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June 15, 2020

Corporate insolvency and Governance Bill 2019-2021

Corporate insolvency and Governance Bill 2019-2021

Date updated:

Some help with holding a Charity AGM?

This Bill currently passing through the House of Lords will hopefully soon be law. It is intended by the government to provide some “flexibility and breathing space for businesses”, and covers a broad range of measures from help with wrongful trading and Insolvency to temporary easing of some filing obligations and general meeting requirements. 

The good news is that if it passes in its current form it will offer some much-needed support to many corporate charities struggling with how they have, and will, hold this year’s required AGM. 

In summary the Bill’s key benefits are that it:
  • allows use of entirely electronic meetings and voting systems, removing the need for a physically present quorum;
  • suspends members’ rights to attend meetings in person and requirements to hold meetings in particular places, or votes in a particular way;
  • limits members’ rights at meetings to voting; but does crucially protect their right to vote;
  • retrospectively approves meetings already held on/after 26th March 2020. However, approval only extends to any breach which would have been legal if the Bill had then been in force. So, this is not a blanket approval of all previous errors;
  • allows members’ meetings required to be held on/after 26th March 2020 until 30th September 2020 to be held at any point up to and including the 30th September 2020 (with a power to extend this period); and
  • will allow extensions to some Companies House filing deadlines.
The less good news is it is unlikely to solve everyone’s problems, as the Bill:
  • is only applicable to corporate charities as defined in the Bill, which are in general terms Companies, CIO’s, SCIO’s, or Registered Societies. It seems a likely omission that this was not extended to cover charities formed under Royal Charter or an Act of Parliament and this point has already been raised in the House of Lords scrutiny of the Bill.
  • does not override any quorum requirements which will still need to be met, albeit virtually;
  • does not override members’ rights to: receive papers for the meeting as required under the charity’s governing documents or legislation; or request hard copies of certain documents (although BEIS previously indicated help with this issue would be given, so it is possible this may be included in regulations made under the Act once in force); and
  • whilst it seems to retrospectively approve some breaches in how a meeting was held on/after 26th March it doesn’t seem to explicitly cover flaws in any postponement or adjournment processes.
However, if you are planning for your AGM now below are some points to consider:
  • Allow extra time to plan/get consents/communicate.
  • Make sure you have the latest versions of your governing documents to refer to.
  • Check whether there were expiry dates linked to any authorities or appointments given at last year’s AGM, as these will not be automatically extended under the current Bill, unless they stated “the next AGM” which should allow for its movement.
  • If dependent on members’ approval, check when your accounts and other statutory documents need to be filed, and whether you can apply for a filing extension for these if you delay your AGM. Companies House are currently offering a 3 months extension for filing accounts on prior application and this may be extended under the Bill.  Likewise, you can contact the Charity Commission if you may need an extension.
  • Check rotation requirements of Directors/Trustees. Will you have a gap to fill?
  • Date the AGM should be held on or by, can you wait for the Bill to be in force, or do you need to issue a notice now?
  • You will still need to meet quorum requirements, albeit once the Bill is in force this can be done virtually. If you cannot meet these, consider if it is necessary to approach the Charity Commission for assistance in overriding provisions.
  • Consider use of Proxies. Under the Companies Act all members have a right to appoint a proxy.
  • You will still need to meet any requirements about communicating with members by email or website, it doesn’t seem at present that these requirements will also be suspended under the Bill.
  • If you are proposing to use a virtual meeting provider check the platform’s security and consider risks to confidentiality.
  • Keep members informed. One of the key risks faced by failing to hold an AGM properly is that the members, amongst others, could later object to what was done. The more information and communication you can have with members on what the Charity is doing (for example webcasts by the directors, Q&A sessions, offering a facility to submit questions before the AGM, the better chance the charity trustees will have of defending any allegations by members that they may have been disadvantaged).

If your charity has complex requirements and/or you are still in doubt as to what options are available to you, then we would recommend that you seek specialist advice.