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Virtual shareholder meetings to continue for a further six months

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AnnouncementCovid-19CoronavirusPandemicHealthASXASICCorporate governanceCorporate advisory and governanceTradingGuidanceNot-for-profit and charities

Introduction 

In May this year, the Federal Government announced temporary changes to the Corporations Act 2001 (Cth) (Corporations Act) which were intended to provide certainty tobusinesses (including not-for-profit organisations and charities) in meeting certain obligations amidst the impact of COVID-19. The changes, contained in the Corporations (Coronavirus Economic Response) Determination (No. 1) 2020 (Instrument) allowed: 

  • companies to convene “virtual” Annual General Meetings (AGMs) and other meetings prescribed under the Corporations Act entirely online; and 
  • company officers to sign documents electronically. 

Our earlier alert discusses the Instrument in further detail. 

Extension of relief

The Instrument was due to expire on 6 November 2020. This would have meant that companies with 30 June financial year ends may not have been able to rely on the Instrument for their upcoming AGMs. 

The Treasurer recently announced that the Federal Government will extend the measures (for both virtual AGMs and electronic signing of documents) for a further six months so that they expire on 21 March 2021. The Treasurer’s media release notes that the extension is based on positive feedback from industry that the measures provided certainty to business, as well as the ongoing challenges in Victoria preventing face-to-face gatherings. The release also notes that: 

  • meetings must continue to provide shareholders with a reasonable opportunity to participate; and 
  • shareholders will continue to be able to put questions to board members and vote online. 

ASIC guidelines 

ASIC has also published guidelines setting out its views on the most appropriate approach to conducting hybrid or virtual meetings, having regard to the Instrument (Guidelines). 

ASIC has since stated the Guidelines will continue until 21 March 2021 in line with Federal Government’s extension of the temporary measures. 

Companies considering holding a hybrid or virtual general meeting should review the Guidelines in detail to ensure they comply with ASIC’s recommended approach as far as possible. In summary, the Guidelines include the following: 

Member participation  

 

  • The virtual technology should enable those participating virtually to follow the proceedings of the meeting uninterrupted. 
  • Changes to the way the meeting is conducted must still, as far as possible, promote genuine and effective interaction between members and the board. 
  • Members should be able to ask questions live during the course of the meeting, as well as ask questions or comment on the management of the company and remuneration report (where applicable). 
  • If members’ questions or comments will be submitted and reviewed in advance of the meeting, the selection process should be balanced and representative. There should also be transparency about the number and nature of the questions asked and not answered and ASIC recommends appropriate records of questions, comments and responses should be kept to enable this.
  • Members entitled to vote should have the opportunity to consider responses to questions and debate before voting. 

Voting in hybrid or virtual meeting

  • Voting at a virtual or hybrid meeting should be by a poll rather than a show of hands. 
  • Where practicable, voting via online or other means should also be available prior to the meeting. 

Content of the notice of meeting

 

  • The notice of meeting should include clear explanations of how to use the technology and how the reasonable opportunity to vote, comment and ask questions will be provided to those participating virtually. 
  • Companies should, at minimum, specify an email address (or other online submission facility) in the notice of meeting for the service of proxy appointments and authorities. 

Technical problems during a hybrid or virtual meeting

  • Companies are encouraged to assess virtual technologies in advance of the meeting (e.g. by holding a short rehearsal).
  • Backup solutions to overcome technical issues should be considered and the company’s approach communicated to participants at the beginning of the meeting.
  • If technical issues result in a number of members being unable to reasonably participate, the meeting should be adjourned.

The option to hold a virtual meeting until 21 March 2021 will provide flexibility and certainty to companies managing the challenges posed by the COVID-19 pandemic including restrictions on large gatherings, particularly for the 2020 AGM season.  In addition to reviewing the Guidelines, as noted in our earlier alert, each company should still carefully check the provisions of their constitution for any specific requirements around the holding of general meetings. If the provisions of a company’s constitution could be improved to facilitate hybrid or virtual meetings, the upcoming AGM may provide an opportune time to address this. 

Not for profit organisations and charities registered with the Australian Charities and Not-for-Profits Commission (ACNC) should also have regard to the guidance released by the ACNC on holding remote meetingshere , as certain meeting provisions of the Corporations Act have been ‘turned off’ for bodies corporate registered with the ACNC. 

If you would like further advice on holding a hybrid or virtual general meeting or reviewing and updating a constitution to better facilitate these meetings, please contact our Corporate Advisory and Governance team.
 

|By HopgoodGanim Lawyers
AnnouncementCovid-19CoronavirusPandemicHealthASXASICCorporate governanceCorporate advisory and governanceTradingGuidanceNot-for-profit and charities
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