Other than our usual statutory bodies, trustees (family or otherwise) and corporates, the law recognizes the existence of a common law universitas as a legal entity with powers to sue and be sued in its own capacity.
Although I have mentioned a trust, I pause to highlight that a trust on its own is not a legal persona – a legal persona is a body that is capable of suing and being sued in its own name.
The basic implication is that such an entity cannot transact in its own name; ordinarily a trust is represented by its trustees in all juristic acts. In this article, I am focusing on a universitas, those entities that are usually established through a constitution – clubs, churches, cooperatives and like entities.
A universitas is typically an organisation that is constituted and set up through a constitution or like document.
In simple terms, it is an entity that has a common law persona but not legally registered or regulated through any written law.
In terms of our common law, a universitas is therefore recognized as a legal entity and persona with capacity to sue and be sued in its own name.
This organisation has a constitution with members agreeing to achieve a common goal which is for the benefit of those members.
Typical in this category are cooperatives, clubs, churches and other membership-based organisations.
Boards are very important in the running of the affairs of a universitas.
The boards and committees are established in terms of the organisation’s constitution or constitutive document.
The constitution usually spells out the types of boards and their roles within the organisation, however, the manner in which these boards operate is identical to many boards of other organisations.
It is critical when setting up boards that the nature and composition of the boards is very strategic.
The ordinary board has a board chairman with or without a prescribed vice chairman, a secretary of the board, a treasurer and other board committee members.
This set up differs from one organisation to the other.
The above setup may be applied to cooperatives, some clubs, ecclesiastical or church set ups to enable the board to have the requisite skills in the board in question.
An organisation’s charter or constitution sets up boards or a board.
It must be clear on what skills set or qualifications are critical in the incumbents to constitute a board.
It is good practice that a constitution must be clear on qualifications required for each position in the board.
Likewise, the constitution of a cooperative, church or club must set out clearly the expectations for a board, and it is from these expectations that the skills set can be easily discerned and stipulated.
The following issues must be clarified in the constitutive document with regards to setting up the boards for a universitas: the type/s of the boards required and their purpose; the powers of the board in running the affairs of the organisation; the tenure of the board in question which is the period for which the board members will be in office before they retire; the relationship of the board to other boards in the organisation and there must also be provision for the conduct of the business of the board through meetings.
It must be specified how the board meets, the nature of the notices for the meeting, the minimum number of board members required at any meeting for the proceedings of the meeting to be considered valid – the quorum. Particular care must be taken when setting up the quorum.
The quorum is set considering that not all members of the board are able to attend a meeting all the time so you set a minimum number of the board members required in order for the meeting to conduct its business.
This helps to avoid a situation where a meeting will never take place in the absence of a few board members who absent themselves for genuine, not genuine or political reasons.
It must be remembered that the purpose of a board is to run the affairs of the organisation through deliberations and binding resolutions.
A board must always execute resolutions.
Resolutions are decisions that are reached in a board meeting and such must be reached through motions duly executed.
A motion is a proposal, which is made by a member/s of the board for approval by other member/s in the board and all or majority in agreement.
Once a motion is proposed and approved by the board, it must be recorded in the minutes as a resolution of the board.
It is good practice that minutes must record resolutions and not discussions or who said what.
Boards run through a “conciliar” like fashion of governance – the rule of the majority.
With the reformation of corporate governance in the medieval period, this concept even pervaded the Catholic Church between the 14th,15th and 16th centuries where the church held the principle that the supreme authority in the church resided in the ecumenical council, apart from, or even against the pope.
This concept is the hallmark upon which boards operate.
Decision-making power resides in the whole board as opposed to a single person or a few.
A chairman or secretary of the board has no residual powers to direct operations of the organisations except as resolved in the board.
To wit, a chairman of the board has no locus to engage in any activities with the organisation including authenticating any legal transactions apart from the express or implied authority derived from the resolutions of the board.
For a greater reason, the chairman of the board’s mandate is derived from the organisation’s charter or the usual or ordinary roles of that position in the event that the charter is silent.
In order for a board to be effective, board members must be sufficiently knowledgeable on their roles in the board. This is a factor of their level of knowledge as well as board induction. This informs that when you appoint boards, ensure that they are sufficiently skilled in the proposed roles, and also ensure that you take your time to train and orient them to their board roles and responsibilities.
Boards with members that are clear on their roles are very effective in discharging their responsibilities.
The other most important point to make is that boards with properly oriented and skilled members are likely to have diverse and useful contributions.
The purpose of setting up a board or committee is to get the best mix of skill in management of the organisation.
This is achieved when members of the board are independent in their approach in and outside meetings.
A board member must never endorse everything even those ideas that they do not agree with – an effective board member is one who is ready to analyse and interrogate issues put for discussion coming up with own views and contributions.
The role of the board is always to set policy which will then be executed at lower levels by other managers as such board members must be careful to see that no discussion is concluded without their honest, genuine, constructive and deliberate input.
I cannot end this discussion without mentioning important roles which must be deliberately played by the chairman and the secretary.
To start with, the secretary must ensure that minutes are recorded properly. For this to happen, the secretary must be sufficiently skilled for the position, and level headed.
On the other hand, a chairman must be a person who is fit and proper person with high integrity.
A chairperson must be a tried and tested person who is not bent on selfish gain or easily swayed by emotions or clouded in judgment by situations.
The role of the chairperson is to ensure that the board functions as envisaged by the charter or constitution.
Thus the chairman must have thorough understanding of the organisation, fully appreciating principles of good governance.
He or she must be a person of great impartiality and apolitical in the running of board affairs.
Lastly but not least, boards must ensure compliance with the constitution in all their business and decisions including any procedures they purport to follow. This approach will ensure that their organisations prosper in their objectives, and there is minimum disgruntlement from the floor.
This article is not meant to be legal advice nor is it meant to be exhaustive of the subject under discussion. Should you require specific legal counsel on related matter, you may contact the author or consult an attorney. Majachani is a partner at Alex F and Associates, Attorney – he can be contacted on [email protected]