Government has confirmed that co-operative and community benefit societies will now be covered by its legislation to provide businesses with greater flexibility in how and when they hold their Annual General Meetings (AGMs), or any other General Meetings (GMs) this year.
We know AGMs are right at the heart of member democratic control in co-ops and community businesses. We also know that because of COVID-19 and social distancing, our members have faced a number of dilemmas regarding how and when to hold their AGMs.
Legal clarity and comfort
Back in March government announced it would be legislating to give companies greater flexibility in how they approach AGMs and GMs in 2020. Since then we have been working with government to get this extended to societies in a useful way.
The intention now is that the new legislation will give societies legal certainty and comfort if they need to breach their rules, and usual good co-operative practice, by:
- Holding their AGMs and GMs in ways that restrict in-person participation
- Holding their AGMs and GMs with online participation
- Delaying their AGMs and GMs
The legislation will initially provide this period of legal certainty and comfort up to the end of September 2020, after which it can be extended if needs be. The legislation will also apply retrospectively from 26 March, so any AGMs and GMs that societies have held from that date onwards are covered.
"Originally, this legislation was only planned to help companies, which caused a major headache for some of our members - particularly large retail societies. We took these concerns to government and are delighted that we were listened to and these measures have now been extended to cover societies as well." James Wright, Policy Officer, Co-operatives UK
The Department for Business, Energy and Industrial Strategy and the Financial Reporting Council have updated their information sheet to reflect the fact that societies are now going to be included. We advise society secretaries to read this document carefully.
These temporary measures are subject to successful passage of the upcoming Corporate Insolvency and Governance Bill. We don’t know for sure when this Bill will be introduced to Parliament or when it will come into law, though government’s intention is to get the Bill passed as soon as possible.
The Corporate Insolvency and Governance Bill will also fast-track a number of reforms of insolvency law, which will give companies in distress more options to save themselves. We have been lobbying hard to get co-operative and community benefit societies include as well. While government has been helpful on this, no final outcome has yet been reached.
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We have also been trying to get government to legislate to temporarily extend the statutory deadline for societies to file their accounts with the Financial Conduct Authority. Unfortunately we have not been successful in this. Government takes the view that the statement provided the FCA offering leeway to societies who breach the statutory filing deadline is sufficient.