Difference between a with and without members NPC

With members

Without members

–       The board governs, the members appoint the board and special resolutions are passed by members (same as shareholder role, but no ownership as no shares);

–       Checks and balances in place

All authority in the board of directors, including special resolutions to amend the MOI etc, and also power of appointment of new directors.

(Can adjust and give some of these powers to other parties or organisations)

Members elect the board.

Usually remaining board chooses replacement board members

In the case of an impasse at board level or the board not performing or all resigning at once (!) the members can reconstitute/fix the board. 

If the board is ‘stuck’, or not performing, or all depart at once, there is no back-up plan or easy way to solve.

Only requires one member and members can be organisations or natural persons. Advise a wider pool of members, for future of the organisation.

Three directors minimum.

Requires minimum three directors

Members make special resolutions: amend the MOI, change the objects, and decide to close down. Also determine director remuneration.

Governance, oversight, strategy, financial oversight, risk management, policies, structures, appointment of executive- All decisions made by the board

AGM must be held

No AGM

Allows for growth to a bigger membership, and for these members to then elect a ‘fit for function’ board to govern.

In cases where representation is key, as participation would only be through appointing a person to the board, growth in organisations involved could lead to a too-big board.

Members must elect at least one third of the board each year (statutory minimum requirement) i.e. board rotation terms should be based on a three year cycle.

It is advisable for board terms to be observed anyway, but they can be structured in any way.