United Kingdom: ME Association governance issues

[Arvo]

re we at the point where MEA members should be asking the Trustees not only for both confirmation as to which is the correct version of the articles of association but also a copy of the minutes of the general meeting (AGM or otherwise) at which they were agreed,


but also request a new general meeting after the presumed current articles are shared with all members and where the membership is asked to confirm their support for those articles, allowing them to be lodged or re lodged with the Charity Commission and Companies House preventing any further ambiguity/confusion?

I've seen you've done the first part, which is great for the paper trail (although I think not the key documents needed, nor the most solid, trustworthy ones), but imo the second part is a very bad idea.

It would only create more mess: you'd be asking the members to post-hoc vote in articles that allow payments that are illegal under the current governing document, while the ones responsible for those payments are still being questioned on making those.

Also, this approval would be considered a new edition of the AoA. Let's say that approval is given on 28 January: then still all payments from 2022, 2023, and any in 2024 would have been illegally made, requiring accountability, as things stand now.

For the trustees case, it would I think also emphasise that the current AoA-Nov14 was indeed in place, as it got amended.

This is now indeed a matter for the Charity Commissin and Companies House, and if the trustees can prove an honest mistake has been made, I suspect it'd still need court intervention to set it right.

 

[Arvo]

The Essential Trustee, what you need to do. Guidance by Charity Commission.

I know some people who I think should read that....

Great guide, it indeed points out that ME Association trustees are not, ahem, functioning optimally at the moment.

I think the CC needs to be informed of all of the issues, which includes the “movement” article, the non-apology, the “I am Complaints Officer” article, the attempts to add the motion to the AGM by Nic? The ultimate refusal to do so, the format of the AGM, the emails to P White and threatening legal action statement.

I doubt if the article and nonpology are cases for the CC - I would reckon that the CC would direct the members to their own AoA: members can direct actions of the directors (Article 7) and remove a director by resolution (Article 25).

However, what is absolutely serious and CC business is that the directors hamper active membership involvement and scrutiny in the ways you describe.

 

[Arvo]

It's somewhat of a side issue, but what I also found interesting, is that paragraph 6.6 says that you can't pay directors of a charity unless your AoA specifically says so:

In some circumstances, one or more trustees (or persons with a financial connection to a trustee) do receive payments or other benefits from their charity. This is only permitted if:

• the benefit is specifically authorised by the governing document, the Charities Act (or other relevant legislation), the Commission or the courts; any specified procedures must be strictly followed

The ME Association did not represent that properly in their statement imo, when they said:

The Charity Commission permits such arrangements provided certain strict conditions are met. One of these is that the Articles of Association do not forbid such payments. The current version of the Articles, as registered with Companies House in 2014, does not forbid such payments.

It's not so that the CC permits it under the condition that the AoA does not forbid it (I suspect that's legally also really, really weird, as the governing doc should follow overarching CC rules), the CC does not permit it unless the AoA specifically says it is allowed (with conditions applied, like CC approval for it).

And the second sentence in that quote was not right too of course.

 

[Arvo]

I'm really going to try and stop digging on this topic (for) now, it's making me really unwell and I feel stupid for deteriorating over this.

Good luck to any members and other interested dealing with this - it's a terrible mess, I hope it will be resolved as quickly as possible.

(And if you are contacting the Charity Commission, please don't forget to ask about its permissions for the 2013 and 2014 financial amendments to the AoA, and its copy of the ME Association's Articles of Association of 18 November 2014 to see if it matches the other two.)

 

[Dx Revision Watch]

I'd be interested to hear Riley's comments to the 15-day notification rule for amendments.

Why is that? Because I reckon it is just the 15 day notification rule after the members voted on the AoA amendments. AoA-Nov2014 was approved on 18 November 2014, and the sticker on the CH file says 28-11-2014, so that was within the limit.

You've taken my comment too literally. I wasn't thinking about whether the board had submitted the 2014 document for registration within the 15 day limit because we know it was date stamped 28/11/14 by Companies House. But musing on the irony of submitting a document for registration when they had 15 days post-adoption in which it could be checked for errors and omissions but (apparently) not noticing for ten years that the document they had sent in wasn't the document they intended to submit. It does make me wonder whether any of them had looked at that document since.

From some looking around, I think the bigger, way more problematic issue for Riley & co may be that he probably can't change the Companies House registration without either a member vote on a special resolution or a court order, where they'll have to prove the AoA-Nov14 was not right.

On the assumption that the members had voted in November 2014 on Resolutions for adoption of the "correct" version rather than voting on the version submitted to Companies House in error, I agree. I'd be surprised if Companies House would just replace the version registered back in 2014 with the version the board now says was the "correct" version.

That legal firm's document: https://www.qualitycompanyformations.co.uk/blog/how-to-amend-a-companys-articles-of-association/

says that if a company amends its articles by special resolution but subsequently files an incorrect version of the amended articles that failure on the part of the company does not affect the validity of the articles adopted by special resolution. When members adopt new amended articles by special resolution those articles take effect immediately and their status as articles does not depend on their registration at Companies House.

Presumably Companies House has a policy for dealing with this situation.

(You can use form RP04 to make trivial corrections: that would have been applicable to the Trustee Act/Company Act error, but not to change a whole governing document registration as a woopsie.)
And at the moment, like I said, I very much doubt they can prove that it's not the "real" AoA-Nov2014, given the situation and what they have shown so far.

They may still have evidence of which document was voted on at the 2014 general meeting. If they had put the correct 2014 draft document online prior to the general meeting they may have evidence for that.

I've looked on Wayback for 2014. At 8 December they still had the file for the approved 2013 Articles on the Policies and Documents page - I couldn't see a file for the draft 2014 iteration at any point in 2014 - at least not on the Policies and Documents pages.

There is only one capture for 2015 and that still had the file: Articles of Association (approved at EGM on 19th November 2013) on the page.

So I suspect that Rileys attempt that he wrote to Lucibee about, ""Yes, we are now aware of the discrepancy. It appears that a copy of the pre-2013 Articles was sent in by error to Companies House. I am writing to them to get the error corrected.", will be amply inadequate.

Indeed. But what does he mean by the "pre-2013 Articles"?

There were no amendments registered between the 2007 and 2013 Articles, so where he says, "pre-2013 Articles" does he mean that an early draft of the 2013 Articles had been submitted instead of the "correct" version for 2014? He seem incapable of giving precise answers. The statement issued on the 17th December was also garbled.

 

[Dx Revision Watch]

..I doubt if the article and nonpology are cases for the CC - I would reckon that the CC would direct the members to their own AoA: members can direct actions of the directors (Article 7) and remove a director by resolution (Article 25).

However, what is absolutely serious and CC business is that the directors hamper active membership involvement and scrutiny in the ways you describe.

I agree, I don't think CC would get involved in scrutinising the content of magazine articles.

 

[Dx Revision Watch]

Another law firm article discussing legal status of unfiled articles:

https://www.womblebonddickinson.com...rticles-were-true-articles-filed-or-not-filed

See the four paragraphs under heading "Which articles were the true articles?"

The court distinguished that case and rejected this argument because it fails to distinguish between the articles as a contractual or legal concept and the articles as a piece of paper designed to capture or evidence that concept. It also over-states the significance of registration.

There is nothing in the statutory scheme which vests the Filed Articles with the special quality of being the real articles for all purposes. The articles are what the members have resolved on from time to time, whether originally or by amending special resolution. Nothing else can be the articles. Their status as articles does not depend on registration...​

 

[Jonathan Edwards]

The articles are what the members have resolved on from time to time, whether originally or by amending special resolution.

That is all very well but what if nobody can find any trace of 'what the members have resolved'. What if the 'wrong' articles are the only documents with the relevant date in existence and the members either have forgotten or disagree about what they resolved?

My impression is that the argument is that if a set of documents filed/registered with CH are different from a record of a resolution existing at the company, which is consistent with being a true record of a resolution at the time, then the registered documents are not to be taken as valid. There might be exceptions, such as if the company's offices had been destroyed by fire and all members had a clear memory of the resolution but they would be exceptions.

 

[Dx Revision Watch]

Having read the two law firm articles at:

https://www.bdbpitmans.com/news/filed-or-not-filed-which-articles-are-the-true-articles/

https://www.womblebonddickinson.com...rticles-were-true-articles-filed-or-not-filed

my interpretation is this:

Providing that the general meeting held on 18 November 2014 to vote on a special resolution to amend the Articles was:

a) quorate;
b) that the members who voted in person and by postal ballot were voting on the intended version;
c) that a sufficient percentage of those who participated voted in favour of adoption of the resolution(s)

then it seems that the Articles approved by the membership are the true articles and that this would be the case, whether the wrong document had been sent in error and was filed by Companies House, or whether the document was not filed at all.

That it is the resolution being carried and adopted that gives the document its legal status, not the subsequent registration of that document with Companies House.

Which means that as long as the document Mr Riley has posted on the site to replace the 2014 Articles document is the document which was adopted on 18 November 2014, Mr Riley can refer to that document as the "correct Articles" or the "true Articles" which supersede the 2013 Articles.

The question remains why was the 2013 version amended via special resolution in November 2014, if the only changes were to substitute "2000 Charity Act" with "Trustee Act 2000", which could possibly have been achieved through a minor correction?

Is it the case that the "new model form" had for some reason not been adopted in 2013 along with two specific changes, and was therefore being proposed to be adopted in 2014?

The special resolution wording for the 2014 Articles was:

"That the new form of Articles of Association referred to in a notice given to the members of the charity known as the ME Association in accordance with the regulations governing the charity and a copy of which Articles is attached hereto, be adopted as the Articles of Association of the Company and substitution for, and to the exclusion of, the existing Memorandum and Articles of Association of the charity."​

It does not say anything about any other changes.

 

[Dx Revision Watch]

That is all very well but what if nobody can find any trace of 'what the members have resolved'. What if the 'wrong' articles are the only documents with the relevant date in existence and the members either have forgotten or disagree about what they resolved?

Even if there had been no summary of the 18 November general meeting published on the website, there will have been minutes of the meeting and they are supposed to keep meeting minutes for at least 10 years. There may also be references to the document in the minutes of board meetings in the run up to the general meeting (as there were in 2013). There may still be emails on file from that date with the document attached for circulation to the trustees for signing off on finalisation.

The resolution will have gone out in a magazine at some point in 2014 with the ballot slips which would have been printed with the resolution. This documentation may still be on file. The draft document may also have been posted somewhere on the website at that time, other than on the Policies and Documents page. Those webpages might still be on file with Tony Britton.

My impression is that the argument is that if a set of documents filed/registered with CH are different from a record of a resolution existing at the company, which is consistent with being a true record of a resolution at the time, then the registered documents are not to be taken as valid.

Which is what I have said above.

 

[Peter T]

I suspect that if the Trustees can not provide a clear paper trail for the version of articles they claim to be the true one, independent of any action the CC might deem to be appropriate, that the current Trustees or their immediate successors if appropriate will need to review the articles and present a draft as soon as possible to a general meeting for the members’ approval.

I am not sure how the association can function if it does not have a clearly adopted set of articles.

Any articles so approved may have to be adopted on the basis that there will be a further review and second membership vote within an agreed timescale.

 

[Jonathan Edwards]

Even if there had been no summary of the 18 November general meeting published on the website, there will have been minutes of the meeting and they are supposed to keep meeting minutes for at least 10 years.

But what if those minutes make no reference to relevant specifics?
At present we have no indication whatever as to why the articles were re-drafted in March 2014 and then re-approved at the end of the year.

Which is what I have said above.

Not exactly. You didn't add the crucial bit of a record of a resolution existing at the company that differs. If all records of minutes are too vague and no document of the relevant date is to be found things look a bit different. At present we are being offered a 'correct' document with an attached date of 2013 (of unclear significance), which seems very odd if the decision to change the November 2013 seems to have been made in March 2014.

 

[Dx Revision Watch]

But what if those minutes make no reference to relevant specifics?
At present we have no indication whatever as to why the articles were re-drafted in March 2014 and then re-approved at the end of the year.

Can you remind me, please, which document indicates there had been a decision to redraft in March 2014.

Not exactly. You didn't add the crucial bit of a record of a resolution existing at the company that differs. If all records of minutes are too vague and no document of the relevant date is to be found things look a bit different. At present we are being offered a 'correct' document with an attached date of 2013 (of unclear significance), which seems very odd if the decision to change the November 2013 seems to have been made in March 2014.

 

[Jonathan Edwards]

I am afraid it is now buried in the thread. I had thought that we were told somewhere that the end of 2014 meeting was held to approve something drafted in March. Which seemed quite relaxed but presumably all of this was just intended to tidy up rules for hypothetical situations maybe following the shift in law in 2011?

 

[Dx Revision Watch]

I am afraid it is now buried in the thread. I had thought that we were told somewhere that the end of 2014 meeting was held to approve something drafted in March. Which seemed quite relaxed but presumably all of this was just intended to tidy up rules for hypothetical situations maybe following the shift in law in 2011?

I can't be certain it hasn't been mentioned earlier in the thread but I've got no recollection of reading that. Mind you, this tangled web is enough to addle anyone's brain. There are no summaries of board meetings on the MEA's site for 2014 so it could not have come from a meeting summary.

The PDF file for the November 2014 Articles has the date 11.03.2014 in its file path, which depending on the date settings of the person who authored it, can be read as either 11 March 2014 or 3 November 2014. Possibly you were thinking of this.

Similarly, the file path for the PDF of the so-called "correct articles" has the date "Articles-of-Association-5-12-2013"

If that means 5 December 2013, then it suggests it may have been drafted after the Articles were passed on 19 November, as the EGM draft Articles document had been up on the MEA's Policies and Documents page since at least 16 September, that year. Or it could have been based on a draft drafted prior to the EGM, if it meant 12 May 2013, except it has an edit in it for the Trustee Act 2000 which doesn't appear in the 2013 Articles, as registered with Companies House.

And then we've got Riley telling Lucibee: "Yes, we are now aware of the discrepancy. It appears that a copy of the pre-2013 Articles was sent in by error to Companies House. I am writing to them to get the error corrected."

I don't know what he means by the "pre-2013 Articles" unless he means an early draft of the 2013 Articles. What a mess.

Gillian Briody was MEA's Operations Manager for many years and was also Company Secretary at the time of the 2005, 2007, 2013 and 2014 Articles. Gill had been registered as Company Secretary on Companies House from January 2005 to March 2020.

One might assume the office PC filing system was in better order than perhaps the trustees' was. But she retired several years ago. Though I would have thought HO would have carried archive files over to new machines.

 

[Dx Revision Watch]

And then we've got Riley telling Lucibee: "Yes, we are now aware of the discrepancy. It appears that a copy of the pre-2013 Articles was sent in by error to Companies House. I am writing to them to get the error corrected."

I've been looking at the mechanism for obtaining corrections to information and documents filed on Companies House. As Arvo has written, there is a specific form for minor corrections and in some cases the document containing the error or errors is retained but red flagged for there being an additional corrected version. But it does look as though for something larger like Articles, it might require a court order to have the erroneous document removed entirely.

If Mr Riley thinks a quick word with Companies House will result in the "incorrect" document being taken off after 10 years and the so-called "correct" Articles replacing that document, as the MEA has hastily done on its own site, he may be disappointed.

 

[Jonathan Edwards]

The PDF file for the November 2014 Articles has the date 11.03.2014 in its file path, which depending on the date settings of the person who authored it, can be read as either 11 March 2014 or 3 November 2014. Possibly you were thinking of this.

That was part of it but there was also a reference somewhere in the materials in the thread to March being the date the proposal was set up - but someone else may have inferred that.
Within a UK organisation use of 11.3.2014 to mean 3rd November is vanishingly unlikely I think. We never use that format. Unless there is some intentional agreement specifically for company documents. I have never seen it on the UK legal documents.

 

[Arvo]

You've taken my comment too literally. I wasn't thinking about whether the board had submitted the 2014 document for registration within the 15 day limit because we know it was date stamped 28/11/14 by Companies House. But musing on the irony of submitting a document for registration when they had 15 days post-adoption in which it could be checked for errors and omissions but (apparently) not noticing for ten years that the document they had sent in wasn't the document they intended to submit. It does make me wonder whether any of them had looked at that document since.

Ah, I see! (I was already surprised.)
That 15 day notification also matters to additionally show that there was indeed an AoA approval on 18 November 2014. You can't amend your AoA in 2013 and then register them a year later.

That legal firm's document: https://www.qualitycompanyformations.co.uk/blog/how-to-amend-a-companys-articles-of-association/

says that if a company amends its articles by special resolution but subsequently files an incorrect version of the amended articles that failure on the part of the company does not affect the validity of the articles adopted by special resolution. When members adopt new amended articles by special resolution those articles take effect immediately and their status as articles does not depend on their registration at Companies House.

I can't find it in the text (sorry, too zonked out). But that's a different argument, and not the one I'm making. For me it matters that the document at CH is dated and signed, and part of the official record. And that CH won't just accept and file a replacement AoA at the ME Association's say-so.
(Also, relating to the 15 day notification requirement to the registrar, I'd read this as saying an AoA is in effect immediately, not until CH has finished their registration. It's indeed not the CH registration that gives them validity, but they are a valid registration of the AoA.)

With these:

https://www.bdbpitmans.com/news/filed-or-not-filed-which-articles-are-the-true-articles/

https://www.womblebonddickinson.com...rticles-were-true-articles-filed-or-not-filed

They are about the same case, and I interpret them differently.

• In 1995 CHL amended their AoA (AoA1)
• In 1998 CHL amended their AoA again, due to a drafting error the Five Times Profits Valuation was left out. Registered at CH (AoA2)
• They realised the mistake in the same year, amended the AoA again by special resolution to include the FTPV, but did not fulfill their obligation to file at CH. (AoA3)

So there were three consecutive AoA's in place.

Later, after the AoA3 contained the FTPV again (crucial!), Mr G. argued that the registered AoA2 should count above the special resolution amended AoA3, and that failure to file at CH was acquiesence by the shareholders that the registered ones were the proper ones.

The court ruled that statutes are only amendable by special resolution, not misplaced filing. And that the signing of the resolution on the amended AoA by the shareholders (AoA3) showed that they thought those were proper. (So it was a case of neglect to file, not of validity of the unfiled AoA.)

The ME Association situation is different.

In the ME Association case it's not about an error within the document - it is claimed that the whole original AoA document is a different one.
And the 5 December 2013 doc so far has no legal status as approved by resolution.

Instead there is a signed declaration by the ME Association that the AoA2014 document in CH's archives is the one approved on 18 November 2014, which is filed within notice period. So this document has legal status. (As does possibly one at the Charity Commission as well.)
And there is no member approval of an amended AoA after that date which just has not been filed.

So there's no claim that a registered AoA at an earlier date counts above a special resolution on an unregistered AoA at a later date, which is the basis of the statement that registry does not determine legal status of the AoA.

Instead the ME Association will have to prove that their undated, AoA-Nov2013 matching, 2013-named PDF is the document voted on on 18 November 2014, and the signed declaration present at the official registration office(s), Companies House (and probably Charity Commission) says that it was not (as did their own website until this month).

Not registration as validity of these AoA, but registration as solid evidence that this was the 2014 AoA document.

This is my interpretation, but we don't have to agree: CH and CC will know what will apply and needs to be done, they're doing this all the time.

 

[Arvo]

I can't reply more, but read with interest.

 

[Dx Revision Watch]

...Instead the ME Association will have to prove that their undated, AoA-Nov2013 matching, 2013-named PDF is the document voted on on 18 November 2014, and the signed declaration present at the official registration office(s), Companies House (and Charity Commission) says that it was not (as did their own website until this month).

I don't disagree.

The ME Association situation is different.

I didn't post the links implying that the cases were similar to the MEA's situation. I posted the links because all three discuss:

There is nothing in the statutory scheme which vests the Filed Articles with the special quality of being the real articles for all purposes. The articles are what the members have resolved on from time to time, whether originally or by amending special resolution. Nothing else can be the articles. Their status as articles does not depend on registration.