Investment clubs

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7. The draft constitution and rules

Two of the most important documents in a club's life are its Constitution and its Rules.

• The Constitution is the legal framework within which the club will operate. It rarely requires alteration and can only be changed with the agreement of all members.
• The Rules cover all aspects of the running of the club. They change from time to time. Many clubs require the agreement of 75% of the members to change the rules.

It is up to members to decide what goes in these two documents, but it is safest to adopt tried and tested templates used by other clubs.

ProShare has produced examples of a draft Constitution and draft Rules. They are lengthy documents which have been used by virtually all clubs in Britain as the basis for their activities and the ProShare version is now accepted by leading stockbrokers. Indeed, most stockbrokers insist upon seeing a copy of the club's approved Constitution and Rules signed by every club member before they will act for the club in transacting share deals.

ProShare's draft Constitution and Rules are contained in their Manual which can be obtained by telephoning 01730 233870. For more information go to the bookshop.

1. What is an investment club? 2. A simple explanation of how it works 3. Why join an investment club? 4. Deciding on your aims 5. Joining an existing club 6. Preparing to launch a new investment club 7. The draft constitution and rules 8. Drafting the investment strategy 9. Example of an investment strategy 10. Attracting members to your club 11. Preparing for the inaugural meeting 12. The inaugural meeting - appointment of officers 13. The inaugural meeting - key decisions 14. Things to do after the inaugural meeting 15. Starting the processes 16. Running the first meeting 17. Regular meetings - the key to success 18. The cash account 19. The capital account 20. The asset register 21. The annual general meeting 22. Tax 23. Performance measurement 24. Dealing with a member leaving 25. Conclusion

• ProShare Investment Clubs Looseleaf Manual
• The Motley Fool Guide to Investment Clubs
• The Company of Successful Investors