Virtual AGMs could pose legal risks, charities warned

Charities have been warned not to assume they can hold virtual AGMs as the process may be attached to 'avoidable legal risk'.

Scottish law firm Lindsays has said charities could expose themselves to legal risks by holding annual general meetings online when their constitutons may not allow for them.

The warning comes as lockdown continues and many charities seek to replace face-to-face meetings with digital alternatives.

Lindsays has said the situation is 'not straightforward', but an unconstitutional AGM could raise 'serious questions' about decisions made.

The firm's corporate consultant, David Dunsire, said: "Constitutions typically expressly allow for virtual trustee meetings to be held but not virtual AGMs.

“If the constitution prohibits electronic members’ meetings then it is not possible to proceed unless you change the constitution first, which will also be difficult at present. In this case, the best advice would be to defer until social distancing restrictions are relaxed, then hold a traditional AGM," he said.

“If the constitution specifically permits electronic members’ meetings there are no problems - and, on balance, if a constitution is silent on electronic general meetings, you should be able to proceed with a virtual AGM.”

Both the Office of the Scottish Charity Regulator (OSCR) and the Charity Commission have said they are happy for charities to hold virtual meetings, even if there is no current provision in their governing documents.

But Lindsays has advised charities to check their constitutions now and amend them to specifically permit virtual members' meetings.

"The purpose of the AGM is more than to just consider accounts or reappoint trustees. It is a vital way that charities communicate with members. It would be a pity if the benefits of having a physical platform were lost to the cost saving of holding all meetings on a virtual basis," Dunsire said.

“Needs must at present, but the benefits of people physically meeting in the same room and engaging should not be underestimated.”

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