Electronic General Meetings in the COVID-19 Landscape – Update
In July 2021, we released an alert highlighting the confused and awkward position that many companies found themselves in with respect to hosting general meetings, following the expiration of temporary COVID-19 relief laws and measures that permitted companies to hold general meetings electronically using virtual technology.
Since that time, the Government has passed the Treasury Laws Amendment (2021 Measures No. 1) Act 2021 (Act), which temporarily amends the Corporations Act 2001 (Cth) (Corporations Act) to permit entities to conduct meetings entirely electronically using virtual technology, provided that members are given a reasonable opportunity to participate.
The temporary amendments made by the Act are to remain in force until 31 March 2022.
However, the Government is in the process of finalising permanent reforms to company meeting regulations, with the intention being that these reforms are in place before the temporary relief granted under the Act expires.
The requirements for electronic general meetings under the Act are summarised below.
Requirements for electronic general meetings
In summary, the Act provides that:
- Virtual technology can be used to hold a general meeting, provided that companies ensure that the virtual technology gives members as a whole a reasonable opportunity to participate in the meeting. The terminology ‘as a whole’ was introduced to ensure that a meeting would not be invalidated due to the technical difficulties experienced by some individual members (difficulties that do not necessarily affect all members).
- At a virtual meeting, votes must be cast by poll rather than a show of hands – unless the company’s constitution stipulates otherwise.
- Companies may provide documents that are to be tabled at a virtual meeting to members in advance of the meeting, or may make the documents accessible to persons attending the meeting in any way (for instance, via screen sharing technology at a virtual meeting).
- Members must be given a reasonable opportunity to participate at a virtual general meeting (eg members must be given an opportunity to speak and ask questions at the meeting, if they elect to do so). Importantly, it will not be sufficient under these new amendments that members are permitted to ask questions in writing (via a chat function or the like); instead, companies should ensure that the technology used at meetings appropriately accommodates verbal communication and questioning by the members.
Notices of meeting
If a company elects to host its meeting electronically, the notice of meeting must include sufficient information to allow members to attend and participate in the meeting using the virtual technology.
Under the Act, notices of meeting and proxy forms for general meetings may be given to members electronically. Alternatively, sufficient information may be given to members by communication to allow them to access the documents electronically. In practice, we suggest that:
- where shareholders have nominated an email address for communications to the company’s share register, notices of meeting and proxy forms can be despatched to these shareholders as an attachment to an email; and
- where shareholders have not nominated an email address for communications to the company’s share register (ie, they prefer hardcopy mailing), a simple postcard is despatched to these shareholders by hardcopy mailing, which contains a URL link that shareholders can access on their computer to download the notices of meeting and proxy forms.
Additionally, the Act has provided ASIC with emergency relief powers that enable ASIC to extend the timeframe for companies to hold an AGM on a class basis, and permit ASIC to allow companies to hold a wholly virtual meeting even after the expiration of the temporary relief provided in the Act.
ASIC has used this power to modify the Corporations Act to allow companies with financial year end dates between 21 February 2021 and 7 July 2021 an extension of up to two months to hold their annual general meetings.
Ultimately, the relief provided to companies under the Act offers those companies welcomed flexibility in their approach to convening and holding general meetings in the continuing COVID-19 landscape.
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.