Please click here to read OSCR’s COVID-19 Guidance for Charities

3. Charity meetings and governance

Published: 30/03/2020
Updated: 27/05/2020

Most charities will need to change the way they work during the outbreak. Decisions about how you can operate during this time need to be taken collectively by the charity trustees, where possible. Whilst decisions on the short term measures will need to be taken quickly, the impact on longer term operations also needs to be carefully considered. 

Major decisions and changes need to be recorded and advice taken where necessary.

For general information, please read our guidance on how to manage your charity.

SCVO has key points on governance and links to other sources of information relating specifically to the COVID-19 pandemic here.

 

The COVID-19 pandemic is going to have an impact on your ability to hold your AGM.  This might make it difficult for you to finalise your annual report and accounts.

Wherever possible, we would ask you to try to get these to us on time.  All you need to do is log on to OSCR Online as usual and scan us your report and accounts.  However, we understand that it might be difficult for some and we will take an understanding and proportionate approach to this and no charity in this situation will be penalised for being late. See the Reporting to OSCR section of the guidance for more on accounts.

It may be that by postponing your AGM, you are not fulfilling what it says in your governing document.  However, we would be understanding and proportionate about that. 

Meeting face-to-face is not going to be possible at the moment so holding meetings virtually will be a good option.  Some charities have specific provisions in their governing documents to allow meetings to take place over the phone or using digital solutions.  However, in the current situation, we are happy that charities hold their meetings in this way even if the governing document doesn’t say anything about this.  This will allow charity trustees to have important discussions and to take decisions at this difficult time.  Where you decide to take this virtual route, you should record that they have done this, demonstrating good governance of your charity. 

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

Charitable companies and SCIOs 

The Corporate Insolvency and Governance Bill is currently going through the UK Parliament and it is expected it will be passed by the end of June. When the Bill is passed it should give companies and SCIOs greater flexibility for when and how AGMs and members meetings are held. We will update our guidance when the Bill is enacted.

 

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.

Even if your governing document does not currently allow it you can use telephone or online meetings during the COVID-19 outbreak to help make sure you have enough people to make decisions and form a quorum.

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.