Bill allowing virtual board meetings passes first stage in parliament

The Corporate Insolvency and Governance Bill would allow charities to hold remote AGMs, even if their constitutions forbid it

This article has been clarified, please see final paragraph.

Legislation that will allow some charities to hold board and members meetings virtually, even if the organisations' constitutions do not permit it, passed the first stage on its way to becoming law last week.

The Corporate Insolvency and Governance Bill had its first reading in the House of Commons on 20 May. If passed, the legislation would relax some corporate governance laws to help organisations deal with the challenges of meeting during the coronavirus pandemic. 

It would apply to charitable companies, charitable incorporated organisations  and community benefit societies, but not to unincorporated organisations.

The flexibilities allowed under the bill would enable members to attend meetings virtually, and meetings would not have to be held in a specific physical location, even if a charity’s governing document says that they should be. 

It would also allow votes to be placed electronically or in a way different from that set out in that charity’s constitution. 

In addition, any organisation that was required by its constitution to hold an AGM during the crisis would be able to postpone the meeting until as late as September if necessary.

Simon Steeden, a partner at the law firm Bates Wells, said the legislation would be retrospective, meaning it would validate AGMs and other meetings that had already taken place during lockdown and validate any resolutions passed at them, even if they were against the organisation’s rules.

“The flexibility to hold meetings in ways that aren’t currently permitted under an organisation’s governing document will be particularly helpful for companies, charities and mutuals that have urgent resolutions to be passed by their members over the next few months, such as in relation to the appointment of board members,” Steeden said. 

“Many organisations have been grappling with how to hold virtual or hybrid meetings to comply with government guidelines on social distancing, while ensuring that resolutions are passed in accordance with constitutional and statutory requirements.”

Currently, the measures introduced by the bill would apply only until 30 September, unless they are extended by parliament.

Steeden added that even organisations that did not need to hold general meetings before 30 September might want to take advantage of the legislation. 

“It might be advisable to use the window of opportunity offered by the bill to change governing documents to ensure that organisations have the flexibility to hold virtual and hybrid meetings after 30 September,” he said.

The bill is due to have its second reading in the House of Commons on 3 June.

This article has been amended to clarify that the law would apply only to charitable companies, charitable incorporated organisations and community benefit societies.

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