company to adopt its own articles, which need some tidying up beforehand.  The board has authorised paying for legal advice on this, so that we can be sure to get it right this time.  The revised articles will be sent to all members with the various AGM notices no later than 21st October; and we will also publish them on the forum, so that all members have plenty of time to read them and to ask any questions prior to the AGM.  The revised articles will need 75% of the members voting to support them.   If anyone wishes to be involved in this process, please let me know.  This step is to achieve two things:  so that the rules we wanted are put in place; and to limit what the board can do.

The final step, and this is based on clear legal advice, is that we need to change who votes on the Technical Regulations; we also need to establish the right group to vote on the Sporting Regulations.  Because we have held meetings where it has been very unclear what sort of AGM it was, we need to create a clear distance from the past in order to avoid any accusation that the Club (ie its members) is involved in the Companyís activities.  The Technical Regulations will be voted on by the teams; defined as cars which raced in the sprint series or 24-hour race in the season leading up to the AGM.  Each car will have one vote.  The Sporting Regulations will be voted on jointly by the Teams (as above) and Drivers that are racing members, who raced in the sprint series or 24-hour race in the season leading up to the AGM.  One vote per driver.    

This clearly raises the issue of how a member who is not a car owner or driver can have a role in the Technical and Sporting Regulations; and it has to be through the relevant committee.  70% of the teams already partake in the Technical Committee, which allows full debate of any issues and the time to undertake any analysis needed.  Input into both committees is always welcome; and they effectively take over from the AGM as the right forum for debate on such matters.  This step is to ensure that the Club cannot be argued to be involved in the racing activities and ensure that membersí liability is limited.

One final point I would like to cover is that of voting, which I recognise is a contentious issue.  As the Company has not adopted any articles, all forms of voting, including proxy votes, are acceptable under company law at the Company AGM in November, where we vote on directors, accounts and, in this case, the new articles.  There is nothing we can do about this as a matter of law; however, the new Articles will clearly remove proxy voting as has been our practice.  This does not affect the Club AGM or the voting on the Sporting and Technical Regulations, in all of which we can be governed by practice, so vote on a show of hands.  I recognise that this is not what we have done in the past, nor wish to do; but in the case of the Company, we are bound by law.

I hope that this clarifies what the board has been trying to do over the last weeks.  To be absolutely clear, we have to put these changes into place to effect what members voted for in 2008, so that we all individually carry no more than £1 liability on behalf of the racing club: with the old rules each of us risked an unlimited liability. The changes are structured so that as little as possible changes from how it is now, the members will continue to determine all the same items.

You will receive a further letter from me on or before the 21st October convening the various meetings on 19th November before the dinner dance, which will explain what meetings we will have and will give the background on what we will be voting on, including the new Articles.

There has been a lot of work involved in this, and a lot remains to be done before the AGM.  If you have questions or concerns on any of this, please let me know; or, if you have any concerns at any time regarding the club, do not hesitate to write to board@2cvracing.org.uk; and if you have the time and inclination to help, that would be most welcome.



Yours

Meyrick Cox
Chairman

[edited to include the attachment. CY]