AGMs and Members meetings
The rules for Charitable companies and CIO’s on holding AGMs and other meetings online have been extended to 30 March 2021 under the Corporate Insolvency and Governance Act 2020.
For other types of meetings or other constituted charities, trustees then need to check their Governing Document. If online meetings are not allowed then trustees should consider amending their Governing document. If you need to postpone meetings then you need to refer to the rules in your governing document relating to postponement. If the governing document is silent then good governance determines that the reasons for holding the meeting in such a way should be recorded fully. This is particularly so if you cannot hold the AGM and finalise the accounts.
Where meetings are held virtually, great care is needed in recording the meeting. Notably, making sure that the meeting is quorate and also in recording the votes on proposals discussed and decisions taken. Everyone entitled to vote should be able to record their vote as if present in person. The process should be recorded. All other meeting requirements need to be met.
Use of Reserves and Restricted Funds
In particular, at this time of crisis Trustees need to consider very carefully whether there is any need to change the priority previously established for expenditure of the charity. This could apply to funds which have previously been designated for a purpose and the trustees may need to consider whether these funds can be re-prioritised.
Restricted Funds and Endowment Funds often cannot be re-prioritised without the permission of the donor.
Should trustees wish to re-designate funds they should record the reasons and if they wish to ask a donor about restricted funds they should consider both the potential long term and short term impact on the charity.
Insolvency Help for Charities.
The Corporate Insolvency and Guidance Act 2020 has extended the moratoriums relating to debts; certain contracts; wrongful trading provisions (amongst others) which have been in place this year. The relevant dates for the extended periods vary depending upon the particular circumstances, but many are extended to March 2021. We recommend that advice is sought from an Insolvency Practitioner if your charity is likely to encounter problems relating to debts at an early stage.
Care must be taken to ensure that your charity is operating within its objects and is carrying out the activities it was established for. This can apply, for example, to the nature of the activity or the geographical area in which it operates. Failure to abide by the governing document leaves trustees exposed. You may wish to consider changing your objects, but this can take some time, to ensure you are complying.
By Steve Cresswell, partner