Stone King Briefing: Academy Trust Members Meetings in Pandemic Conditions

During the pandemic in 2020, the Corporate Insolvency and Governance Act 2020 (“the Act”) was introduced which temporarily allowed restrictions on Members meetings to be eased. The Act allowed for Members meetings to be conducted electronically even where a Trust’s Articles did not expressly allow for virtual Members meetings. The Act is no longer in force and Academy Trusts should therefore comply with Company Law and their Articles when conducting Members meetings.  Note that this advice relates only to holding Members meetings and that different rules will apply to the holding of Trustees meetings.

The perceived difficulty with conducting virtual Members meetings when these are not expressly allowed in the Articles is that the Companies Act 2006 sets out that a notice of a meeting must confirm a specified “place” of the meeting. This creates difficulties if meetings are to be held virtually at several different places.

Dealing first with the requirements of the Companies Act: there is some uncertainty as to whether ‘place’ can be taken to include an electronic or virtual platform. Whilst the debate continues, best practice suggests that Trusts wishing to conduct hybrid or virtual meetings should ensure that their Articles expressly allow these. Please also see comments below about amending Articles and DfE requirements.

Assuming that the Articles permit hybrid or virtual meetings, Trusts must ensure that the Members attending the meeting must be able to participate as if they were present in person. They must therefore be able to hear the proceedings; to speak and to be heard; and to vote in real time using an online platform.

The Department for Education’s (the “DfE’s”) new mainstream model Articles do expressly allow for virtual Members meetings (NB. the DfE have not updated their other model Articles for Church Schools). However, this ability was not previously included in the mainstream model Articles, so this briefing note goes on to advise Trusts in that circumstance.

The DfE’s stated position under their 2016 mainstream model was that additional wording surrounding electronic meetings was not required and that Trusts could proceed to conduct virtual meetings if required by passing internal rules. The new mainstream model now expressly refers to the ability to conduct Members meetings virtually. It is, consequently, highly probable that the DfE would allow for Trust’s to insert wording into their Articles to allow for electronic Members meetings although at the same time the DfE are also likely then to require a Trust to update their Articles in their entirety to the latest model.

Under some Trust Articles, Trusts are required to seek Secretary of State consent to amend their Articles or adopt new Articles (usually set out in Article 10).  Trusts should also check in their Articles whether the consent of a Foundation, Diocese or Sponsor Body would be needed to amend their Articles.  The Funding Agreement may also require a Trust to seek Secretary of State consent.

Academy Trusts are therefore in a difficult position given the Company Law and Regulatory Framework which both must be complied with, given that seeking consent to amend Articles can take several months due to the processes that must be followed.  That delay conflicts with the fact that some Articles require an Annual General Meeting of Members, and the failure to carry out that meeting may be reported in a company’s annual audit. 

It is important that Members still carry out their Annual General Meeting if required, and we recommend that Members still meet in person as far as possible in order to comply with Articles. There is the option for Members to appoint a proxy in their place should they not wish to attend in person or are unable to attend.

Alternatively, Trusts can also comply with the requirement regardless of the legal uncertainty by way of a “hybrid” meeting.  A notice would be given, specifying a physical location as the place of the meeting, and providing the below conditions are met, members need not be physically present:

• here is a nominal presence at that location,  

• members are entitled to attend at that location, and may therefore do so if they wish,

• members attending virtually must be able to hear, speak, be heard, understand, follow, question, participate, and vote in real time

If the above options are not possible, the Trust could in extenuating circumstances hold the meeting virtually if the Members agree that this is the only option. We would anticipate that the DfE would not take issue with this given the extenuating circumstances but the Trust should proceed as soon as possible to update their Articles and seek the necessary consents should they wish to continue with virtual Members meetings going forward.

If a Trust’s Articles and Funding Agreement do not require Secretary of State consent, the Members can pass a special resolution to amend the Articles to allow for electronic meetings and make the necessary filings at Companies House.

If you need any further advice or assistance with this issue please contact: KatherineHall@stoneking.co.uk.