In the current situation, where the Government has placed drastic but necessary restrictions on gatherings of people, charity trustees may wonder how they can continue to discharge their responsibilities and in particular how they can meet to conduct their trustee business.
Another issue facing trustees is how to get documents signed when they, like most other people, are staying at home as much as possible. Here, Mark Pery Knox Gore outlines the options open to trustees.
Key points
- Trustees should check their company constitution or trust deed for provisions relating to the holding of meetings
- Where constitution/deed is silent, trustees may hold virtual meetings
- Charities that operate as companies have a high degree of flexibility
- Charities that operate under a trust must look to the provisions of the trust deed
- Trustees should be wary of delegating responsibility
Legal entity
The steps which trustees can or should take to tackle these problems will vary according to the type of legal entity through which their charity operates. Generally, companies to which the Companies Act 2014 applies have mechanisms available to them which will help them overcome most of these difficulties. On the other hand, charities which are either trusts established by trust deed or unincorporated associations should look to their governing documents to see whether there are useful provisions which can be invoked to help them work around the restrictions.
Trustee meetings – Charities Regulator
In a time of crisis such as the one we all face now it is important that trustees meet regularly to discuss whether, and how, the charity can continue to provide its services in the changed environment. The Charities Regulator has issued a useful FAQ guide for trustees. The Charities Regulator has suggested that where the governing instrument is silent on the conduct of virtual meetings, the trustees should not feel constrained and should hold their meetings virtually. In addition, we are pleased to note that the Regulator will not require a charity to seek prior approval for the amendment of its constitution where the amendment is made for the purpose of facilitating the holding of meetings otherwise than in a single location.
Companies
For charity trustees who are directors of a charity operated through a company (most commonly a company limited by guarantee), company law provides a high degree of flexibility in the way that board business can be conducted. We have provided some guidance as to the steps which company directors may consider taking to alleviate the difficulties resulting from the stay at home restrictions, such as how to make board decisions and signing documents remotely. These steps can be taken by directors of incorporated charities in just the same way as the directors of any other type of company.
Trusts and unincorporated associations
In the case of a charity established by trust deed, there is no rule or statutory provision applying generally to trusts which allows trustee business to be conducted at virtual meetings. Check the trust deed to see if it gives the trustees the flexibility to hold their meetings by telephone or other technological means.
If the trust deed does contain such a power, then the provisions must be followed carefully. For example, the relevant provision might call for a meeting to be held at a particular location in the usual way, but with the concession that trustees who are unable to attend for any reason may participate in the meeting by means of telephone, so long as they can hear, and be heard by, all other trustees attending the meeting. In other cases, the procedure for trustee meetings might allow all of the trustees to join a conference call remotely, without a central location for the meeting.
The provisions of the trust deed regarding the quorum for the meeting should also be closely observed. Check whether two or more trustees must be physically present at the meeting location in order to constitute a quorum.
Delegating powers
One area where trustees of a charitable trust must exercise a degree of caution is in delegating their functions as trustees. We have already seen an increased use of powers of attorney to facilitate the execution of documents in the current crisis. For company directors, the delegation of functions by such means often enables transactions to be completed with relatively greater speed and efficiency. Under the general law of trusts the trustee's power of delegation is much more limited. If their trust deed so permits, trustees may delegate the management and administration of a trust and they may appoint professional advisers such as solicitors, insurance brokers and investment managers. However, they may not delegate their core responsibilities as trustees. Many trust deeds, or standing orders adopted by the trustees to guide them in the performance of their role, will specify that certain functions are reserved to the trustees: typically, the reserved functions will include significant capital expenditure, acquisition or disposal of property, appointment and removal of trustees, and the approval of the trust's financial statements. It is doubtful whether such functions can be delegated by the trustees. It is recommended, therefore, that trustees seek legal advice before executing powers of attorney.
For more information please get in touch with Mark Pery Knox Gore, (Corporate & commercial, Public & Regulatory).
To discuss any other COVID-19 related issues impacting your business, please get in touch with Barry Cahir (Litigation and Insolvency), Thomas O'Dwyer (Litigation), Sharon Delaney (Litigation), Dorit McCann (EU, Competition & Procurement), Damian Maloney (Corporate and Commercial), Aidan Marsh (Commercial Property), Gerry Gallen (Commercial Property), Sandra Masterson Power (Employment), Paul Gough (Employment), Edward Evans (Corporate & Commerical), Fidelma McManus (Housing) or your usual Beauchamps contact.
