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Covid-19 governance advice

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AGM voting card

Coronavirus is impacting on how Co‑operatives UK members can effectively govern their businesses. This guidance page has been developed to give some general governance advice in relation to the coronavirus pandemic. 

Planning your AGM 

This advice focuses particularly on the planning and staging of annual general meetings (AGMs), filing of annual returns and submission of application forms to the Financial Conduct Authority (FCA) after 30 March 2021.

Annual general meetings (AGMs)

The relaxations around general meetings and the mode of holding them brought into force by the Corporate Insolvency and Governance 2020 (CIGA2020) will come to an end on the 30 March 2020. This means that co-operatives will need to plan ahead about how AGMs or other general meetings will be held after this date, as the options available will depend on the co-op’s governing document,  legislation and guidance in place at the time the meeting notice is despatched and at the date and time of the meeting itself.

What are the options for co-ops?

Amending your co-op’s rules to enable meetings to be held online

Co-op’s considering holding meetings online, should check their governing documents as soon as possible to ensure that there is nothing that would prevent a meeting being held in this way.  For co-op’s that need to update their governing document to permit meetings to be held online, we would urge you to use the enabling provisions in CIGA2020 to hold an online general meeting specifically to amend the rules before these expire at the end of March 2021.

We have advised and assisted many co-ops to do this over the course of the last year and any co-op needing advice on how to do this can contact us for support.

Holding meetings online

It is likely that general meetings will be required to be held on a closed basis until at least 17 May and possibly until at least the 21 June so those co-operatives with governing documents that allow meetings to be held online should ensure members are kept up to date with regards plans for holding the AGM, either by sharing a proposed future date or advising members of plans to hold the AGM online.

Members still have the same rights and should be given opportunities to engage in the business and vote in other ways than in person. If an in-person AGM is held and members are asked not to attend, then opportunities should be provided prior, during or after the meeting for engagement and challenge and any questions asked should be responded to in advance in order to enable members to use their votes before the meeting.

If a co-operative decided to hold a general meeting online and its governing document is silent or specifically prohibits meetings from being held online, this would mean it was in breach of its governing document. Members can take action against a co-operative if a breach occurs. Co-operatives should seek to gain the consent of and/or consult with its members to limit the risk of a member taking action against the co-operative for breaching its governing document; or let your members know as soon as possible the reasons why you have decided to hold a virtual AGM even though your governing document does not provide for it and make sure you provide them with as many opportunities as possible for asking questions and attending online to limit the risk. Note, the FCA states that it doesn't consider it in the public interest to take action if a breach occurs.

Find out how to hold an online AGM

Hybrid AGMs

Depending on the restrictions on gatherings in place at the time, co-operatives may consider a hybrid meeting (where meetings permit both physical and virtual attendance). Again, co-operatives should check their governing documents to ensure that there is nothing to prevent a meeting to be held in this way and keep members up to date in the same way as if the meeting was being held wholly online.

Find out how to hold a hybrid AGM.

Find out how to hold a hybrid AGM

The Co-operative and Community Benefit Societies Act 2014 and Companies Act 2006 DO NOT require co-ops registered under them to have an AGM. If a co-op is obligated to stage an AGM this is because it is a requirement of its governing document. If a co-op decided to postpone its AGM this would mean it was in breach of its governing document. Members can take action against a co-operative if a breach occurs. Co-operatives should seek to gain the consent of and/or consult with its members to limit the risk of a member taking action against the co-operative for breaching its governing document. Note, the FCA states that it doesn't consider it in the public interest to take action if a breach occurs. 

Wherever possible, we advise holding AGMs using electronic means or where restrictions permit, a hybrid AGM wherever possible and use proxies if you have the power to do so. If a co-operative does not have the power to use electronic means or appoint proxies then it could consider doing this anyway. The impact of a Rules breach to enable participation by electronic means is lower than the impact of cancelling an AGM completely. If a co-operative has a small number of members (less than 30) then the AGM agenda items could be agreed by written resolution or where restrictions permit, by holding a hybrid AGM where a small number of members to achieve a quorum can be permitted to attend a physical location and other members can join online.

Often the agenda for an AGM is not time specific. For example, you can still run elections to the Board; minutes can be signed off at any point; application of surplus can wait to a later date. If a co-operative must re-appoint an auditor then this is probably more time specific, but can probably be delayed. Specifically in relation to societies, the annual accounts and returns do not have to be agreed by members; rather they need to be presented/confirmed by them. Annual accounts and returns can be filed with the FCA on time and then confirmed by the members at a later date. Companies House has issued guidance here.

This is the current position. We are in contact with the FCA and will update this information when we are made aware of any changes:

“We are aware that some societies are considering a number of options, including postponing scheduled member meetings, such as Annual General Meetings (AGMs). Societies are concerned that this could lead to them breaching their own rules or legislative requirements.

“It is for societies to reach their own decision as to whether to go ahead with any planned meeting, taking into account any relevant Government guidance, their own individual circumstances and, where appropriate, legal advice. Societies should take reasonable steps to ensure they meet any obligations they are under as soon as reasonably practicable. Societies will want to consider alternative arrangements such as making use of video conferencing where permitted.

“The rules of an individual society govern the relationship between a society and its members. It is important members are afforded the ability to exercise their rights under the rules of a society. Societies may want to take their own advice to consider any risks arising from action taken by members as a result of a breach of their own rules. The FCA has no role to play in determining disputes over society rules.

“Where, following Government guidance, the postponement of a general meeting results in a breach of a legislative requirement, it may fall to the FCA to make a decision as registering authority as to what if any action we take. We do not consider it to be in the public interest for us to take action in this context where we can see that a society is taking steps to ensure they meet the legislative obligation as soon as reasonably practicable. Members of societies will, of course, retain the ability to take action in accordance with their rights under the rules of a society.

For those societies that have listed securities, they should continue to consider and comply with their obligations under MAR and the relevant FCA listing rules.”

Annual returns and accounts

To enable businesses to manage their response to COVID-19 organisations registered as companies are able to apply for a three month extension for filing their accounts. The FCA has now confirmed it will not take any action to follow-up on any delayed submission of annual returns and accounts by societies before 31 October 2020, where the delay is three months or less. For annual returns and accounts due for submission by 30 April 2021, the FCA has confirmed it won't take any action to follow-up on delayed submissions, where the delay is three months or less.

"We are aware that some mutual societies are considering a number of options, including postponing scheduled member meetings, such as Annual General Meetings (AGMs). Societies are concerned that this could lead to them breaching their own rules or legislative requirements. It's for societies to reach their own decision as to whether to go ahead with any planned meeting, taking into account any relevant Government guidance, their own individual circumstances and, where appropriate, legal advice. Societies should take reasonable steps to ensure they meet any obligations they are under as soon as reasonably practicable. Societies will want to consider alternative arrangements such as making use of video conferencing where permitted.

"The rules of an individual society govern the relationship between a society and its members. It's important members are afforded the ability to exercise their rights under the rules of a society. Societies may want to take their own advice to consider any risks arising from action taken by members as a result of a breach of their own rules. We have no role to play in determining disputes over society rules. The Corporate Insolvency and Governance Act 2020 has made it easier for societies to hold meetings virtually. Schedule 14 of the Act contains a number of helpful logistical provisions, notwithstanding anything in the rules of a society. Currently, these provisions apply to meetings due to take place up to 30 December 2020.  

"Where, following Government guidance, the postponement of a general meeting results in a breach of a legislative requirement, it may fall to us to make a decision about what, if any, action we take. We don't consider it to be in the public interest for us to take action in this context where we can see that a society is taking steps to ensure they meet the legislative obligation as soon as reasonably practicable. Members of societies will, of course, retain the ability to take action in accordance with their rights under the rules of a society.  For those societies that have listed securities, they should continue to consider and comply with their obligations under MAR and the relevant FCA listing rules."

Application forms

Rules around the submission of application forms have been slackened due to Covid-19. Following consultatation with the FCA we have produced new guidance.

All applications should be submitted online rather than via postal methods. Applications submitted either through the Mutuals Society Portal, or by email to [email protected] (or to [email protected] for annual returns) will be processed significantly quicker than applications submitted by post.

  • Electronic signatures - The FCA will accept elecronic signature on all applications, including on accounts
  • Statutory declaration - A number of application forms (such as rule amendments) require the completion of a statutory declaration. For the time being the FCA no longer require statutory declaration forms to be fully completed. The FCA does not require the form to be signed by a solicitor/commissioner for oaths/notary public or justice of the peace. However, the authority does ask that an officer/secretary of the society completes the first half of the form (as above, electronic signatures will be accepted)
  • Recording of charges - The FCA is currently asking that charge instruments are certified as a true copy. The FCA will accept electronic certification

Have a specific governance question?

Get in touch with our advice team

Insolvency

Government has introduced new insolvency legislation to give businesses in distress more opportunities to turn things around. These apply to all co-operatives including registered societies.

> Read more

Our COVID-19 advice web pages are regularly reviewed and updated. Get updates via email, Twitter, Facebook or LinkedIn

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