3. Charity meetings and governance

1. Meetings and AGMs

One of the challenges for charities during COVID-19 has been how to hold meetings including Annual General Meetings (AGMs). For many charities it is a requirement in the governing document  to hold an AGM. The governing document will often also outline how you need to do this. For some, this has also had an impact on finalising the Annual Report and Accounts your charity where this has been directly linked to an AGM.

Where restrictions make face-to-face meetings impossible, doing them ‘virtually’ will be a good option. Some charities have specific provisions in their governing documents to allow AGMs and other meetings to take place using digital methods such as phone or online. If your governing document does not allow you to have virtual meetings, you should amend it as soon as possible to permit you to do so. This will help you in the current situation and it will also be good for the resilience of your charity going forward.    

For a few charities, making these changes might be very difficult. This will depend on what your governing document says about how changes can be made and what your charity’s legal form is. Generally, if there is no such clause in the governing document and you decide to hold meetings over the phone or using digital solutions, we will understand. However, you should record this decision clearly and demonstrate that you have done this to exercise good governance in your charity. 

One thing that applies to all charities is the need to make sure you are quorate when you make a decision to amend your governing document.

If you do have the power to make these changes, once they have been made, you should notify OSCR of the changes by sending an email to info@oscr.org.uk

In email, please provide:

• Your charity’s name and charity number
• A copy of the revised governing document
• Evidence of how the decision to make the change was made - this will depend on the charity’s legal form and what its governing document says the charity needs to do to make amendments. For example, you could provide a copy of the minutes of the meeting at which the changes were agreed or a copy of the Resolution passed.

You can also tell OSCR in writing at OSCR, 2nd Floor, Quadrant House, 9 Riverside Drive, Dundee DD1 4NY using the Notification of Changes Made form. More information about amending your governing document to allow for virtual meetings can be found in the 'Changing your governing document to allow for virtual meetings: FAQs' section below.

You should also update other relevant regulators, such as Companies House.

There are lots of free and low cost options for virtual meetings. SCVO have tips for virtual meetings and remote working.

2. Postponed AGMs

As a result of COVID-19 and the resulting restrictions, you may have postponed your Annual General Meeting (AGM). Where you have made this decision, please make sure that you record the postponement and the reasons for it clearly, particularly when this means you have not acted in line with your governing document. It is important for the ongoing good governance of your charity that you can explain your decision making if you are ever questioned on this. 

Postponing your 2020 AGM may result in it ‘bumping up’ against your 2021 AGM. If this is the case, then you should look at your governing document before deciding how best to resolve this. If your governing document requires that you hold an AGM every year then you should still aim to carry out two distinct meetings. This is especially important if your governing document requires you to carry out certain business at your AGM (for example, electing trustees or considering the Annual Report and Accounts).

Depending on what your governing document says about the timing of AGMs, it may make sense for you to hold the two AGMs one after the other on the same day. If you do decide to do this, you must make sure that the trustees and members agree to proceed on this basis and you must be very careful to ensure that your record keeping shows which decisions were made at which AGM. It is also important to make sure the decision to run the AGMs in this way is clearly recorded.

Your governing document may require the AGM to be held at a certain time of year, between specified dates or with a minimum or maximum time period elapsing between one AGM and the next. We will be understanding and proportionate if you are unable to comply with these provisions at the present time or if any concerns are raised with us about the postponement of AGMs or other meetings. 

3. Decision making

Decision-making processes, and the recording of any resulting decisions are important for the good governance of your charity. You need to be able to return to the decisions at a later date, and understand the reasoning behind them. 

This is particularly important if, in these exceptional circumstances, your charity is one of those where the governing document and legal form have made it difficult to make changes to allow you to have virtual meetings. This might mean you have taken the decision, in order to continue to function, to have trustee or members meetings virtually even though this doesn’t meet the provisions of your governing document. Recording your decisions and explaining why a decision was reached will be important if you ever have to explain your actions in the future.

4. Running virtual meetings

Running virtual meetings definitely requires some specific skills. For instance, you may have to spend more time making sure that everyone has been able to participate fully, as it is sometimes more difficult for people to be heard and seen in a virtual setting. However, in general, the normal rules and best practices of face-to-face meetings will be important. These include:

• giving proper notice and all the usual papers to enable attendees to read and prepare beforehand;
• making sure that a quorum is present
• following the usual procedures for managing business including chairing, discussion and voting
• making sure that all attendees have due regard for confidentiality and the sensitivity of any business
• prepare minutes of the meeting – note the decisions taken and the reasons for them

5. SCIOs and companies

As a result of COVID-19, specific legislation was passed to make provision for the ways in which SCIOs, charitable companies and community benefit societies could hold members’ meetings where face-to-face meetings were not possible. The relevant legislation is the Corporate Insolvency and Governance Act 2020. The provisions outlines by the Act were that:

• The members meetings may be held by phone, video or other electronic means even where the charity’s governing document requires them to be held physically;
• Members still have the right to vote but the charity can require that this is done electronically or by other means (such as by post);
• Members do not have a right to attend a meeting in person or to participate in a meeting other than to vote.

Initially these provisions were in force until 30 September. Scottish Ministers made regulations for SCIOs extending them until 30 December and have now extended them again until 30 March 2021. See our news story for further information about this. The UK Government also extended the provisions until 30 March 2021 for charitable companies and community benefit societies. These provisions are not going to be extended any further. This means that if you are a SCIO, company, or community benefit society and your governing document does not permit you to have virtual meetings, you should, where possible, make the necessary changes to your governing document to permit virtual meetings. 

The 2020 Act and the subsequent regulations only apply to members meetings not to meetings of the charity trustees or other meetings.

Since the COVID-19 pandemic began, many charities have contacted asking us if they are allowed to hold meetings virtually instead of in person. To help charities understand what action they have to take, we have produced some FAQs on the topic. 

1. Can we hold our meetings virtually?

Some charities have specific provisions in their governing documents to allow AGMs and other meetings to take place using methods such as phone or online. If your governing document does not allow you to have virtual meetings, you should amend it as soon as possible to permit you to do so. This will help you in the current situation and it will also be good for the resilience of your charity going forward.    

2. Do we need OSCR’s consent before making changes to our governing document?

You do not need OSCR’s consent to change your governing document to allow for virtual meetings unless you also intend to make any amendments to the charity’s objects or purposes.

Charities must seek OSCR’s prior consent if they are amending the objects/purposes. Please go to the ‘Changing your charity’s purposes’ section of the website for more information.

3. Do we have to notify OSCR if we amend our governing document?

Yes, within 3 months of making the changes.

Although OSCR’s prior consent is only required when you are amending the objects/purposes, charities must notify OSCR of any changes to their constitution.

4. How do we notify OSCR of changes to the governing document?

You should notify OSCR of the changes by sending an email to info@oscr.org.uk

In email, please provide:

• Your charity’s name and charity number
• A copy of the revised governing document
• Evidence of how the decision to make the change was made - this will depend on the charity’s legal form and what its governing document says the charity needs to do to make amendments. For example, you could provide a copy of the minutes of the meeting at which the changes were agreed or a copy of the Resolution passed.

You can also tell OSCR in writing at OSCR, 2nd Floor, Quadrant House, 9 Riverside Drive, Dundee DD1 4NY.

5. Can OSCR provide charities with an acceptable form of wording to include in their governing document which would allow them to hold virtual meetings?

There is no agreed wording to suit all charities. However, other charities have used wording along the following lines:

Interpretation clauses

Virtual meeting: a meeting of members of the charity or a meeting of the charity trustees [Board etc] where arrangements have been made in advance to allow participants to attend the meeting by means of a conference telephone, video link or similar means of electronic communication at which all participants can be heard and can hear each other without the need for them to be physically present at the same location. A person participating in a meeting by such means shall be deemed to be attending virtually.

Hybrid meeting: a meeting of members of the charity or a meeting of the charity trustees [Board etc] at which some participants are attending the meeting in person and others are attending virtually.

Meetings clauses

The charity shall hold a meeting of members attending in person or virtually in each calendar year, to be called an ‘annual general meeting’ or ‘AGM’. The charity trustees [Board etc] may call other meetings of the members attending in person or virtually as they think fit. Such meetings may be entirely virtual meetings or hybrid meetings as the circumstances allow.

The charity trustees [Board etc] shall meet not fewer than [….] times a year. Such meetings may be entirely virtual meetings or hybrid meetings as the circumstances allow and as agreed by the charity trustees.

A person attending a meeting virtually shall have the same rights to receive notice, speak, vote and otherwise participate in the meeting as he or she would have if attending the meeting in person. [nb. similar provision can be made for people attending as proxies]

Notice clause

Where arrangements have been made for a meeting to be held virtually or as a hybrid meeting, the notice calling the meeting shall state that fact and include details of the means by which a person may attend the meeting virtually.

Quorum clause

No business shall be transacted at a meeting unless a quorum is present. The quorum shall be [….] persons present and entitled to vote upon the business of the meeting. A person shall be deemed to be present by attending either in person or virtually where arrangements for virtual attendance have been made.

Voting clauses

A person entitled to vote upon the business at a meeting may do so either in person or virtually where arrangements for virtual attendance have been made.

Where a vote is to be taken by means of a secret ballot, any arrangements for a meeting to be held virtually or as a hybrid meeting shall include a means for those attending virtually to cast their vote secretly.

Minutes clause

The minutes of a meeting shall record the names of all persons present at the meeting without distinction between those who attended in person and those who attended virtually.

While updating your governing document to allow you to have virtual meetings, you might decide to do an overall review.  If so, you might want to consult SCVO’s model constitutions which you can find here. 

6. If we intend to change our governing document to allow for virtual meetings, do we have to do so by the end of March 2021?

Ideally, yes. However, we will be proportionate if charities are not able to do this before the end of March due to current circumstances.

7. We do not know if our governing document already allows us to hold virtual meetings - can OSCR check our governing document and let us know if we need to make changes?

Unfortunately, we cannot check the governing documents of individual charities. If charities are unsure if their governing document allows virtual meetings, they could seek advice from their local Third Sector Interface (TSI). Contact details for your local TSI can be found here.

8. If our governing document does not currently allow us to hold virtual meetings, how can we hold a virtual meeting to make amendments?

You should have a virtual meeting if it is the only way you can currently hold a meeting and you have urgent business to attend to, , but make sure you clearly record why you have done so.

9.We are a Charitable Company - do we need to let Companies House know if we change our Articles of Association to allow virtual meetings?

Yes. If your charity is also a company, you must send your amended Articles of Association to Companies House within 15 days of the resolution being passed. This is a legal requirement and we’re finding that a significant number of charitable companies who have notified OSCR, have yet to notify Companies House.

It may be that you have been set up to host a specific event, for instance a festival or an agricultural fair. It may be that this event is specified in your governing document.  We know that it will be impossible for you to do that if the event is taking place in the next few months. We completely understand and you do not need to get our permission to postpone your events.

A quorum refers to the minimum number of people necessary to make decisions and conduct the charity’s business. A quorum can refer to:

• the number of charity trustees required for board meetings, or
• the number of the charity’s members required for membership meetings, for example Annual General Meetings (AGMs).

This number is often set out in the charity’s governing document.

In the current situation, we are happy that charities hold their meetings virtually to help make sure you have enough people to make decisions and form a quorum, even if the governing document doesn’t say anything about virtual meetings. There are lots of free and low cost options for virtual meetings. SCVO have tips for virtual meetings and remote working.

We know you may be concerned that there may be circumstances where you cannot get enough charity trustees or members to form a quorum because of COVID-19 but need to make decisions on the future of your charity. 

If this is the case you should check your governing document to see if it allows you to change the number of people required to form a quorum. If yes, you could change the number now by following the provisions set out in your governing document.

You should notify us of this change using the Notification of Changes Made form.

If you find yourself in a position that you cannot form a quorum you should check your governing document to see what it says about appointing additional people to form a quorum to make valid decisions.

If there is nothing specific in your governing document, it may be that the law governing your legal form (for example Company law or Trust law) makes provision for the appointment of additional charity trustees or members. If you are unsure you should seek legal advice on how you can resolve this issue and the risks to the charity and charity trustees in making decisions without a quorum.

If you have tried to get enough people to form a quorum but are unable to, any decisions you make may be invalid and may be open to challenge from people affected by those decisions, for example, employees or service users.

We will be proportionate when assessing any concerns raised with us about decisions made without a quorum. However, others affected by those decisions may take a different approach. So you should take advice and fully understand the implications of any decisions you make.

We will look at whether your actions were in line with charity trustee duties and if you acted in the interests of your charity and with care and diligence.

We are aware that in the current circumstances many charities’ trading subsidiaries may be finding it difficult to operate and be facing financial difficulties.

As with other businesses, support for trading subsidiaries may be available from government or other sources – see UK Government information for businesses and employers, which includes companies and Community Interest Companies.

The UK Government have announced plans to change to insolvency laws to allow companies ‘breathing space from creditors enforcing their debts for a period of time whilst they seek a rescue or restructure’.

The UK Government will also temporarily suspend wrongful trading provisions to ‘give company directors greater confidence to use their best endeavours to continue to trade during this pandemic emergency, without the threat of personal liability should the company ultimately fall into insolvency’.

Legislation to introduce these changes will be introduced in the UK Parliament soon.

In any case, as a charity trustee you have a duty to put the interests of your charity first. If a trading subsidiary of your charity is likely to be operating at a loss for a sustained period of time then you need to decide what actions are in the interest of the charity. 

The reason for setting up a trading subsidiary is usually to generate funds for the charity and to protect the charity’s assets. Where the charity is supporting the trading subsidiary and not receiving any of the benefits you could be putting charitable assets at risk.

You need to consider the situation, taking into account the whole picture, including the immediate and longer term implications for the charity and its operating model. 

For example, it might be in the charity’s interest to provide short term support to help a trading subsidiary to be mothballed so that it can be reopened when things change to provide long term support for the charity. 

You should make sure to record your consideration and all decisions made so that it is clear why you have taken a particular course of action in the interests of the charity.