Emergency measures introduced by the UK Government in response to the COVID-19 pandemic include a ban on gatherings of more than two people and stringent restrictions on when people may leave their homes. In these circumstances, charities have raised questions as to whether, and if so how, they can hold meetings. This will depend on the charity's circumstances, including its legal structure, any relevant provisions in its governing document and whether the meeting is of members or trustees.
Structure
There are several different types of charity structure, the most common being: company limited by guarantee (CLG), charitable incorporated organisation (CIO), trust and unincorporated association. A charity's structure affects the laws with which it must comply (for example, CLGs will be subject to company law and CIOs the CIO Regulations) and the contents of its governing document. These issues in turn affect the charity's options in respect of dealing with meetings during the COVID-19 pandemic.
If your charity needs or wants to hold a meeting during the crisis, your first step should be to check for relevant provisions in the governing document. The document may provide you with options, such as postponement or holding a virtual meeting. However, it is becoming clear that, for many charities, their governing documents do not afford them the flexibility to deal effectively with meetings during such exceptional circumstances. This problem is particularly acute in relation to the AGMs of CLGs and CIOs.
Member meetings
Charities with a membership beyond their trustees will often hold an annual members' meeting (commonly known as the annual general meeting (AGM)), to enable members to discuss and vote on key issues relating to the charity's governance.
There is no legal obligation on charities (including CLGs) to hold an AGM, although the charity's governing document may require this. For CLGs, the company law requirement to hold AGMs was removed in 2006, but if the articles of association have not been updated they will usually require you to hold an AGM even though it is permissible not to.
Where the governing document does not require an AGM, the charity may consider not holding one in 2020, even if it would normally, or delaying the meeting until later in the year. If member decisions need to be made, it may be possible to pass a written resolution instead.
Where the governing document requires an AGM, it may be impossible to hold one as normal in the current circumstances. There are several potential options available to charities to deal with this issue, but these will depend on the governing document and applicable law.
It is important to ensure that members are kept informed about the charity's plans regarding the AGM. For example, the charity could consider setting up a dedicated page on its website or an email helpline for questions.
The Government has announced that it plans to introduce laws to allow public companies to hold AGMs remotely or postpone them and it is possible that such laws could be extended to charitable companies. Similar provisions could also be introduced for other types of charity. The situation is fast moving and may change.
Virtual/hybrid meetings
A virtual meeting is a meeting held entirely by virtual means, i.e. with no physical location. A hybrid meeting is a meeting where people can attend either physically or virtually. Whether or not a charity can hold these types of meeting depends on its governing document and, on a practical level, whether it has adequate technology in place.
If the governing document contains provisions allowing virtual/hybrid meetings, the charity can proceed on this basis. Any provisions should be complied with and members should be provided with adequate information on how to participate and be able to speak, hear others and vote at the meeting.
If the governing document prohibits such meetings, they cannot be held. Certain provisions, such as physical quorum or meeting location requirements, may constitute prohibitions. If a fully virtual meeting is not possible, it may still be possible to hold a hybrid meeting, e.g. with two people attending physically and others attending virtually.
If the governing document is silent on the point, the position is less clear, but the safest course at present is to assume that such meetings are not permissible. The Charity Commission has suggested it would have a flexible approach should charities opt to hold meetings digitally, but this does not eliminate the risk of complaints from members. However, the position may change if the Government legislates further on virtual AGMs.
Proxies
For some charities, proxy voting may present a solution. This will depend on whether proxies are permitted and any quorum requirements.
Members of charitable CLGs have the legal right to appoint a proxy to attend and vote at meetings on their behalf, even if the articles require attendance in person and contain no provision for proxies. It may be possible for multiple members to appoint the same person, e.g. the meeting chair, as their proxy, to enable the meeting to go ahead with only two persons present, subject to any quorum requirements. Provision should be made for poll voting (because of limits on how many proxy votes a single person can cast where voting is on a show of hands).
CIO and unincorporated association members will only have the right to appoint a proxy if this is provided for by the governing document.
Other voting methods
Some governing documents will also allow postal or electronic voting, which may present a solution, subject to compliance with the relevant provisions and any quorum and oversight requirements.
Delaying or postponing the meeting
If notice of the AGM has not yet been sent out, charities may consider delaying their AGM until later in the year, subject to any requirements in the governing document.
If the notice has already been sent out, the governing document may still allow the charity to postpone the meeting; if so, any relevant provisions should be complied with and members should be informed as soon as possible.
Adjourning the meeting
If the meeting cannot be delayed or postponed, the governing document may allow it to be adjourned, meaning the meeting is convened but then postponed to a later date, potentially enabling one person to attend and then immediately adjourn. If the charity plans to pursue this option, members should be informed in advance.
Note that sometimes the right to adjourn is conditional on a quorum being present, or there is a requirement to hold the adjourned meeting shortly after the first meeting, which may render adjournment provisions of little use in current circumstances.
Amending the governing document
Clearly, the current crisis has demonstrated the desirability of including provisions in charity governing documents that allow for flexibility in respect of members' meetings, such as the ability to hold hybrid/virtual meetings, postpone/adjourn/cancel meetings and/or vote by proxy/post/electronically. Going forwards, many charities will want to consider amending their governing documents to provide this flexibility should a similar situation arise in future. Of course, the charity's members will need to approve any such changes and flexibility should not come at the cost of member engagement. As a separate point, it may also be necessary to amend provisions relating to appointment of trustees, to enable this to be dealt with differently in situations where an AGM is not held.
For some charities, particularly smaller ones, it may be possible to amend the governing document imminently to include more flexible meeting provisions and enable this year's AGM to be postponed, cancelled or proceed in a different way. It may be possible to do this by way of written resolution without the need for a meeting.
What if none of the options apply?
What happens if there seems to be no option but for the meeting to go ahead? In practical terms, this may be impossible in the context of COVID-19. In such circumstances, the charity could consider introducing emergency measures for remote attendance, encouraging proxy voting and/or adjourning, postponing or cancelling the meeting on the basis that it is legally impossible to hold it. The Charity Commission has indicated that this may be necessary due to the pandemic. In these circumstances, we strongly recommend that legal advice is taken and all decisions documented in writing.
Trustee meetings
There is generally a greater level of flexibility afforded to trustee meetings, both in charity governing documents and in law. Once again, the first step is to review the governing document to determine the requirements.
Modern governing documents often include provisions allowing trustees to hold telephone or video meetings; the Charity Commission's model documents for CLGs and CIOs permit this. If the governing document is silent, it is generally accepted that trustees may hold meetings and take decisions in these ways, but best practice would be to obtain advance consent from all trustees. The governing document may also allow trustees to take decisions by written resolution.
However, some governing documents are more restrictive, e.g. they may prohibit virtual meetings or have quorum or other requirements that cannot be met because of COVID-19. In such circumstances, trustees should do everything they can to comply with the governing document but should not avoid taking decisions because of it. The Charity Commission has indicated that holding virtual meetings in the current circumstances is likely to be acceptable. In any event, if the trustees agree unanimously, it is generally accepted they can hold a virtual or telephone meeting or take a decision by email. In the absence of any other options, an urgent decision could be taken and then ratified at a later meeting held in compliance with the governing document. Any decisions made by trustees to hold meetings or take decisions in different ways should be documented in writing.
Once again, charities may want to revisit their governing documents with a view to introducing greater flexibility as regards trustee meetings, so that they are better equipped to take decisions in times of crisis. Even in normal circumstances, this flexibility is often welcome, particularly given the state of technology in 2020.
Filing requirements
Cancelled or delayed meetings may impact on the charity's ability to comply with deadlines for filing accounts and annual returns. It may be necessary to apply to Companies House and/or the Charity Commission for permission for late filing.