With traditional AGMs not possible due to a ban on mass gatherings, Rachel Gwynne, Legal Director in the social housing team at law firm Shakespeare Martineau, offers advice to RPs on how essential decisions can still be made.
Annual General Meetings (AGMs) are no longer a legal requirement for housing associations, however, many have decided to continue holding AGMs, as they are often the forum for important decision-making and information sharing with tenants and leaseholders. In addition, many housing associations’ constitutions still require an AGM to be held. Unfortunately, the ban on mass gatherings due to COVID-19 means AGMs which were scheduled to take place during lockdown could be suspended, creating a host of unwanted implications. So, with AGM season now upon them, what can RPs do to ensure that essential decisions can still be made?
As well as a way for people to keep informed about matters regarding the organisation, AGMs also offer housing associations an opportunity to appoint and retire board members, approve accounts and appoint auditors. As such, they are essential to the smooth running of the business, and alternative methods need to be found to allow AGMs to continue during lockdown.
Most RP constitutions will include provisions that AGMs have to be held within six months of the organisation’s financial year-end, and so it may be possible to postpone these AGMs until later in the year, once lockdown restrictions have been lifted. However, this will not be the same for every RP, and constitutions will need to be reviewed to see whether this is possible.
It is likely that the majority of RPs’ constitutions will only permit a hybrid or physical AGM alternative, neither of which is currently possible. This means alternative e-solutions need to be considered.
One option may be a virtual AGM. On a positive note, there would be monetary savings with no need for a venue, catering or travel expenses. Plus, any members that would have been unable to attend a physical meeting may be able to participate, improving the attendance rate and potentially increasing engagement.
Although the usual financial considerations will not need to be made, there is still a level of investment needed for virtual AGMs to go smoothly. Two-way communication is essential, with shareholders needing to attend, speak and vote. Therefore, provisions for technical support and equipment, and hosting and Internet considerations will need financial investment. However, this is a small price to pay for a successful AGM.
In addition, an RP’s constitution must allow for virtual AGMs to take place. This includes careful review of what the minimum quorum requirement is for an AGM to be considered valid. Generally speaking, most RPs’ constitutions have quorum requirements of more than two people needing to be present in person. Current lockdown measures mean meeting these quorum requirements is practically impossible. Therefore, RPs must investigate other ways to make any decisions that are urgent or essential.
If it is not possible to carry out an entirely virtual AGM meeting, and it cannot be postponed, then it is possible that the two or more persons required to attend the AGM could be classed as ‘essential for work purposes’. Of course, appropriate social distancing measures must be maintained throughout the meeting, with all other attendees present by proxy or video call where they can hear and participate.
One other way of dealing with urgent or essential decisions may be to consider whether written resolutions can be used. Some RPs may be able to pass members’ written resolutions more easily than others depending upon the provisions contained in their constitution. However, written resolutions do not tend to work well where there is a large membership, particularly if electronic signatures cannot be used.
Once things return to normal, AGMs will likely become physical meetings again. Nevertheless, now that people are more aware of the potential obstacles, RPs may move towards holding electronic meetings, or at least make provisions for them. Hopefully, such exceptional circumstances will not happen again, but it may be wise for RPs to consider amending their constitutions to cater for virtual meetings, just in case.
Offering a more dynamic and inclusive way to do business, making the most of the technology available is certainly not a bad thing, now or in the future.
To ensure that necessary tasks can still be done lawfully, RPs should review their constitutions as soon as possible. If an AGM has already been announced, then an amendment notice should be sent out to members in ample enough time.
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