Due to current social distancing measures, many organisations are considering whether they can hold general meetings using technology. This article aims to address the concerns that companies limited by guarantee that are registered charities are facing when looking to hold upcoming general meetings electronically.
Can a charity hold general meetings electronically?
Unfortunately, the answer is ‘it depends’.
What does your governing document say?
A charity’s governing document will influence whether a general meeting can be held using technology. As an example, the Australian Charities Not-for-profits Commission’s (ACNC) template constitution for companies limited by guarantee includes the following clause in relation to general meetings of members:
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. Anyone using this technology is taken to be present in person at the meeting.
If a charity’s governing document includes a clause expressly permitting general meetings to be held using technology, the charity can proceed to hold a general meeting in line with that clause.
If the governing document is silent on this point, the charity will need to be able to rely on legislation in order to hold a general meeting using technology. Members may question the validity of resolutions passed at general meetings that were not validly held.
In relation to voting, companies must ensure that votes taken at the meeting are taken on a poll, rather than by a show of hands.
Can the COVID-19 legislation assist?
The Federal Treasurer recently provided short-term regulatory relief from provisions relating to company meetings under the Corporations Act 2001. The Corporations (Coronavirus Economic Response) Determination (No. 1) 2020 enables companies to hold annual general meeting (AGMs), and other meetings prescribed under the Corporations Act, entirely electronically. The legislative instrument commenced on 6 May 2020 and will remain in effect for six months.
Meetings required or permitted to be held under the Act or the Regulations may now be held using technology that gives anyone entitled to attend a reasonable opportunity to participate without being physically present. This change offers welcome relief to companies given the previous uncertainty surrounding entirely virtual meetings. Quorum, voting, participation, proxy, and notice requirements are now capable of being met by using technology.
In relation to voting, companies must ensure that votes taken at the meeting are taken on a poll, rather than by a show of hands. Notices of virtual meetings must include information about how those entitled to attend can participate in the meeting, including details relating to voting and speaking at the meeting. If a notice of meeting has already been distributed without these details, it must be reissued at least seven days before the meeting is held.
The issue for some charities is that public companies limited by guarantee that are registered with the ACNC are generally not required to hold meetings (including AGMs) in accordance with the provisions of the Corporations Act. Section 111L of the Corporations Act sets out a complete list of the provisions that are not applicable to registered charities. Registered charities instead need to comply with the ACNC Governance Standards.
In most cases, charities will not be able to use the electronic meeting relief offered by the Determination given that their meetings are not required to be held pursuant to the Corporations Act. An exception applies where a charity is required to hold a meeting under a provision of the Corporations Act and that provision is not excluded by section 111L.
Further, meetings must be held in accordance with governing documents, so this relief will not apply where the use of technology to hold meetings has been expressly prohibited in a governing document.
Do the ACNC Governance Standards assist?
Charities can take some comfort from ACNC Governance Standard 2, which provides that charities must ‘take reasonable steps to be accountable to their members and allow their members adequate opportunities to raise concerns about how the charity is run’.
- the governing document of a charity does not explicitly require a meeting to be held in person
- the meeting is not a type that the Corporations Act and therefore, the COVID-19 legislation applies to
it may be arguable that holding a meeting in the current COVID-19 environment where members are invited to attend and participate via some form of technology would still comply with ACNC Governance Standard 2.
If a charity’s governing document is silent on this issue, it may be difficult to find an authority allowing a general meeting to be held using technology.Companies limited by guarantee that are also registered charities are regulated by a combination of legislation that generally results in the position on electronic general meetings being unclear. For some charities, their governing document may provide a solution.
We strongly recommend that charities seek specific advice as to whether they can hold an upcoming general meeting using technology.