Holding Board, Committee and member meetings in the COVID-19 environment.
Much of the business of For Purpose organisations is necessarily conducted through meetings – both regular meetings of your responsible persons (your Board or Committee) throughout the year and a meeting (typically annual) of your members.
New social distancing measures will be in place for at least six months, with the possibility of enhanced restrictions. Current restrictions limit non-essential gatherings to less than 100 people with no more than one person per four square meters. For organisations with a significant number of members, in-person annual general meetings will no longer be feasible. Even if your annual general meeting or Board or Committee meeting might be compliant with social distancing, many organisations and individuals are likely to prefer not to meet in person at this time.
Here’s what you need to know before you schedule that video conference.
Play by your rules…
Your governing document (a constitution for companies or rules for associations) sets out how decisions are made by your responsible persons or members. A well-drafted governing document will provide for meetings to be held by technology and confirm that decisions made at those meetings are legally effective. For example, the ACNC template constitution for a charitable company limited by guarantee reads:
The company may hold a general meeting at two or more venues using any technology that gives the members as a whole a reasonable opportunity to participate, including to hear and be heard.
Unfortunately, many governing documents are silent on the use of technology or were prepared long before technology existed to facilitate voice or video conferencing (this is one of many reasons why you should dust off your governing document and make sure it is still fit for purpose). In this case, the legislation that applies to your organisation may help.
… as well as the legislation
You also need to be aware of the requirements of your governing legislation.
The requirements for companies limited by guarantee differ depending on whether or not your organisation is a registered charity.
If your organisation is not a registered charity, you may benefit from the “no-action” position taken by the Australian Securities and Investments Commission (ASIC). ASIC has advised that it will not take action against companies that breach their constitution by holding a hybrid (online and in person) or online only AGM. ASIC will also allow companies to defer AGMs due to be held on 31 May to the end of July. ‘No-action’ means you may still be in breach of your constitution or the Corporations Act, but ASIC will not act on the breach. Be aware that a vexatious member might not overlook the breach. There is detailed information here (albeit targeted at larger companies) about the position of companies limited by guarantee that are not registered charities.
The ‘no-action’ position for companies limited by guarantee applies to members meetings only. It does not apply to meetings of directors. The replaceable rules permit directors’ meetings by technology (if your constitution does not expressly exclude the replaceable rules or include a contrary provision).
If your organisation is a registered charity, its principal regulator is the Australian Charities and Not-for-profits Commission (ACNC), not ASIC. Although registered charities are exempt from the Corporations Act provisions which regulate meetings, they must comply with the Governance Standards. Among other things, the ACNC Governance Standards require you to be accountable to your members. This includes holding members’ meetings and complying with the provisions of your constitution that regulate meetings.
The ACNC has been proactive about relaxing requirements in the past for charities that have legitimate compliance challenges. For example, reporting deadlines were extended for charities affected by the bushfires. However, the current ACNC guidance falls well short of providing reassurance to registered charities that propose to extend their AGM date or hold a hybrid or online-only AGM in breach of their constitution due to coronavirus concerns.
Registered charities must also comply with the provisions of their constitution that regulate directors’ meetings. Your constitution may permit the use of technology or circular resolutions. If you’re unsure, seek advice to make sure that your directors’ resolutions are valid.
In some cases (such as all Victorian associations meetings and Queensland associations Committee meetings) the legislation permits associations to hold a meeting by technology even if the rules don’t expressly allow it. In other cases, you can seek an extension to your AGM date.
Again, associations would benefit from additional guidance from their State regulator and/or the ACNC (in the case of charitable associations).
Make sure you meet other legal requirements
A meeting held using technology must still meet the other requirements of your governing document. Don’t forget to:
- issue the proper notices (the ASIC ‘no-action’ provisions may assist sending supplementary notices);
- make sure the technology gives members as a whole a reasonable opportunity to participate (Can they ask questions of the Board or Committee and any auditor? Consider accepting additional questions in advance of the meeting.);
- consider whether your governing document allows proxy voting or voting by postal ballot;
- observe quorum requirements;
- ensure participants can be identified and are entitled to be in the meeting; and
- properly minute the meeting and any resolution passed.
Use great meeting etiquette
If your organisation hasn’t used video conferencing to hold its meetings before, make sure you:
- test the proposed facility beforehand, ensuring that the chair in particular understands how to use the technology and that it is appropriate for the proposed number of attendees;
- provide clear instructions on how to access the meeting room and website together with your meeting notice;
- establish and circulate a written meeting protocol to assist members to communicate effectively – this might include, for example:
- muting mics when individuals are not speaking;
- providing designated times for questions;
- waiting until the chair calls on you to speak; and
- asking people to raise their hands if they would like to speak.
It is helpful to remind participants of the protocol before the session commences.
Why wrestle with an outdated document?
This is an issue that may last from some time, or could recur in the future. Having the flexibility to hold an online Board, Committee or members’ meeting without compliance concerns is always valuable. Additionally, if your governing document predates technology or is silent as to the use of technology, there’s a good chance it may not include other important provisions too.
How we can help
If you’d like advice about the provisions in your current governing document or how they might be updated, get in touch with the For Purpose team at Moores. Please do not hesitate to contact us here.