Channel Islands Co-op defers vote on move to increase number of unelected directors

The board says the changes are in line with its co-op principles but a former chair warns it moves too far from democratic control

Channel Islands Co-op held its annual meeting last night where a vote was deferred on a number of rule changes.

These include a contentious proposal to move away from having almost all its directors elected by members, to just six of 11 on the board.

The society had nearly 300 registrations for its virtual Annual Meeting of Members (AMM) and Special Meeting of Members (SMM). Two members have challenged its decision to bring most of the proposed changes to the virtual SMM.

The two members wanted any discussion of these changes deferred until a face-to-face meeting can be held, after social distancing measures can be safely eased. In addition, they claim these changes are undemocratic and are not in line with the society’s co-operative principles. 

One of the two, Peter Roffey – a former chair and vice chair of the society –told the Guernsey Press he was concerned the changes would lead to more non-elected directors, longer maximum terms for non-elected directors, non-elected directors being able to become president, and strict controls over who is eligible to stand for election.

“It moves too far away from the Co-op’s principle of democratic control which is followed by Co-ops around the world,” he said.

“It is the people who own the business, and they should be able to choose who leads the business on their behalf.”

He added that the proposal would not necessarily be a bad thing, but was important enough to be discussed at a physical meeting.

In a letter to members, the society’s board of directors defended the plan, and the decision to discuss it at a virtual meeting.

“We know, in the last year, that all sizes of groups and organisations have successfully held meetings and debates online and, given the large number of members who have registered, we are confident that members are happy with the medium and there is no advantage to be gained from deferring until a face-to-face meeting can be convened,” they wrote. “A virtual meeting also allows for full participation by both Jersey and Guernsey Members at the same time – a significant step forward in the democratic running of the society across both islands.”

They added: “These changes are aligned with our democratic values, and it is important that they should take effect as soon as possible, to ensure regulatory compliance and best practice.”

They said the changes were in line with the society’s co-op values and principles, and that they comply with the new Co-operative Corporate Governance Code developed by Co-operatives UK.

“As an Industrial & Provident Society our core business is regulated by both the Jersey and Guernsey Financial Services Commissions (JFSC and GFSC),” they added, “which set high standards in relation to the capacity and capability of the board, as well as its effectiveness in governing the society.  Compliance with these standards is not negotiable, if we are to trade lawfully,  and all the society’s directors appointments are now subject to screening by the JFSC and GFSC.”

The rule changes will help the board meet these requirements, they argued, and mean the board is “equipped to lead a complex business” so the co-op “ strong and profitable in an uncertain and fast-changing future”.

But at last night’s meeting members approved a motion to defer a vote on four of the motions. These are:

Motion 2: The appointment of a chair and vice-chair instead of just having a president.

“Under our proposals the chair will normally be an elected director but, to ensure the most effective leadership, the board can choose an appointed director to serve … The chair and vice-chair will be re-elected by the board every year.

“We have also proposed that if the chair is an appointed director the vice-chair must be an elected director.”

Motion 4: This change allows for a potential increase in the board from nine to 11 members so that the board could appoint another executive director, such as the chief financial officer, and also has the power to appoint an additional external director. It also gives the board the authority to fill any temporary vacancy that may arise in the absence of candidates that fulfil the board’s selection criteria.”

The letter added: “We would like to emphasise that the majority of the board (six of the potential 11 seats) will be elected directors and that it would be up to the board to appoint the other five directors based on required skills and experience. All our directors must be members.”

Motion 5: Under this proposal elected directors’ terms would be reduced from up to 12 years, subject to re-election, to a maximum of nine years, subject to re-election every three years, “to ensure fresh thinking and diversity”. It is also proposed that directors should be subject to the same maximum terms but that their contracts should be reviewed annually.

“This change will ensure that the board has a majority of elected directors, who can control the selection of executive and appointed directors from our member base, on the basis of need,” said the letter.

Motion 6

This concerns the rules around termination of membership. Currently, at the absolute discretion of the Board, a member shall cease to be a member if they are convicted of, or admit to having perpetrated, an act of dishonesty to the prejudice of the society.

The motion seeks to add a second clause, which states that ‘if a member  has acted in a manner that is detrimental to the society’s  interests,  good  standing or values, the  board may remove that member by  passing a  resolution and shall ensure tat the member is duly notified that their 
membership has been terminated”.

  • This is an updated version of a story filed on 8 June ahead of the members’ meeting, amended to include the result of the vote. A fuller report to followw, along with a separate report on the society’s financial results