Review of the Registered Clubs Industry in NSW - Clubs NSW

11 Making it easier for clubs to amalgamate
Under scenario 3, where members may be willing to consider amalgamation but
directors are not willing “to give up their blazers” 213 , the board of directors may
knock back any amalgamation approaches and members would not be informed.
But if members were aware of the financial position of the club and the
amalgamation proposal by another club, they may well decide to vote in favour of
amalgamation or at least further investigation of this option. This raises the question,
when does the board have a duty to disclose amalgamation offers to its members?
ClubsNSW put the view that informing members of amalgamation offers as they are
made can compromise negotiations. However, it also submitted that there is merit in
clubs disclosing in their annual report any amalgamation offers and the details of the
board’s consideration of those offers. 214
IPART accepts that revealing details of a potential amalgamation offer that is still
being finalised might compromise negotiations. However, IPART also considers that
disclosing amalgamation offers only in the annual report would delay disclosure for
too long. IPART is of the view that formal amalgamation offers should be disclosed
to members in a timely manner. 215 This would be the case particularly for clubs that
receive a proposal from another club to amalgamate. The reason for notifying
members of formal amalgamation offers is to provide an avenue for members to
provide timely input to the board of the club, especially if the members and the
board have opposing views.
Defining what constitutes a formal offer may be difficult. However, where a board
has formally considered an amalgamation proposal and made a decision, IPART
considers that this outcome should be disclosed to its members as soon as
practicable. This would also give members the opportunity to express their views on
whether they think the board has made the right decision, or whether the board
should review its decision.
IPART considers that a reasonable time period for boards to inform members is 30
business days from the date the board makes its decision. This would effectively
give clubs around six weeks to draft a notice and approve it at the next monthly
board meeting and then communicate it to members, for example by mail, on the
club’s website, and in a notice on the message board of the club premises.
Recommendation
58 That the management and board of a club be required to inform its members, within 30
business days, after a board decision regarding a formal amalgamation offer has been
made. The disclosure to members should include information on the reasons for its
decision.
213 This term was used to characterise directors reluctant to consider amalgamation for reasons of club or
personal pride by a number of participants at the Wagga Wagga Roundtable, 14 September 2007.
214 ClubsNSW submission, 4 April 2008, p 30.
215 ASX Listing Rule 3.4 under Continuous Disclosure requirements state that an entity needs to inform
the ASX of the outcomes of a takeover bid within 10 business days after the end of the offer period.
190 IPART Review of the Registered Clubs Industry in NSW