The Corporate Governance and Insolvency Act 2020 came into force in June 2020. But the measures it covers are due to expire in March 2021. We urge co‑operative and community benefit societies to read this blog and take action.
Its purpose is to provide a number of new measures intended to relieve the financial burden on businesses during the Covid‑19 outbreak – and to increase businesses’ chances of survival.
More detail of these measures can be found in our news item from back in October when the Government extended AGM help to mutual societies.
These measures include a relaxation of the requirements around general meetings by temporarily overriding certain elements in an organisation’s governing document as to how general meetings are held.
What is permitted currently
- The delay or postponement of general meetings until 31 March 2021. This legislation applies retrospectively from 30 March (2020), so any general meetings that coops have held from that date onwards are covered.
- Meetings to be held in ways other than in person (for example online).
What happens after March 2021?
Following our recent conversations with HM Treasury and the Financial Conduct Authority (FCA), we understand that these measures cannot be extended further without primary legislation being passed and this is unlikely to happen before the measures expire at the end of March.
We are continually monitoring this situation and will continue to update members on changes.
We also understand that for co-operative and community benefit societies, the FCA will continue to maintain its position that it wouldn’t be in the public interest to take action where a society is taking steps to ensure that it meets its obligations under the Act as soon as reasonably practicable.
What should you do?
We are aware that many co‑ops have already taken steps to amend their governance arrangements to be able to communicate with members virtually and hold meetings online.
However, the news that the measures will not be extended at the end of March will mean some co‑ops will have to consider what action to take now to enable them to comply with their governance obligations.
Before the Corporate Insolvency and Governance Act 2020 provisions expire at the end of March, Co‑operatives should check their governing documents to understand if they include provisions to enable general meetings to be held virtually and if not, make a plan to amend them.
How can we help?
For any advice in respect of your co‑operative’s governance arrangements or to seek advice about changing your governing document, please contact our advice team.