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The Corporate Insolvency and Governance Act 2020 - What Do Charities Need to Know?

on Friday, 10 July 2020.

On the 26 June 2020, The Corporate Insolvency and Governance Act 2020 (the Act) officially came into force, giving companies breathing space to continue to trade through the pandemic and avoid insolvency.

Many of these changes will be welcomed by trustees of incorporated charities. Here’s what you need to know for charitable companies and charitable incorporated organisations (CIOs), which are 'eligible bodies' for this purpose:

  • Eligible bodies can now apply for a moratorium to protect themselves from debt enforcement action, whilst they explore viable rescue or restructure options. The moratorium will be valid for an initial period of 20 business days.
  • The Act has introduced a suspension on personal liability arising from wrongful trading for directors of eligible bodies who have continued to trade through the pandemic. The court is to assume that the director/trustee is not responsible for any worsening of the financial position of the eligible body or its creditors.

This will ease the pressure on boards to close otherwise viable organisations to avoid potential liability. However, as described in an earlier briefing, related duties continue to apply and boards should seek professional advice.

As mentioned in a previous briefing, it was proposed the suspension would apply retrospectively, lasting for an initial period of three months from 1 March 2020. The Act has now confirmed the new wrongful trading rules will apply until 30 September 2020.

  • The Act also provides for greater flexibility in holding Annual General Meeting's (AGM's) and other meetings, allowing them to continue to be held but in a safe and practical manner whilst meeting constitutional obligations. Also applying retrospectively, these provisions apply to meetings due to be held between 26 March and 30 September 2020. Details of how the rules have been relaxed can be found in our previous article.  

  • Under Secondary Legislation (The Companies etc. (Filing Requirements) (Temporary Modifications) Regulations 2020) that came into force on 27 June 2020, temporary easements of filing requirements will automatically be granted to eligible companies. These extensions apply to the filing of company accounts, confirmation statements, event-driven filings (changes to companies) and mortgage charges. They will remain in place until 5 April 2021.

The Charity Commission has addressed the Act in its guidance for the charity sector during the coronavirus pandemic.


For specialist legal advice on the implications of this Act on your organisation, please contact Shivaji Shiva in our Charities team on 07788 313 298, or complete the form below.

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