The Corporate Insolvency and Governance Act came into force on 26 June 2020. It contains specific provisions regarding holding of virtual general meetings, which will be of interest to social landlords. The provisions within the Act apply to the "relevant period" which is defined as the period from 26 March 2020 until 30 September 2020, although this may be amended by regulations but cannot be extended beyond 5 April 2021. The provisions apply to "qualifying bodies" (see below).
Virtual general meetings
Under the Act, general meetings do not need to be held by qualifying bodies at any particular place and may be held where votes can be cast by electronic or any other means. Further, general meetings may be held where members participating are not in the same place. These provisions will apply regardless of what is set out in the constitution of a social landlord.
Accordingly, social landlords that need to convene general meetings during the "relevant period" may convene such meetings electronically – i.e. by way of video conferencing – even where the social landlord's constitution does not permit this.
The Act provides that members positively must not attend the meeting in person, which is clearly intended to reinforce the current restrictions on gatherings in public places, in case members insist upon attending the meeting in person.
In respect of participation in such virtual general meetings, the Act expressly provides that a member of a qualifying body does not have the right to participate in the meeting other than to exercise their vote. This means that social landlords will need to consider the format of their virtual general meetings to ensure that members can only participate by voting and not otherwise.
Extension of period to hold annual general meetings
As well as facilitating virtual general meetings, the Act also introduces regulations to extend the period for holding annual general meetings, where these are due to be held during the "relevant period". Most social landlords will be required under their constitution to convene an annual general meeting within six months of the end of their financial year, which will fall within the "relevant period" if a social landlord's financial year ended on 31 March.
The maximum extended period which may be specified in such regulations is eight months and so we will need to see what is actually introduced under these separate regulations before definitively confirming what the permitted extension will be.
Separately from the publishing of this Act, there have been various announcements regarding regulatory filing deadlines in relation to a social landlord's accounts, and whether the applicable filing deadlines with Companies House, the Financial Conduct Authority and the Scottish Housing Regulator might be extended. This Act does not currently extend any of the applicable deadlines and so social landlords will need to keep an eye on announcements of any extensions by the relevant regulators – the Scottish Housing Regulator has already announced an extension to its filing deadlines.
If a social landlord is permitted to delay the convening of its annual general meeting, that is unlikely to impact on the timescale for filing accounts either, since for most social landlords who have rules based on the SFHA model rules, one of the main reasons for holding the annual general meeting is so that the annual accounts can be "presented" to the members at the annual general meeting, but there is no requirement to have the accounts actually approved by the meeting, and so any delay in holding the meeting should not delay the finalisation and filing of the annual accounts.
Who does the Act apply to?
The Act applies to a "qualifying body", including but not limited to:
- a registered society under the Co-operative and Community Benefit Societies Act 2014;
- a company under the Companies Act 2006; and
- a Scottish charitable incorporated organisation (SCIO) under the Charities and Trustee Investment (Scotland) Act 2005.
What about governing body meetings?
The Act does not make any amendments regarding governing body meetings. Accordingly, the provisions of social landlords' constitutions will still apply. If a social landlord's constitution does not make provision for governing body meetings to be held virtually then the Act will not make any amendments to this and amendments to the constitution will need to be made in order to hold governing body meetings virtually.
That being said, the most up-to-date SFHA model rules do include a provision for governing body meetings to be held virtually.
The amendments in the Act will no doubt be welcomed by social landlords who will need to hold their annual general meeting within the next few months. Further, we are aware that a number of social landlords may seek to hold special general meetings in the near future for various purposes and so the provisions of the Act allow these meetings to be held virtually.