Covid-19 is posing governance challenges

A number of co-ops have had to postpone their AGMs while others are hosting virtual meetings

Co-operatives in the UK and across the world are changing the way they operate in response to the Covid-19 outbreak. Government bans on public gatherings of more than two people, along with the compulsory stay at home measures, means that co-operatives have to consider contingency plans.

While some have decided to postpone their Annual General Meetings, others are using technology to host virtual AGMs.

In the UK the Department for Business, Energy and Industrial Strategy is permitting companies to postpone their AGMs.

In collaboration with the Financial Conduct Authority, Co-operatives UK has produced guidance notes on holding AGMs within the context of the COVID-19 pandemic.

The Co-operative and Community Benefit Societies Act 2014 and Companies Act 2006 do not require co-ops registered under them to have an AGM, but the governing documents of specific co-ops do. Therefore, a co-op that does not hold an AGM could be in breach of its own rules. Co-operatives UK advises co-ops to seek consent from members in case they decide to postpone an AGM.

The FCA has no role to play in determining disputes over society rules nor does it consider it in the public interest to take action if a breach occurs.

Co-operatives UK is also advising co-ops to hold AGMs using electronic means wherever possible and proxies where co-ops have the power to do so. The apex is currently drawing up some best practice advice on holding AGMs electronically, which it will share with its members.

In terms of annual reports, the FCA has now confirmed it will not take any action against societies where returns due up until 30 June 2020 are delayed by up to three months. The Company House has also advised enterprises unable to file their accounts on time due to Covid-19 to make an application to extend the period allowed for filing.

How are co-ops responding? Southern Co-operative is keeping members up to date with its actions including how they can help in store and in our communities through a dedicated Covid-19 page.

“Our existing Business Continuity Plan and structure has also made a significant difference during the outbreak. It was well tested ahead of the pandemic and has enabled us to switch to a more flexible way of working that allows us to make decisions without delay. Our structure ensures that decisions continue to be made in line with our legal obligations and considering our values and wider purpose – to work together for the benefit of our communities,” said a spokeswoman.

Southern’s AGM is also being postponed until it is safe to hold public events. In the meantime, board meetings have continued to be held via teleconference and with support through the society’s digital platform, including sub-committee meetings with full reporting on actions taken to manage the business and support communities through the Covid-19 outbreak.

Similarly, Central England Co-op has postponed its Annual Members’ Meetings, scheduled to take place at the end of April. “We have similarly taken the decision to defer the 2020 board elections until later in the year,” said a spokesman. “Our member and activities and events have also been suspended until we know it is safe for them to recommence. We hope that the Members’ Meetings can be deferred until October although will keep this under review.”

The Co-operative Group is also exploring arrangements for its AGM this year, due to take place in May.

Some co-ops have decided to go ahead with virtual AGMs. Co-operatives UK itself will be holding its AGM online on 19 June. Members’ representatives at the 2020 AGM will be able to vote on resolutions through online polls and submit questions online. Co-operative Press is also aiming to convene a digital meeting on 19 June.

Likewise, in Canada, Desjardins Group hosted its AGM online on 27 March via online webcast. The Federation’s board of directors is advising local credit unions to adopt similar measures and hold their AGMs at a later date. Desjardins Group has used this format in the past during a special general meeting in fall 2018. While the AGM has taken place, elections for positions on the board of directors and board of ethics and professional conduct have been postponed until the 24th Congress this autumn. Outgoing board members will continue to hold office until then.

“Desjardins Group is aware of the repercussions of this decision, but I believe we have a duty to put public health ahead of internal governance processes,” said Guy Cormier, president and CEO of Desjardins Group.

With co-ops in full AGM season, communication technologies will be vital for the sector in the coming weeks. When planning their virtual AGMs co-ops will need to take into account that the technology used will need to allow members to participate, ask questions or vote, something that will prove to be more challenging for larger co-ops.

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