During the inquiry the regulator issued an Order to provide information in relation to charity meetings prior to submission of the accounts to the Charity Commission, confirmation that all trustees had viewed and agreed the accounts prior to submission and any other documentation relating to the submission of the accounts to the Commission.
It raises the question: what is a properly constituted trustees’ meeting to approve accounts?
There is no general rule of law which says that the business of charities must be conducted at meetings. However, it is usually essential for the good governance of charities that meetings are held and are effective. Meetings provide an environment for informed decision making, clarification of responsibilities and monitoring the implementation of decisions. The governing documents of most charities do define properly constituted meetings and will often state the number and types of meetings that must be held.
The Charity Commission provide a helpful table summarising the usual types of charity governing documents where you can find your charity’s definition of a properly constituted meeting:
As a charity trustee, you should be familiar with your charity’s governing documents and understand the definition of a properly constituted meeting to approve the accounts of your charity.
If your charity’s governing document gives no specific definition of a meeting the courts have accepted that a valid meeting normally consists of at least two people who can both see and hear each other (Byng v London Life Association (1989)). This would mean that telephone conference facilities generally could not be used to transact a meeting without the governing document giving express permission to hold meetings by telephone conferencing.
Most charities’ governing documents give powers to trustees to make rules and regulations for the conduct of meetings. As a trustee you may therefore decide to alter your charity’s governing document to reflect specific requirements for the holding of meetings and make the holding of properly constituted meetings more practical. Where this is the case, the Charity Commission suggest that you should include a provision on the following lines, adapted as necessary:
“In this [constitution] the expression ‘meeting’ includes, except where inconsistent with any legal obligations:
• a physical meeting
• [a video conference, an internet video facility or similar electronic method allowing simultaneous visual and audio participation], and
• [telephone conferencing]”
In some cases, meetings may not even be required. Governing documents prepared under The Companies Act 2006 permit decisions of trustee directors to be approved by written resolution.
You should remember that accounts which have not been approved either at a properly constituted trustees’ meeting or by written resolution, as permitted by your governance document, may be regarded as false accounts which will have other more serious implications.
Action points:
1. Review your governing documents and understand what they define as a “meeting” or if they permit trustee decisions to be made by written resolution.
2. Compare your current processes for trustee approvals at “meetings” or by written resolution and ensure decisions are properly constituted in accordance with your governing documents.
3. If necessary, change your governing documents to redefine a properly constituted meeting, or add a clause to permit decisions by written resolution or change your process for meetings and written resolutions to ensure they are compliant.
4. Ensure your accounts are approved at a properly constituted meeting or by using properly constituted written resolution process.
The next step
If you need advice reviewing or amending your governing documents please contact Michael Fitch by email m.fitch@uhy-uk.com or call 028 9032 2047 or contact your usual UHY Hacker Young Charity adviser.
