Here’s what you need to know about running your AGM from a distance
17 June 2020 at 3:16 pm
Physical distancing rules might mean running your charity’s general meeting a little differently this year. We take a look at what that means.
Imagine you’re an incorporated association, your annual general meeting is coming up, and because of coronavirus restrictions, holding it in person is not possible.
Thanks to video conferencing technology such as Zoom or Microsoft Teams, holding remote meetings is easier than ever. But here’s the catch; your constitution says the meeting must be held in person by a certain date and if you don’t abide by these rules, the meeting is ruled invalid.
It’s an issue that Craig Gibson, a principal lawyer at Macpherson Kelley, has come into contact with on numerous occasions. He fears the problem will only get worse because of COVID-19 restrictions.
So what exactly is the issue?
If someone was to set up an incorporated charity today, Gibson said they would be advised to draw up a flexible constitution – one that allowed for meetings to be held electronically, and did not prescribe a hard date for the AGM.
The issue for a lot of charities however is that their constitutions are outdated and ridgid.
“A lot of these organisations have to have a meeting by September, October, or November, for example. There’s no ambiguity in the language, and that’s obviously a problem when they aren’t able to meet and have more than 10 people in a room,” he said.
Gibson told Pro Bono News that over the last 12 months he has seen a number of cases where disgruntled members of charities have taken their boards or the heads of their organisations to court, claiming that changes to the constitution, meetings, or election processes were invalid.
“While members of charities are obviously there to pursue amicable purposes… it does seem to be that member-based organisations can sometimes be quite aggressive and quite hostile to one another,” Gibson said.
The issue isn’t unique to incorporated charities. Charities structured as a company by limited guarantee are also affected, but because they are registered under the Australian Securities and Investments Commission, the rules are slightly different.
In both cases, Gibson said it was an issue that charities needed to have on their radar as meeting dates approached.
“I think that over the next few months this is really going to start becoming a problem,” he said.
Is there anything the ACNC can do about this?
While the Australian Charities and Not-for-profits Commission might usually be the place to fix an issue like this, unless an incorporated charity is infringing charity law, it’s not the regulator’s place to interfere with constitutional issues.
“The ACNC isn’t bothered about how, or where you want to hold meetings, as long as there’s some kind of accountability and guidance around the actions of the charity,” Gibson said.
A spokesperson for the ACNC told Pro Bono News they understood coronavirus presented unique challenges to charities, including how they held their AGMs, but they still expected charities to comply with their governing documents.
“For many charities, there will be flexibility for the way they can hold an AGM or even acceptable circumstances in which an AGM can be postponed,” the spokesperson said.
The ACNC recently published some practical tips for charities thinking about hosting their meetings remotely such as making sure you consult with stakeholders, being aware of the deadline for holding the meeting and taking into consideration the costs involved.
The ACNC also said it’s a good idea for incorporated charities to check information with their state or territory regulator, because the rules differ depending on where you are.
So what can you do if your charity isn’t allowed to host meetings remotely?
The truth is, it can get kind of tricky. The ACNC suggests seeing how you can change the rules in your constitution, even if it’s temporary.
But as Macpherson Kelley associate Hannah Fraenkel pointed out, that actually requires you to hold a meeting.
Gibson said the best way to approach the issue was to be completely open with your members and try and come to a resolution before things get out of hand.
“Be as communicative as possible so that if a member ever does challenge the steps taken, it can be shown that the board has acted in a way where they’ve tried to give procedural fairness,” he said.
Given this issue is probably not going to go away anytime soon, Gibson suggested planning ahead where possible.
“Most charities should ensure they don’t have this problem again in future by looking to modernise their constitution when they can,” Gibson said.