The COVID-19 pandemic has changed the way not-for-profits are run, and AGMs will never be the same.
Even in states and territories unaffected by lockdowns, organisations need to be ready to switch tack quickly when increased restrictions hit.
Zoom, Slack and GoToMeeting online sessions are the new boardrooms, but AGMs raise a whole suite of questions about virtual versus physical meetings.
Our Community recently hosted a 30-minute webinar on what the pandemic means for AGMs. The webinar was part of the Save Our Sector campaign, which aims to help not-for-profits to survive the crisis.
Here are some of the curly questions posed by webinar attendees, with answers from the Institute of Community Directors Australia’s Lisa Jennings, the lead trainer in ICDA’s Diploma of Governance. Our Community’s thinker in residence, Chris Borthwick, contributed expertise and advice.
You’ll find more information in the help sheet What should I do about my AGM in the midst of COVID-19?
If an AGM is held electronically, despite the model rules in my state being “silent” on the legality of this, does this mean that decisions made in monthly committee meetings can also be challenged?
If the AGM is invalid, the election of the board is invalid, and the acts of the board are invalid. However, the only way to establish this invalidity would be for some malcontent to take you to court – that is, to spend their own actual personal money.
“Challenging” isn't just putting a matter of your hand up; it involves spending several thousand dollars for a chance in the lottery, and that isn't going to happen unless someone in the organisation hates you for other reasons. Myself, I think the court would probably uphold the meeting as valid, on the general grounds that courts don't like getting involved in trivial quibbles unless there's a chance they'd produce different outcomes.
If you're determined not to proceed unless you can be absolutely certain that every aspect of what you do is absolutely beyond reproach in a situation where laws arguably conflict, then you are indeed on the horns of a diabolical dilemma.
During the webinar, you gave us the contents of the model rules for incorporated associations in each state regarding extending the timing of our AGM, and using electronic methods for holding it. Does this mean that this advice supersedes whatever is in our organisation's constitution?
No. If when you originally drew up your constitution you altered the model rules, or wrote your own rules, and provided they still adhere to the Act, and have been approved by your regulator, then your constitution stands. The model rules are only suggestions, designed to make it easier for not-for-profits, and are non-binding guidelines.
If we decide to postpone our AGM [so that we can meet in person instead of online], what does that mean for next year?
You should hold your 2020 AGM as soon as practicable after the social distancing rules have been relaxed, and then your 2021 AGM in the usual month, before your 2021 reporting is due to be lodged with the regulator.
We have applied for an extension of time for our AGM to Community Affairs Victoria (CAV) twice now and are still waiting for a response. What should we do?
Document all interactions with CAV in case of issues later. Try to call them to check that your extension request has been received, and ask what they recommend doing. The bottom line is that you are unlikely to be penalised for delaying your AGM if you can establish that you have done the right thing.
How do you manage voting in an electronic meeting?
We advise that you keep decisions that need to be made to an absolute minimum. Seriously consider having all voting undertaken by proxy/surface mail. Try to avoid voting on special resolutions, because in some organisational structures this is allowed only by proxy at this time (check the PowerPoint slides for links to the different regulators). For small groups meeting online via platforms such as Zoom, a show of hands would suffice. For large groups using functions such as those provided by GoToWebinar, members can vote in a text box.
Do you have suggestions for an electronic platform that allows secret voting?
There are many ways you can conduct electronic voting where the organiser is the only person who knows how people have voted. GoToMeeting has polling functionality, and this article on the Zoom website explains how to conduct anonymous polling in Zoom meetings.
Do electronic meetings need to be hosted by anyone in particular, such as the secretary or the chair?
No. We recommend that the person who is the most proficient at using technology is the “host” of the meeting – remembering that if there is voting, the host will be the one who sees the results. In any case, you may want the office bearers to be the people who can be seen on the screen by default, with anyone else who is talking to be “unmuted” and then shown as they speak. People will need time during the meeting to get used to the technology, so you should factor this into the schedule.
If our current constitution doesn't have a clause for electronic meetings, can an amendment be made prior to the meeting?
No. Changing the constitution can usually be done only through approving the changes at a properly convened general meeting, through a special resolution – which usually has to be passed by a super-majority of members, and then reported to your regulator.
If a director of a company limited by guarantee has a term that expires at the end of the year and we say we couldn’t hold an AGM to reappoint them by then, could they continue?
This is an instance where the regulator has taken prompt action to say that it doesn't know. ASIC has said that it's not going to take action against you for anything like this, but also that:
"An ASIC ‘no-action’ letter does not necessarily preclude third parties (including the Office of Director of Public Prosecutions) from taking legal action in relation to the same conduct or conduct of that kind. Nor does it prevent a court from holding that particular conduct infringes the relevant legislation. ASIC does not represent that the conduct covered by the ‘no-action’ letter will not be held to contravene the relevant legislation. Nor does ASIC undertake to intervene in an action brought by third parties in respect of such conduct."
We'd all like to have a definite hard-and-fast answer that will cover all circumstances, but in the present emergency nobody's offering one. Our advice, under the circumstances, is to do the safe thing, hold an online meeting, and defy anybody to sue. You'll be in good company.
Until we can reschedule an electronic AGM and elect the new committee, can we just ask that the existing committee stay in place? Our constitution is silent on anything to do with these types of matters.
As your organisation is in New South Wales, you may apply for an extension of time for an AGM. An entry in your minutes (from the AGM when it is finally held electronically) should just note that as the AGM was delayed, so was the re-election of committee members. You don’t need to vote on this.
I am the chair of a small not-for-profit and we elected to hold our AGM as originally planned, but via Zoom (our Constitution is silent on remote attendance). We kept a complete record of all communications to our members. We reached a quorum at the meeting. The only decisions were acceptance of previous minutes, chair and treasurer’s reports and financials. There was no need to vote on board positions as the nominations did not exceed the vacancies. Is it likely our AGM will be considered void or will our claim to have acted in good faith likely be accepted?
It seems you have done everything by the letter, and you should feel confident that you will be okay. You have identified the key idea – that you “have acted in good faith”.
Does a sports club at a university have to hold an AGM, or can we postpone for six months without requesting any permission? If permission is required, where does it need to be obtained from?
This depends on who your regulator is. You need to ask your secretary/treasurer who they lodge their annual statement with, and then use the links on the PowerPoint slides from the webinar to ascertain whether you need to apply for an extension, or whether this happens automatically.
Our demographic is not very computer literate and we do not have the provision for proxy voting in our current constitution. How do we get a clause regarding the ability to vote by proxy, when we can’t have an AGM to vote on it?
Unfortunately, if you cannot hold a meeting electronically, and you don’t want to risk using proxies where it is not explicitly included in your constitution, then delay is the only solution at present.
Our constitution does not mention any authorising authorities by name, other than compliance with the Corporations Act. We are a charity (registered with the ACNC) and also a company limited by guarantee (we provide limited reporting to ASIC). Are there other authorities to whom we should be referring for matters of corporate and constitutional governance?
Your organisation should report to ASIC and the ACNC.
Watch a replay of the webinar for answers to more questions, including these ones:
- Can we go ahead with our AGM online, despite our constitution and other legislation saying it must be in-person?
- Can we not run an AGM, despite legislation saying we must hold one within x number of days of the end of the last financial year?
- What do we do if our legal counsel is advising us to scrap the AGM, but we have pressing matters that need to be resolved?