Read Jason's latest blog: When Conflict of Interest is Raised in a Member Meeting

By Jason Robinson

Conflict of interest (COI) can be a challenging issue to address within any organizational context, but it can become especially sensitive during member meetings, where questions about fairness, transparency, and ethical decision-making are common. A conflict of interest occurs when an individual’s personal interests (financial, familial, professional, etc.) interfere with their ability to act in the best interest of the organization or its members. In a member meeting, this could involve situations where a member stands to gain personally from a decision they are helping to make, or where a member might influence a decision that benefits them at the expense of fairness or transparency.

The topic of COI is often raised last-minute before the meeting or during the meeting with no warning.  For example, prior to an election of a director, a member could state “the candidate [NAME] is a paid staff person at their local Club and is therefore in conflict should they be elected to the Board of the provincial/territorial organization,” or they could ask “member [NAME] works for the third-party company that we are currently discussing a contract with; are they permitted to be present during debate and voting on this matter?”

There are many books, blogs, and articles on the topic of COI and how best to address COI that is both real or perceived.  The topic of COI is a key part of the Governance Essentials e-course, and I’ve included links to a few of our blogs below[1]. We also recommend this article by the Sport Dispute Resolution Centre of Canada about the myths and realities of COI in sport.

Many of these resources provide guidance for how to address potential COI within a Board setting, and many of the legislative Acts within Canada speak to COI among directors, particularly around financial gain. However, there is little written about the scenario where COI is specifically raised within a member meeting.

This blog will serve to identify what written rules and procedures can be applicable to member meetings as well as provide some tips for the presiding officer (chair) of the meeting to utilize when the topic of COI is raised in a member meeting.

What the Acts say

The federal and provincial-territorial Acts that are applicable to not-for-profit sport organizations consistently speak to COI in the context of a corporation’s directors. Each director must at all times act honestly and in good faith and prioritize what is best for the corporation. Directors must promptly disclose the nature and extent of any material interest (contract, transaction) that they have with the corporation or any other matter that could conflict with their duty to the corporation. This disclosure is provided in writing and/or at the meeting of directors. They shall remove themselves from debate and not vote on any decision related to that material interest or matter. The nature or extent of their interest is noted in the Board meeting minutes.

With respect to member meetings, the topic of COI or the ‘disclosure of interests’ is not explicitly raised within the Acts. That stated, a reasonable approach would be to ask any member to provide a similar disclosure of interest to their fellow members in any situation where a material interest takes place.

What the Canadian Sport Governance Code says

The Canadian Sport Governance Code (the ‘Code’, 2023) addresses COI on the Board of Directors for national sport organizations.  The Code indicates that “Not less than 40% of the directors should be Independent” and it defines Independent as “a director has no fiduciary obligation to any body for the subject sport at the national or provincial level, receives no direct or indirect material benefit from any such party, and is free of any conflict of interest of a financial, personal or representational nature (provided that participating in the NSO’s sport does not alone cause a person not to be Independent.” The Code further states, “Whether a director or prospective director is Independent is to be determined by the nominating committee. A person who would not be considered Independent will be considered to be Independent once they resign from or terminate the circumstance that gives rise to the non-independence.”

The Code also advises that the chair of the Board should be an Independent director, that directors may be reimbursed for reasonable expenses but not renumerated for their service as a director, and that executive team members (e.g. staff) should not be a Board member.

While the Code does not speak directly to member meetings, it does identify that the nominating committee is responsible for determining whether a candidate is or is not Independent, which helps to proactively address potential inquiries or claims of COI at a members meeting where elections are taking place.

What policies typically say

A Conflict of Interest Policy is a very helpful tool that defines COI, helps to navigate related complaints, and serves to mitigate COI in your decision-making. A well-written COI policy will:

• Define COI including the difference between pecuniary and non-pecuniary interests
• Outline the obligations of organizational representatives to avoid situations of conflict (i.e. personal benefit, preferential treatment of relatives and friends) and to disclose any potential conflict of interest
• Emphasize a duty to raise concerns about COI in a timely manner
• Provide steps to minimize COI in decision-making (i.e. declaration forms, determination of a COI, no participation in debate or vote)
• Outline how COI complaints may be filed with the organization and how complaints will be reviewed and, if required, any actions to be taken
• Require legitimate conflicts of interests to be noted in the minutes of the meeting

COI policies tend to focus on board, staff and committee roles and may not speak directly to member meetings. A more intentional approach is recommended and some best practices for addressing COI in member meetings include:

• An intentional request (during introductions or as an agenda item) for members to declare any COI to their fellow members
• Examples of COI that are common to the organization (i.e. volunteers not voting on transactions that involve their personal business, members not voting on their own suspension, nomination committee members not running for election)
• When a material interest exists within a member meeting and that matter is being discussed or voted upon, identifying the protocol for the conflicted member(s) (i.e. the member may be asked or mandated to temporarily leave the meeting while the specific is discussed and is not permitted to vote on the matter)
• When there is disagreement on whether or not a conflict exists, how that disagreement is resolved (i.e. by the chairperson, by the members)
• Within election nomination forms and submissions, identification of potential COI’s in advance of the meeting
• Agreement by any candidate(s) who, if elected, will be placed in a position of conflict and who agrees to resign immediately from that other conflicting role

What the commonly used parliamentary authorities say

The most common meeting procedural authority, Robert’s Rules of Order (Edition 12) notes the following:

45:4 Abstaining from Voting on a Question of Direct Personal Interest – “no member should vote on a question in which he has a direct personal or pecuniary interest not common to other members of the organization….. However, no member can be compelled to refrain from voting in such circumstances.”

45:5 Voting on Questions Affecting Oneself – “The rule on abstaining from voting on a question of direct personal interest does not mean that a member should not vote for himself for an office or other position to which members are generally eligible, or should not vote when other members are included with him in a motion.”

In the eyes of Henry M. Robert and the revising authors of this book, a member is permitted to vote for themselves in an election, and is permitted to debate and vote on matters in which they are part of a group or collective (otherwise decision-making could be stunted or abused). It is also worth noting that a member with a direct personal interest is still permitted to vote on that matter, however Robert’s Rules provides that the member should abstain from voting on the motion.

The Standard Code of Parliamentary Procedure (2^nd Edition) notes the following:

5.61 “A member who would otherwise be disqualified from voting under the rules may still vote on a question involving the whole organization when others are equally affected by the vote, even though the member has a direct personal or financial interest.  For example, every member has the right to vote on a motion that determines convention expenses to be paid to delegate by the organization. Another example is elections, which are considered to affect the whole organization because all members share an interest in serving the organization and electing the best officers, directors, and committee members to do so.”

5.62 “When charges have been preferred against a member, that member cannot vote on the charges.  However, if other members are also named in the charges, all members can vote on the charges. This rule prevents a small proportion of members from gaining control of an organization by filing charges against the majority of the members.”

30.16 “A board member with a personal interest may not vote or debate on the matter but, if present, is counted towards quorum unless the bylaws of the organization or applicable law requires otherwise.”

The Standard Code also identifies that declared COI’s and their abstention should be noted in the meeting minutes, and that resolution or reference committee members should have no likely conflicts.

Meeting Procedures by James Lochrie notes the following:

P21 “The interest of the member may be real or potential.  In either case, the members must declare the conflict as soon as possible. The purpose of disclosing even potential conflict is to improve the likelihood that it will not hurt the organization. 

It is not wrong to have a conflict of interest…. What is important is that conflicts be declared and that members declaring conflicts remove themselves from any dealings with the subject in question.  It is unreasonable to expect such individual to resign from the organization.

If a conflict is disclosed properly and the member refrains from debating and voting on the subject, and leaves the meeting, the organization may, by vote, still award business to the individual or declare the conflict inconsequential.

A member cannot be accused of having a conflict of interest but only failing to disclose it.”

Lochrie also identifies that a member who declares a COI and leaves the meeting is not counted in determining the quorum; however if they remain in the meeting, even though not voting, the member is counted towards quorum.

Tips for the presiding officer

As with any meeting preparation, ensure that your organization is abiding by the rules as outlined in the applicable Acts and your governing documentation (in that order) and where gaps still apply, aim to adopt the principles outlined in your adopted parliamentary authority.  In advance of the meeting it is also always good to identify potential COI issues and be prepared to declare or respond to them in an appropriate manner.  When COI concerns or questions are made, here are a few tips for the presiding officer:

1. Acknowledge and specify the concern: It's important to acknowledge the perspective and concern of the member raising the concern or question. Dismissing or deflecting concerns can erode trust and damage the credibility of the organization. It is also imperative that we have a clear understanding of the concern and how that may be considered as a  potential COI.
2. Steer all comments through the chair: It’s natural for any member to feel defensive if concerns or accusations are raised, and it may also be uncomfortable (yet important) for any member to raise them.  As such, it is imperative that the discussion does not become a direct exchange between individuals, particularly when the matter is acrimonious. The presiding officer should field and direct all comments in a neutral manner, to efficiently manage the discussion and mitigate hostility. The chair can instruct the members to direct all comments through the chair.
3. Provide the named individual(s) the opportunity to respond: After fielding concerns, the chair can ask the affected individual to respond to the raised concern.  For example the chair could state, “Member X, another member has raised a concern that you may be in a COI when considering this matter.  Can you speak to your role/status and whether you believe you are in a conflict of interest?” The named individual is not required to respond, but oftentimes will seek to clarify their position or they may willingly acknowledge the concern.
4. Pause and reference the rules: Share the COI clauses in the organization’s bylaws as well as any applicable COI policy language or parliamentary authority that applies to the situation. This can be done proactively within the agenda or when outlining the meeting rules, or it can be in response to a question or claim. Where the rules specifically apply to the situation, apply the rule!
5. Make a reasonable ruling: Oftentimes the rules pertaining to COI are not definitive, and in this situation the members are looking to the presiding officer for guidance and direction on how to address the manner.  On a matter of direct personal interest that is obvious (e.g. member X is the webmaster and we are debating and voting on webmaster services), it is reasonable for the chair to advise the member they will not be voting on the matter. Whether that person leaves the meeting room temporarily (during debate on the matter) can also be a chair ruling. In other scenarios where the COI is perceived by some but not by others, a reasonable approach would be the presiding officer to ask the member to refrain from voting (as well as possibly leave the room during debate). This aligns with the parliamentary principle that a member should abstain from voting on a question of direct personal interest, but is not required to do so.  Should the member decline the chair’s request, they should likely still be permitted to vote.
6. When in doubt, let the members decide: As with any ruling of the chair where they are uncertain what to do (or if the chair’s ruling on the matter is appealed) the presiding officer can ask the members to decide by vote.

One final thought: Can a sport organization DENY any member the right to vote on a matter where a real or perceived COI exists? 

When raised within the member meeting itself, it becomes much more challenging for the organization to take such action and it is commonly the duty of the chair to address the matter (see above). However, when the potential COI is brought to the attention of the organization in advance of the meeting, its Board and/or staff can potentially investigate the claim and consider potential action. Where the COI is considered real and the organization has documented language that prohibits conflicted participants from voting, it can proactively advise the member of its investigative findings and any meeting restrictions that will be placed on the member.  However, where the COI is more perceived and is less certain, it is recommended that the organization exercise caution and be mindful of the rights of its members.  When uncertain, we recommend that you contact a legal advisor for further guidance.

Conclusion

Within a member meeting the topic of COI is not just a legal or ethical concern; it’s a critical issue that can shape the overall health of an organization. When questions or accusations arise, addressing them with transparency, fairness, and professionalism is crucial for maintaining the integrity of the organization and the trust of its members.

In many instances, some members just want to make sure other members are simply aware of the COI and are not seeking any form of restriction; rather they are simply seeking organizational transparency. However, in other circumstances, a claim of COI can also be used as tactic to prevent others from voting, sharing relevant information in debate, or running for election. As such having robust bylaw and policy language on the topic of COI is imperative.

[1] Sport Law blogs related to Conflict of Interest:

• https://sportlaw.ca/governance-gremlins-threatens-sports-ability-to-thrive/
• https://sportlaw.ca/conflict-of-interest-the-sport-organizations-achilles-heel/
• https://sportlaw.ca/to-coach-or-to-direct-is-there-a-conflict/

For guidance or support on any of these matters, contact hello@sportlaw.ca or JER@sportlaw.ca.