Nick Burrows and Emma Ford, in our Charity Law & Education team, explain.
On 3 August 2021, the Government updated its COVID-19 guidance for the charity sector in England and Wales, in light of the removal of all legal restrictions in England on 19 July and the shift to level one, the lowest alert level, in Wales on 17 July.
Advice has been issued in relation to a range of practical considerations for trustees, as they prepare to navigate a transition towards a post-pandemic reality, whilst ensuring that the best interests and future prospects of their charity remain at the forefront.
Meetings and AGMs
Throughout the pandemic, many charities have opted to function on an online basis, with meetings and AGMs held remotely. It may be the case that charities will continue to hold meetings online or by telephone, even as the remaining restrictions are lifted. It is important that trustees consider their charity’s governing document, to ensure that there are no restrictions in relation to the holding of meetings remotely.
The governing document sets out the purposes and rules regarding how a charity should operate. It may be possible to amend the governing document under certain statutory powers within the Charities Acts and Companies Acts. Alternatively, the governing document may grant the trustees power to amend the rules, in order to reflect the hybrid of remote and in-person meetings that is becoming more widespread. In some cases the Charity Commission’s approval will be required in order to implement change to a charity’s constitution.
If holding a virtual AGM or meeting is not practical or possible for a charity, they may wish to postpone or cancel it until they decide that arranging a face-to-face meeting is feasible. Once again, the first step would be to check the charity’s governing document to ensure that trustees have the power to postpone/cancel meetings or if they have the power to amend the rules in order to implement this option.
If any changes are made to the governing document, the trustees must keep the Charity Commission informed, so that the register entry for their charity is up to date. Any changes should be carefully considered by the trustees, to ensure that there are no potentially adverse effects upon the ongoing management and operation of the charity.
In the event that trustees are unable to make changes to their charity’s constitution, it is advised that they get in touch with the Charity Commission, which is considering circumstances individually and with some leniency in light of the pandemic. If the trustees can show that they have considered all relevant factors and alternatives and can demonstrate that their proposed change is in the best interests of the charity, the Charity Commission may, at its discretion, grant authorisation for this change.
Filing Annual Return and Accounts
In light of logistical difficulties incurred as a result of the pandemic, a temporary measure has been implemented to permit charities to apply to the Charity Commission, for an extension to file their annual return and accounts. Any charity applying to benefit from this provision must demonstrate compliance in every other respect.
The recent easing of restrictions means that this provision is now scheduled to come to an end. All charities with an extension approved by 30 June 2021 will need to complete their filings by 30 September 2021. That said, charities can still apply for an extension between 1 July 2021 until 30 September 2021, if the cause of their filing delay is related to COVID-19. For applications within this period, a fixed three-month extension may be granted.
Financial Considerations
The COVID-19 pandemic has brought significant uncertainty to charitable companies and Charitable Incorporated Organisations. Trustees are advised by the Charity Commission to evaluate their financial planning decisions and priorities in order to minimise non-essential spending. Guidance and resources are provided by the Charity Commission for the trustees of charities in the face of financial challenges.
Furthermore, in some circumstances, trustees may consider collaborative working or a merger in order to strengthen resources and avoid closures of services. Once again, guidance has been issued by the Charity Commission so that charities can make a fully formed decision as to whether this may be of benefit.
Insolvency
The Corporate Insolvency and Governance Act 2020 has introduced provisions to assist businesses and charitable companies throughout the pandemic. Some of these provisions are still currently in force, despite the easing of restrictions. Temporary moratorium provisions to suspend debt enforcement action, a temporary suspension of statutory demands and a restriction on winding up petitions, will all remain in place until 30 September 2021.
Our specialist Charity Law & Education team can advise on these matters.
For further information or legal advice, please contact law@blandy.co.uk or call 0118 951 6800.
This article is intended for the use of clients and other interested parties. The information contained in it is believed to be correct at the date of publication, but it is necessarily of a brief and general nature and should not be relied upon as a substitute for specific professional advice.
