A new type of (electronic) AGM season: things to consider
All over the country, ASX listed entities are preparing for, and setting the (electronic and in person) stages for their biggest event on the annual corporate calendar – annual general meetings (AGMs).
Over the last 24 months, in light of the COVID pandemic and as a result of the subsequent legislative changes, the AGM landscape has changed significantly. ASX listed entities should familiarise themselves with the current regulatory framework ahead of this year’s AGM season.
So, what is the current position?
A proprietary company is defined as ‘large’ for a financial year if it satisfies at least two of the below criteria:
- On 22 February 2022, the Corporations Amendment (Meetings and Documents) Bill 2021 (Cth) (Corporations Amendment Bill) received royal assent, which implemented, effective from 1 April 2022, among other things, permanent measures to allow companies and registered schemes to hold hybrid (in person and remote) meetings, or wholly virtual/electronic meetings if their constitution allows it, and use technology to despatch meeting documents.For further detailed information on the Corporations Amendment Bill, please see our previous article published on 11 March 2022 here.
The most notable regulatory development in this space is that listed entities are permitted to hold members meetings physically, in a hybrid manner (physical venues and virtual/electronic venues), or entirely virtually/electronically if their constitution allows. Regardless of the method chosen, meetings must be held at a reasonable time and enable members an appropriate opportunity to attend and participate.
Our observation is that there is an increasing drive by listed entities to hold their 2022 AGMs entirely virtually/electronically, or at least in a hybrid manner, in accordance with the new legislation.
For an ASX listed entity who is seeking to hold its 2022 AGM entirely virtually/electronically, it is integral that they first analyse their constitution to determine if holding their AGM in such a manner is permitted. If it is not expressly permitted by the constitution, the AGM cannot be held in this manner.
Therefore, ASX listed entities whose existing constitutions do not permit them to hold AGMs entirely virtually/electronically may like to consider including a resolution at their 2022 AGM to amend their constitution to appropriately allow for entirely virtual/electronic AGMs going forward.
Despatch of meeting materials
The other significant regulatory development is that meeting materials (notices of meeting and explanatory statements) may be sent to members in a physical form, or sufficient information may be sent in physical form to allow members to access the materials electronically, or by sending the materials in electronic form. In practice:
- Where shareholders have nominated an email address for communications to an entity’s share register, documents can be despatched to these shareholders as an attachment to an email; and
- Where shareholders have not nominated an email address for communications to an entity’s share register (i.e., they prefer hardcopy mailing), a simple ‘postcard’ can be despatched to these shareholders by hardcopy mailing, which contains a URL link that shareholders can access on their computer to download the documents (known as the “postcard method”). If an entity adopts the postcard method, they can either include a personalised proxy form with the electronic download pack or elect to send a hardcopy personalised proxy form with the postcard (in which case it must be accompanied by a prepaid return post envelope).
The above requirements are subject to any specific electronic communication preferences that an entity’s shareholders may have elected to make.
Another important consideration this AGM season (particularly for entities holding hybrid and entirely virtual/electronic AGMs) is electronic voting.
Historically, for physical AGMs, members typically vote on the day of an AGM by manually completing a voting card or by returning a proxy form.
However, with the drive toward hybrid and virtual/electronic meetings, entities may like to consider electronic voting by members. Most entities’ constitutions will include rules that provide that a direct vote at a meeting of the company’s members will include a vote delivered to the company by post, fax or other electronic means approved by the directors – hence permitting electronic voting.
Having an electronic voting facility will allow members to vote in real-time (using either an application on their mobile phone or web browser) if they are attending the meeting electronically or virtually.
Again, ASX listed entities looking to allow for electronic voting should first analyse their constitutions to determine whether it is permitted, and if not, consider including a resolution at their 2022 AGM to amend their constitution to incorporate provisions allowing such.
We anticipate that for the 2022 AGM season, and annual AGM seasons thereafter, there will be an increasing number of ASX listed entities holding their AGMs as entirely virtual/electronic meetings – reducing both the cost and administrative burden for entities associated with holding physical meetings, whilst also giving shareholders increased flexibility and opportunity to attend meetings. Accordingly, it is also likely that electronic real-time voting will become the norm at meetings held in this manner.
Therefore, it is integral that entities ensure that they have the appropriate technological platforms, processes, and procedures in place to facilitate appropriate and sound electronic/virtual AGMs and electronic voting. Entities should consult their share registries who will be able to provide apt assistance and guidance in this regard, and more often than not, will be able to facilitate and manage the process for them.
If you have any questions about this article, please get in touch with an author or any member of our Corporate & Commercial team.
This information and the contents of this publication, current as at the date of publication, is general in nature to offer assistance to Cornwalls’ clients, prospective clients and stakeholders, and is for reference purposes only. It does not constitute legal or financial advice. If you are concerned about any topic covered, we recommend that you seek your own specific legal and financial advice before taking any action.