1. THE BOOK OF DISCIPLINE AND THE LOCAL CHURCH Talk to CHINESE ANNUAL CONFERENCE 3 July 2010

2. SIGNIFICANT CHANGES IN BOD – LARGELY TO IMPROVE GOVERNANCE : Why? Charity Sector Scandals (NKF 2005) attracted public attention & greater Government scrutiny Civil Servant made 1 st full-time Commissioner of Charities (“COC”) with increased supervision New Charity Council issued CODE OF GOVERNANCE For Charities & IPCs in Nov 2007 (“COG”) [being reviewed in 2010] COG applicable to religious groups (though derived from corporate governance model) EVALUATION CHECKLIST (“EC”) – annual submission to COC required The BOD & Local Churches 2

3. FUNDAMENTAL PRINCIPLES: Every Charity owes obligations to its stakeholders Charity’s Governing Body [IN LOCAL CHURCH – THE LCEC] must discharge these obligations – #1Duty to Act Honestly – #2Transparency of Decision-Making – #3Accountability for Decisions The BOD & Local Churches 3

4. NOT ENOUGH JUST TO “FOLLOW THE RULES” Everyone must always try to up-hold underlying principles Don’t act like the Pharisees! Always try to do the right thing, the proper way [principle: ACT HONESTLY] When we make mistakes, own up [principle: ACCOUNTABILITY] Never cover up! [principle: TRANSPARENCY] HONESTY & ACCOUNTABILITY often requires some INDEPENDENCE The BOD & Local Churches 4

5. LOCAL CHURCH STRUCTURE Local Conference has general oversight over LCEC ¶147.1 [ akin to the “General Meeting” ] Local Conference mbs (besides LCEC): ¶146.2 – local preachers – diaconal ministers – honorary stewards (no vote unless elected to LCEC positions) – retired ordained ministers holding mbship – ministers under voluntary location – PPRSC chairperson The BOD & Local Churches 5

6. Local Conference DIFFERENT FROM LCEC Chaired by: o District Superintendent or o Elder designated by DS ¶146.4 (principles: ACCOUNTABILITY, INDEPENDENCE) DS has final authority to decide all questions of law submitted in writing, subject to appeal to President at next Annual Conference ¶552.15 & ¶707.4 (principle: ACCOUNTABILITY) Notice of Local Conference: ¶146.7 14 days notice by pulpit announcement, weekly bulletin, local church publication or mail (at least 2 of these modes) (principle: TRANSPARENCY) The BOD & Local Churches 6

7. Local Conference at least twice each year ¶146.3 Special Sessions¶146.6 only if called – by DS (after consulting Pastor i/c) – by Pastor(s) with written consent from DS (principles: ACCOUNTABILITY, INDEPENDENCE) Purpose must be stated in Call (principle: TRANSPARENCY) Only business in harmony with Call to be transacted (principles: TRANSPARENCY, ACCOUNTABILITY) The BOD & Local Churches 7

8. Church Conference ¶148 instead of Local Conference Purpose: to encourage broader participation by church members Called: Only when authorised by DS (maybe after written request from Local Conference) (principles: TRANSPARENCY, ACCOUNTABILITY, INDEPENDENCE) The BOD & Local Churches 8

9. LOCAL CONFERENCE & MAJOR CHURCH BUILDING PROJECTS Local Conference approval required for major projects (eg. church building, extensions, purchases)¶411 unless ¶411.3 a) exception applies (below 10% ave p.a.income over last 3 years) The BOD & Local Churches 9

10. The BOD & Local Churches 10 CHANGES TO DISCIPLINE AFFECTING LCECs#1 TERM LIMITS TERM LIMITS (principle: ACCOUNTABILITY): Local Conference has general authority to establish term limits ¶147.6 (read with COG 1.1.6 “Board Renewal”) Compulsory term limits for: – Church treasurer¶149.1 e) read with EC Q.3 (COG 1.1.6) – Finance Comm Chairperson ¶149.1 f) read with EC Q.3 (COG 1.1.6) – Governance Comm Chairperson* ¶149.1 i) read with EC Q.3 (COG 1.1.6)(new position) TERM LIMITS balanced by having understudies – LCEC must have Vice-Chair, can have more than one ¶153.4 – Asst Treasurer, Finance Comm Vice-Chair (new positions) ¶149.1 e) & f)

11. CHANGES TO DISCIPLINE AFFECTING LCECs#2 MEMBERSHIP COMPULSORY LCEC MEMBERSHIP FOR ALL PROGRAMME CHAIRS (principles: ACCOUNTABILITY, TRANSPARENCY) Missions, Outreach & Social Concerns, Witness & Evangelism, Worship & Music, Disciple & Nuture Chairs must be LCEC members ¶149.1 j) & 153.1 k) read with EC Q.4 (COG 1.2.1) EMPLOYED PROFESSIONAL & MINISTRY STAFF MAY BE LCEC MEMBERS WITHOUT VOTE BUT CANNOT SERVE AS LCEC CHAIR ¶153.3 read with EC Q.2 (COG 1.1.2) (principles: ACCOUNTABILITY, TRANSPARENCY, INDEPENDENCE) The BOD & Local Churches 11

12. CHANGES TO DISCIPLINE AFFECTING LCECs#3 ACTING IN CONCERT LCEC TO ACT IN CONCERT WITH FINANCE COM & OTHER COMMITTEES: TO ENSURE OVERSIGHT OF KEY AREAS OF GOVERNANCE & OPERATIONS UNDER DOCUMENTED TERMS OF REFERENCE (principles: HONESTY, ACCOUNTABILITY, TRANSPARENCY) ¶152 read with EC Q.4 (COG 1.2.1) : The BOD & Local Churches 12

13. CHANGES TO DISCIPLINE AFFECTING LCECs#4 QUORUM LCEC QUORUM: MINIMUM ONE-THIRD ¶152.3 read with COG 1.3.2 (principle: ACCOUNTABILITY) The BOD & Local Churches 13

14. CHANGES TO DISCIPLINE AFFECTING LCECs#5 ATTENDANCE REGULAR ATTENDANCE: THREE CONSECUTIVE ABSENCES W/O ACCEPTABLE REASON CREATES VACANCY ¶307.5 read with COG 1.3.3) (principle: ACCOUNTABILITY) The BOD & Local Churches 14

15. CHANGES TO DISCIPLINE AFFECTING LCECs#6 MINUTES LCEC MINUTES MUST BE KEPT & CIRCULATED TO ALL LCEC MEMBERS “AS SOON AS PRACTICABLE” ¶152.5 read with COG 1.3.1) (principles : ACCOUNTABILITY, TRANSPARENCY) The BOD & Local Churches 15

16. CHANGES TO DISCIPLINE AFFECTING LCECs#7 QUALIFICATIONS CHURCH TREASURER QUALIFICATIONS: PREFERRED (NOT MANDATORY) TO HAVE relevant accounting qualification OR appropriate financial literacy OR appropriate practical experience (previous service as Asst Treasurer?) (principle: ACCOUNTABILITY) ¶153.1 g) read with COG 1.1.9 The BOD & Local Churches 16

17. CHANGES TO DISCIPLINE AFFECTING LCECs#8 ANNUAL REPORT LCEC MUST MAKE ANNUAL REPORT OF ITS DECISIONS TO LAST LOCAL CONFERENCE (principles: TRANSPARENCY, ACCOUNTABILITY) ¶154.12 read with EC Q.14 (COG 8.1.1) The BOD & Local Churches 17

18. CHANGES TO DISCIPLINE AFFECTING LCECs#9 GOVERNANCE COMMITTEE CHURCH GOVERNANCE COMMITTEE CREATED ¶170.6 read with EC Q.4 (COG 1.2.1) performs functions similar to an Audit Committee in corporate governance context amenable to LC, not to LCEC (principles: ACCOUNTABILITY, INDEPENDENCE) Gov Comm Chair a mb of LCEC (principle: TRANSPARENCY) Gov Comm Chair & all mbs cannot be Church Treasurer or Finance Comm Chair (principle: INDEPENDENCE) should majority of Gov Comm not sit in LCEC? The BOD & Local Churches 18

19. CHURCH GOVERNANCE COMMITTEE not “superior” to LCEC doesn’t “second-guess” LCEC monitors, reviews processes especially – financial issues – interested person transactions The BOD & Local Churches 19

20. SUMMARY EVERYONE MUST PLAY A PART TRY TO KNOW THE RULES … BUT ALWAYS KEEP TO THE PRINCIPLES! The BOD & Local Churches 20

21. ALWAYS KEEP THE PRINCIPLES! Try to do the right thing, the proper way [principle: ACT HONESTLY] When we make mistakes, own up [principle: ACCOUNTABILITY] Never cover up! [principle: TRANSPARENCY] Remember:HONESTY & ACCOUNTABILITY often requires some INDEPENDENCE The BOD & Local Churches 21