Not-for-Profits’ Obligations under their Constitutions and Statutes and COVID-19

The constitutions of most societies and charitable trusts require the holding of an Annual General Meeting within 3 or 4 months of their balance date (to allow time for accounts to be compiled and in many cases audited).  31 March is the balance date for the majority of societies and charitable trusts, with 31 December being the other most popular date.  After the approval of those accounts there are statutory obligations relating to the filing of annual returns.  Because of the COVID-19-related difficulties associated with travelling to holding meetings, we posted an article on 17 March 2020, “Holding (or not holding) General Meetings of Members in extraordinary circumstances,”.  Copies of that article were sent to the Registrar of Incorporated Societies, Charities Services, and senior staff in the Ministry of Business Innovation and Employment.

 

Government action

On 8 April the COVID-19 Ministerial Group considered a background paper and made a number of decisions that offer societies and charitable trusts some relief from the obligations discussed in our 17 March article.

 

Compliance with statutes and constitutions

The Minutes of the Decision of the COVID-19 Ministerial Group (see ) summarise the relevant decisions as follows:

Extending statutory deadlines

8 noted that many statutory deadlines in corporate governance legislation, relating to such matters as holding annual general meetings and filing annual returns should be relaxed because they are unachievable or are relatively unimportant in the current circumstances;

9 noted that there are powers to make exemption notices in relation to statutory obligations under some Acts (e.g. the Financial Markets Conduct Act 2013 and the Charities Act 2005) but not others (e.g. the Companies Act 1993);

10 agreed to provide the relevant Registrars with a temporary power to issue exemption notices relating to compliance with statutory obligations under the Companies Act 1993, Limited Partnerships Act 2007, Incorporated Societies Act 1908, Charitable Trusts Act 1957 and various other statutes;

11 agreed to temporarily relax deadlines for Registrars under various Acts to carry out certain functions, such as processing applications to reserve company names;

12 noted that relief from certain obligations, such as lodging annual returns, will have adverse financial implications because there are associated fees and levies;

Non-compliance with entity constitutions

13 noted that some incorporated societies, charitable trusts, unincorporated associations and other entities are unable to comply with obligations in their constitutions or rules in relation to such matters as appointing auditors and holding annual general meetings;

14 agreed to include changes that would provide temporary relief:

14.1 to the effect that an entity which cannot perform an obligation under its constitution or rules because of the impacts of COVID-19 is absolved from the obligation until such a time when it is reasonably able to perform it;

14.2 permitting electronic communications, including electronic meetings, even if their constitutions or rules do not provide for it;

 

Comment

The decisions of the COVID-19 Ministerial Group outlined above will provide welcome reassurance to many not-for-profits entities wondering what to do in during the disruptions caused by the COVID-19 epidemic.