Contents:

1. Introduction

2. Additional guidance on Material Reorganisations

Appendix 1 - Guidance to Regulation 4 

It is proposed that Regulation 4 be supplemented with the following guidance: 

REGULATION 4 

Guidance 

1. Introduction 

• 1.1 The first object of the RFU’s constitution is to “grow the Game in England through the Union’s values and performance.” In particular, it is a fundamental principle of the RFU League Competition that there exists a pyramid structure based on promotion and relegation and (subject to certain caveats), on sporting merit. In its role as national governing body, the RFU must strive to ensure such principles are upheld and not circumvented by Clubs looking to create a de facto franchise system where league positions or even promotions are not exclusively achieved on merit but potentially also by changes of ownership, or Material Reorganisations. 

2. Additional guidance on Material Reorganisations 

• 2.1 The considerations which the RFU may take into account when considering a Material Reorganisation are set out in Regulation 4.7 of RFU Regulation 4. The RFU should have regard to the reason for the Material Reorganisation, which shall not be approved where the intention is in effect to transfer the league position of one (lower placed) Club to another (higher placed) Club. However, the Club(s) should generally be able to decide which name and league position the newly merged Club should take. 
• 2.2 The RFU should have regard to whether the Clubs subject to a Material Reorganisation (where such Material Reorganisation involves the merger or acquisition of two or more Clubs) are sustainable in their own right. This is likely to include analysis of the ownership of those Clubs’ grounds. If there is a corresponding application for a ground move, then RFU Regulation 3.8 shall apply, however the result of a Club’s application for a ground move shall have no bearing on the outcome of the RFU’s consideration of such Club’s proposed change of Ownership or Material Reorganisation (and vice versa) and the RFU shall reserve its right to consider both proposals together. 
• 2.3 The RFU should have consideration as to whether the Material Reorganisation will result in two (or more) stronger Clubs better able to serve their players and supporters. Where two Clubs serve two different communities within the Game (such as amateur versus professional, or men’s versus women’s), then the RFU should have regard to whether a rationalisation would be in the best interests of those Clubs’ communities. 
• 2.4 There may be occasions when Clubs are the proposed subject of de-mergers. Broadly, the same principles should apply as to any other Material Reorganisations. The nature of the reorganisation will depend upon a number of factors including but not limited to the extent of due diligence done on financial sustainability, ownership and management. Such examples will turn on their own facts, and the RFU’s decision shall not necessarily act as a precedent for the purposes of considering future cases. 
• 2.5 Ultimately, the RFU should take the view that it is in the wider interests of the Game for Clubs to be fully integrated and offer more than just first XV rugby. In general, therefore, the RFU shall be reluctant to approve a proposal for a Club’s first XV to split from the remainder of the Club if such a split is proposed as a means of circumventing Appendix 2(b) of RFU Regulation 6 (i.e. to allow what would otherwise be a second XV to play higher than Counties 1 (formerly Level 7)). A better approach would be for the Club to consider how second XV rugby can be provided in an alternative manner.