The Impact Of Covid-19 On Charities & General Meetings

Government-introduced measures as a result of the Covid-19 pandemic have had a significant impact on the ability of charities and other commercial entities to trade and administer their businesses.

As a result of the Corporate Insolvency and Governance Act 2020 (2020 Act), companies, including corporate charities, can benefit from the temporary flexibilities that have been introduced, including holding annual general meetings online or postponing these meetings.

Any charity covered by this legislation that was scheduled to hold an annual general meeting since 26^th March 2020 and holds that meeting in a way that adheres to Covid-19 social distancing measures in place will have done so in accordance with the law, even if it did not meet the requirements for holding such a meeting in accordance with its governing documents.

Charities which have postponed their general meetings since 26^th March 2020 currently have until the end of September 2020 to hold those meetings. In doing so they can take advantage of the additional flexibilities offered by the 2020 Act, as set out below.

Charities holding annual general meetings and the impact of Covid-19 – the options available to members and trustees

In the specific cases of members’ meetings (not trustee/director meetings) of Charitable Incorporated Organisations or charitable companies, held between 26th March 2020 and 30th September 2020:

• They may be held by phone/video or other electronic means, even if the governing document requires them to be held physically face-to-face.
• Members still have the right to vote, but the charity can require this to be done electronically, or by other means (post/electronically).
• Members will not have the right to attend a meeting in-person or participate in meetings other than to vote.

Members/trustees can use these provisions if they feel it is in the charity’s best interests to hold the members’ meeting virtually rather than to defer it. If they rely on these provisions then they must ensure that this decision is recorded in the minutes and that all relevant meeting requirements are met. Trustees need to ensure that only those eligible to vote can do so and that they record who has voted and the percentages of votes cast.

This temporary amendment in the 2020 Act also applies to exempt charities that are community benefit or friendly societies. The measures set out in 2020 Act apply until 30th September, although this period may be extended (or shortened). Any extension has to be in increments of three months but cannot be beyond 5th April 2021. The explanatory notes accompanying the 2020 Act state that its measures are only intended to be temporary and should only apply for so long as they are necessary to allow general meetings to be held in a manner consistent with the need to reduce the spread of Covid-19.

Whilst unincorporated charities are not covered by these provisions, trustees of those organisations should consider changing the requirements in their governing documents to extend timings and/or to allow virtual or telephone meetings.