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Emma Peacock, Trainee Solicitor at DAS Law, looks at what organisations need to know when making those critical decisions ‘virtually’…
Over the last few years, the running of most organisations has become increasingly globalised. This is largely as a result of rapid technological growth and the international expansion of many companies and charities. An example of this is renowned fashion company Jimmy Choo plc which, in July 2016, became the first UK-listed company to host a virtual AGM (Annual General Meeting).
The COVID-19 pandemic brought into sharp focus the need for all organisations, but particularly those run by committee such as charities, to consider their decision making processes. Many charities and boards run by committee that had not already embraced the rapid technological growth of the last few years found themselves with little alternative but to adapt their processes quickly and effectively to ensure critical and urgent business decisions could be taken whilst complying with their constitution and the government’s rules on social distancing and guidance on working from home.
When considering whether your constitution allow for virtual meetings, you should first check your articles of association. If your company has adopted the ‘Model Articles’ without amendment to Article 9 of the Model Articles, there is no requirement for directors to be present in the same room for a meeting to take place and therefore you can proceed to undertake virtual meetings without any need to amend the constitution.
It may be slightly more difficult for older companies (those which pre-date the October 2009 Model Articles) or charitable unincorporated bodies, such as trusts. These organisations should carefully review their governing documents to ascertain whether their constitution allows for virtual meetings.
If the articles do not specify that directors must attend meetings in person, this is slightly more difficult and a question which has divided legal opinion. Given the unprecedented times that we find ourselves in, it is likely that as long as the board follows all other procedures needed to hold a meeting, a virtual meeting will be valid. It is advisable to ensure that there is a clear paper trail of any agreement to hold a virtual meeting by all members of the committee and of course any decisions made during the virtual meeting.
If the articles require a board meeting to be held in person, it is likely that they can be amended by way of a special resolution of the company’s shareholders to permit board meetings to be held remotely.
If holding virtual meetings is not possible for any reason, one alternative option is for decisions to be made by way of a written resolution. This will be permitted if the articles allow for this form of decision making, so again the first step should be to check your articles of association.
The advantage of a written resolution is that it allows for greater flexibility – copies of the resolution do not need to be signed (e.g. an e-mail signifying agreement to the resolution will be sufficient) and it does not rely on all members being available at the same time and having the technology in place to conduct a virtual meeting.
If you have any concerns as to whether your constitution allows for virtual meetings or the process required in order to amend the articles of association to allow for virtual meetings, we would suggest that you seek legal advice.