FAQs – holding meetings and maintaining good governance during Covid-19 for charities, social enterprises and community groups
Charities and social enterprises are grappling with how to manage meetings in this new era of working life.
We have answered some of the most common questions we have been asked below.
There is also some specific guidance produced by sector bodies:
- Charities should check the Charity Commission guidance, which covers AGMs and filing accounts in a Covid-19 world. You can find it here.
- Co-operative and community benefit societies should check this guidance, produced by Co-ops UK in consultation with the Financial Conduct Authority.
The Government has also announced that they are planning to introduce new legislation which will give companies more flexibility around holding AGMs. We are waiting for further details about this to be announced and will update this article when we have more information.
Please do get in touch if we can help with specific queries.
Can our directors / trustees hold virtual meetings?
The first step is to check your constitution. Many constitutions include an explicit power to hold meetings remotely (e.g. by video or telephone conference).
If there is no explicit power, it would generally be acceptable to hold meetings remotely, provided that all the trustees/directors expressly consent, the usual notice and quorum provisions are met, all participants can be heard by everyone else and minutes of the meeting are kept in the usual way.
For companies, the articles of association generally give directors the power to regulate their own meetings. That gives them full power to establish virtual meetings. However the decision to do so itself needs to be valid, e.g. all the directors agree unanimously to the new process.
Although the Charity Commission is saying that it will accept the position in the circumstances, there is still a risk that a third party could challenge the validity of a decision, such as creditors, beneficiaries, staff members or even fellow trustees/directors (where a decision is not unanimous). In each case, trustees/directors should weigh up the risks against the importance and urgency of the decision to be taken.
Trustees/directors may also have the power to pass written resolutions under the constitution, which would be an alternative way of making decisions. However, this can be slower and it does not allow for any discussion of the matter being considered.
We were due to hold our AGM this month but can no longer meet in person. What are our options?
If you have a membership which is separate from the directors/trustees (this would apply to charitable companies, CIOs, registered societies and some unincorporated associations), you may have planned to hold a members' meeting (such as an AGM or other general meeting) during this time. The first step is to check your constitution.
Things to check for include:
- Is there an explicit power to hold virtual meetings of the members? If so, you can do it, provided you comply with the provisions in the constitution about giving notice, quorum and voting.
- If there is no explicit power, is there anything that would prevent it? Some provisions may suggest the need for a physical meeting e.g. a requirement for a notice to state the 'place' of a meeting arguably requires a physical meeting, or specifying that a meeting may be held across a maximum of three separate locations almost certainly limits the possibility of holding a virtual meeting.
- If there is no explicit power and nothing that would prevent you from holding a virtual meeting, the board may decide to go ahead with holding a virtual meeting. The Charity Commission guidance above suggests that this is acceptable, but the board should clearly record their decision to hold the virtual meeting and the reasons for it.
- Alternatively, could the meeting be held by proxy? Check if the constitution permits proxy voting, and the quorum takes into account people who are present in person or by proxy. If so, the meeting could be held in the usual way, at a defined location with people invited to send in proxy votes. One person would be present in person (e.g. the chair) and that person would be appointed to vote on each proxy's behalf. As the vote could not be done on a show of hands, they may need to call a poll vote for the business to be conducted at the meeting.
- A final option to consider is asking the members to pass a written resolution, if permitted by your constitution. This would only be feasible for organisations with a relatively small membership.
Above all, the board should weigh up the risks involved and the importance of the matter to be considered at a general meeting. If your constitution is not clear and the business could wait, it may be better to delay the general meeting, instead of risking a future challenge to the validity of the meeting. Although the Charity Commission is saying that it will accept the position in the circumstances, there is still a risk of challenge from third parties such as creditors, beneficiaries, staff members or even fellow directors/trustees (where a decision is not unanimous).
Does our charitable company still need to file our account and annual report, even if we can't hold a meeting to have them approved by the members?
The law says that directors only need to circulate the accounts and report to the members, not seek formal approval. However, you should check your articles in case they say anything different (and if they do, you will need to follow what the articles say). The documents need to be circulated on or before the date the accounts are filed at Companies House.
It is possible to apply to Companies House for a 3 month extension to the filing deadline if there is a delay because of Covid-19: see here.
If there is a delay to filing them, they should also contact the Charity Commission to explain why and request an extension from the Charity Commission too (send an email to email@example.com).
The Charity SORP Committee guidance on Covid-19 can be found here: https://www.charitysorp.org/media/648486/sorp-covid-19.pdf
If you would like to discuss any aspect of this article further, please contact Laura Moss or any of the Charities and Social Economy team on 0113 243 6100.
You can also keep up to date by following Wrigleys Charities team on Twitter
The information in this article is necessarily of a general nature. Specific advice should be sought for specific situations. If you have any queries or need any legal advice please feel free to contact Wrigleys Solicitors.