As many housing associations are finalising the financial year-end and grappling with statutory audits, the company secretary’s thoughts may be turning to the annual general meeting – or AGM – at which the 2019-20 audited accounts will be presented.
For those housing associations with a December year-end, you may normally be holding your AGM anytime around now. The majority of AGMs occur in September, and while we all hope that by then restrictions on individual movements may be eased further, it makes sense to prepare alternative plans now.
AGMs differ subtly between organisations, but there is always some core formal business that needs to be undertaken – the detail of which is usually set out in a housing association’s incorporation document (normally its Rules or Articles of Association).
Often, AGMs have on their agenda the receipt of the annual report and accounts by shareholders, reappointment of auditors, and election or re-election of board members. Sometimes there is other formal business that requires a vote from shareholders. In a well-run association, the business that is transacted at an AGM will normally be an uncontroversial formality, but AGMs can be a useful opportunity for additional scrutiny.
Many housing associations use a version of the NHF Model Rules, which state that two shareholders need to be present for an AGM to take place. The rest of the quorum can be made up by proxies.
So does this mean that to comply with your rules you need to have a physical meeting, or can you hold your AGM virtually? The rules merely state that the AGM notice should state the time, date and place of the AGM. They are silent on the nature of the place.
When the rules were written, was a virtual meeting room considered as a potential place for an AGM? Well, the idea of a virtual AGM was not excluded. Although every housing association will have to decide if a virtual AGM is right for them in the current circumstances, holding your AGM virtually would appear to present a solution to transact the formal business while not compromising safety for individuals.
The key question to ask yourself when deciding whether a virtual AGM is right for you is: will the shareholders still be able to exercise their rights as shareholders? This will depend on who your shareholders are, and how many you have. As always, there are risks associated with departing from recognised custom and practice. These risks are greatly reduced now by the proposed Corporate Insolvency and Governance Bill, which specifically opens the door to virtual AGMs and is proposed to apply retrospectively to any AGM held after 26 March 2020.
Virtual AGMs have already been held in the corporate sector. Back in 2015, Jimmy Choo was the first UK company to hold a virtual AGM, with a view to increasing accessibility. Before that, virtual AGMs had already been held in the USA. In the corporate sector, there has been some criticism that virtual AGMs allow executives to escape direct scrutiny from small shareholders.
Virtual AGMs are now being cautiously encouraged in the corporate sector, and the new Bill should provide some clarity and reassurance for those who are considering them in all sectors.
Many housing associations will conduct more than just the formal business required by their rules at an AGM. Over the years, I’ve attended events that bring communities together and celebrate the achievements of associations and their residents. At a time when we should avoid physically being together, it’s still important to recognise our achievements. I’m sure associations will think of creative ways of continuing to support their communities and bringing them together. Remember, there is nothing to stop your association holding another event in addition to your AGM at a later stage.
We've put some more detailed guidance together for our members, covering issues including the legality of virtual AGMs, practical considerations, and advice from the FCA. NHF members can access the guidance in the resources section of our website.
If you’d like to discuss any of this further, please do get in touch.
Book your place at Housing Governance Virtual, our new virtual governance conference on 10 July, to find out more about holding virtual AGMs, as well as plenty of other topical governance issues. This is one of a series of events being organised as part of our #NHFVirtual programme.