Equestrian Australia Voluntary Administration Q&A - 9 July 2020

1. Why is Equestrian Australia (EA) under voluntary administration?

On 9 Jun 20, the EA Board placed the company into voluntary administration, due to their concerns that “the Company was likely to become insolvent in the near future” (KordaMentha report, 7 Jul 20). Detailed cash flow forecasts were not released by the EA Board to support the decision.

Just four weeks later, the KordaMentha report shows that EA is clearly solvent and that net assets exceed $1.8m. Also, the report has no details about efforts to significantly cut costs to improve EA’s trading position (eg contract out the finance function, sell the office, move to cheaper offices, reduce staffing, adopt a shared services model etc) and indeed one of the first decisions by KordaMentha was to give State Branches a 25% discount on national levies, worth about $100,000.

The Equestrian SA Board regards the whole EA administration process to be unrelated to insolvency and will waste more than $300K of members money. We believe that the real reason for Administration, was the current EA Board wants a plebiscite of members to justify constitutional change, with the threat of EA being wound up if they don’t get what they want.

2. What will happen at the Second Creditors Meeting on 14 Jul 20?

Essentially, creditors will choose between two Deeds of Company Arrangements (DOCA), proposed by the State Branches (Resolution 4) and KordaMentha (Resolution 5).

3. Will Equestrian SA members be recognised as valid creditors at the Second Creditors Meeting?

No. Using a technicality, KordaMentha has decided that “Members of EA whose membership period expired on 30 June 2020 no longer have a claim in the Administration”. Even though Equestrian SA members have rejoined ESA, their EA membership components are now with EA (Administrators Appointed) not EA as they were previously. KordaMentha is denying votes to ESA members based on this. Indeed, KordaMentha is preventing more than 73% of EA members from casting a valid vote. Equestrian SA wants its members rightfully recognised by KordaMentha as valid creditors at the Second Creditors Meeting.

4. Will EA members still have a say?

Yes. The whole purpose of the EA administration, driven by the current EA Board, is to hold a non-legally binding plebiscite, for members to vote on constitutional change. The State Branches have simply provided an alternative solution for consideration by members.

5. What will happen if the KordaMentha DOCA is approved?

The Current EA Board will be removed and a Nominations Committee will be appointed to choose an Interim Board.

A Special General Meeting will be called, asking the six State Branches to amend the EA Constitution to allow all 20,000 members to vote on future changes (ie one member one vote).

6. What will happen if the amended State Branch DOCA is approved?

The Current EA Board will be removed and a Nominations Committee will be appointed, comprising two Discipline representatives, one from the State Branches and an Independent Chair, to choose an Interim Board.

Separately, the State Branches have requisitioned a Special General Meeting, with a motion to amend the EA Constitution to allow a representative group (56 in all) including State and National Discipline and Coaching Committees, as well as the State Branches to decide future changes (e.g. which model should be adopted).

7. Does Equestrian SA object to the one member, one vote principle?

ESA believes that every member should have a voice and that our voice is best utilised by a constituency. Having your State Discipline and Coaching Committees as well as the State Branch as your constituency will improve the culture in equestrian sport.

Also we note that no other National Federation affiliated with the FEI (eg Britain, United States, Germany and Canada etc) nor any Australian National Sporting Organisation (eg Sailing Australia and Cycling Australia) has this “one member one vote” voting model.

8. Why is the 56 Stakeholder model better?

The group of 56 will include:

• States Discipline Committees and Councils (35)
• State Coaching Committees (6)
• EA Discipline Committees and Coaching Committee (8)
• State Branches including Equestrian Northern Territory (7)

The State and National Discipline and Coaching Committees, who will have most of the votes:

• Understand and in most cases deliver our sport.
• Will represent all Disciplines and States fairly.
• Are better placed to engage directly with members to understand their needs and aspirations.

9. Will the State Branch DOCA deliver the outcomes required by Sport Australia, the FEI and AOC?

Yes, we believe so. Sport Australia, the FEI and AOC all want democratic and representative governance and have not been prescriptive about mandating one member one vote. It is inappropriate for KordaMentha to speculate in its report that the State Branch proposal won’t deliver the outcomes required by Sport Australia, the FEI and the AOC.

10. Does Equestrian SA support governance reform?

Yes. In 2019, Equestrian SA underwent a significant Governance Review and has been implementing the recommendations even prior to the final report being released in December 2019. Most significantly, ESA has benefitted greatly from the expertise and experience of our Independent Chair, Mr Stephen Ludlam. Irrespective of the legitimacy of the EA administration, Equestrian SA supports the process to achieve necessary governance reform.

11. Does the Equestrian SA Board have a preferred governance and business model?

No. Equestrian SA is committed to member and stakeholder engagement to make sure that the Australian equestrian community develop the model that is right for our circumstances and geographical environment, rather than have a model from another country or another sport forced on us. Respect needs to be given to our sport and members, to consider the positive and negative aspects of all models, to come up with one that represents equestrian in Australia and future proofs it for many years to come.