Mark Lewis, partner and head of Lodders’ Charity law team, explains what the Corporate Insolvency and Governance Act 2020 means for AGMs.
*Please click here for an update on this guidance as of 29th September 2020*
The recent Corporate Insolvency and Governance Act 2020 (the Act) means legislation surrounding AGMs will be temporarily amended to facilitate meetings in a safe way whilst honouring social distancing guidelines.
This will apply to companies, charitable incorporated organisations, and Community Interest Companies (qualifying bodies), but it does not apply to unincorporated charities.
It would therefore be sensible for unincorporated charities to consider how their constitutions may be amended in the future to give more flexibility, and indeed the same applies to qualifying bodies, as measures proposed under the Act are only temporary.
How can meetings be held under the Act?
The provisions of the Act go on to explain that meetings held between 26th March and 30th September 2020 (the relevant period):
- Need not be held at any particular place;
- May be held, and any votes may be permitted to be cast, by electronic means or any other means; and
- May be held without any number of those participating in the meeting being together at the same place.
Paragraph 3(6) of schedule 14 of the Act also goes on to set out the restrictions imposed on members of organisations. It states that members will not have the right to:
- Attend the meeting in person;
- Participate in the meeting other than by voting; or
- Vote by particular means.
The measures introduced by the Act will mean that ‘qualifying bodies’ who were due to hold meetings during the relevant period will be able to hold their meetings in an alternative way i.e. electronically, via phone. Furthermore, for organisations who have already held meetings, but haven’t been able to meet the requirements set out in their constitutional documents due to coronavirus restrictions (e.g. quorum), it will be deemed retrospectively that the meeting has been held in accordance with the law.
The provisions codified by the relevant sections of the Act are due to expire on 30th September 2020; the end of the relevant period. However, based on how long restrictions and social distancing guidelines are kept in place for, this period may be extended on a three-monthly basis up to the longstop date of 5th April 2021. Similarly, if appropriate, the relevant period may be shortened, but this is unlikely to be the case.
Extension of period to hold AGMs
A qualifying body may extend the period during which it must hold an AGM that would otherwise fall between 26th March and 30th September 2020. In these instances, the qualifying body will be given until the end of that period to hold the meeting.
The extension of filing periods
Further to the relaxation of rules relating to meetings, the Corporate Insolvency and Governance Act, alongside the provisions of the Companies Regulations 2020 (such as filing requirements and temporary modifications) also provides extensions in relation to Companies House filings. Sections 39 sets out how time limits will be lengthened under the Act, and section 40 lists which filings will attract the extended filing periods.
The Act and Regulations detail that filings listed in section 40 of the Act will be eligible for the following time extensions:
- Where the current statutory time limit for filing is 14 days, this should be substituted and construed as being 42 days until the expiry of the Act;
- The 21-day deadline for registered charges should be increased to 31 days; and
- Where the current statutory time limit for filing is three, six, or nine months, this should be substituted and construed as being 12 months until the expiry of the Act.
It is worth noting that if the statutory filing period at present is 12 months or more, section 39 shall not apply.
Under the filings listed in section 40, arguably the most two most important filings for companies in normal circumstances are accounts under s442 and confirmation statements under s853A(1) of the Companies Act 2006. Currently, accounts must be filed with Companies House within nine months of the end of the relevant accounting period, and a confirmation statement must be delivered to the Registrar of Companies within 14 days of the end of the review period.
Therefore, under the Act, the time scale for filing accounts will increase to 12 months, and the period for filing confirmation statements will increase to 42 days.
To find out more about Lodders’ Charity law services, or for assistance with your organisation’s constitution and accompanying documentation, please get in touch with Mark Lewis on 01789 206135, or via email.