The Office of Fair Trading has announced that, due to the COVID-19 pandemic, not for profit organisations will have an additional 6 months in which to hold their AGM. This change applies only to organisations that are incorporated associations. It includes not for profits that are also charities.
What is the extension?
The Associations Incorporation Act 1981 requires an association’s annual general meeting (AGM) to be held within 6 months of the end of its financial year. The Act (at section 121) allows the chief executive to grant an extension to an association for holding its AGM.
Such extensions are usually granted after an association applies to the OFT, setting out the special circumstances that justify the granting of an extension. Given the current circumstances, the OFT has announced that it will grant a grace period of a further 6 months to hold the AGM, if required, without the need for an application to the OFT.
This means that:
- if an association’s current financial year ends on 30 June 2020, it will have until 30 June 2021 to hold its AGM; and
- the term in office for a management committee or Board of an association could be longer than is prescribed in its constitution.
What should associations do?
If after the end of the financial year, an association finds itself unable to hold its AGM in the usual time, it should:
- Ensure that the management committee or Board passes a resolution to defer the AGM until such time as it becomes possible to call and hold the AGM; and
- Communicate with all members about the decision and what it means.
The OFT has said that it is hoping members will be accepting of this situation but the best way to ensure they are is to use a transparent process and communicate with members.
Please contact Joanne O’Brien if you need assistance with these processes.
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