Virtual and hybrid shareholder meetings and electronic distribution of meeting materials are here to stay – finally!
Virtual and hybrid meetings and electronic distribution of meeting materials are finally becoming permanent. They will be enshrined under new legislation that makes the temporary relief introduced during the COVID-19 pandemic permanent. The changes come just in time, with the temporary measures expiring on 31 March 2022.
This is an extremely welcomed and long-awaited measure, enabling companies and their officers, as well as their shareholders, to conduct and participate in general meetings in a manner that is consistent with 21st Century technologies and modern ways of working and living.
In response to the challenges of COVID-19, the Commonwealth Parliament introduced the Treasury Laws Amendment (2021 Measure No.1) Act 2021 (Cth) (TLA). The TLA received assent on 13 August 2021 and has since facilitated electronic dispatch of documents and virtual shareholders meetings. The TLA provided temporary relief under the Corporations Act and is only to remain in force until 31 March 2022.
More recently, on 10 February 2022, the Corporations Amendment (Meetings and Documents) Bill 2021 (Cth) (Corporations Amendment Bill) was passed by Parliament. Following the temporary amendment to the Corporations Act 2001 (Cth) (Corporations Act) under the TLA, the new Corporations Amendment Bill will implement, among other things, permanent measures to allow companies and registered schemes to hold hybrid (in person and remote) meetings, or wholly virtual meetings if their constitution allows it, and use technology to despatch company documents. The Corporations Amendment Bill received royal assent on 22 February 2022 and comes into effect with respect to virtual meetings and sending documents from 1 April 2022 (after the temporary measures expire).
The significant amendments made under the Corporations Amendment Bill cover: electronic signatures and execution of documents, sending documents, and virtual and hybrid meetings.
The below analysis focuses on the various amendments, and the corresponding sections in the Corporations Act that have been amended relating to virtual and hybrid meetings and the use of technology to despatch documents.
This article does not deal with the electronic signing measures. For further detailed information on electronic signatures, please see our previous article published on 21 February 2021: https://www.cornwalls.com.au/signing-made-easy/
- Virtual and Hybrid Meetings
- Section 248D allows for a directors’ meeting to be called or held using technology consented to by all directors.
- Section 249R allows a company to hold members meetings physically, in a hybrid manner (physical venues and virtual venues), or a virtual meeting if the company’s constitution allows. To facilitate this, companies should first analyse their constitution to determine if any changes must be made to permit the use of virtual and electronic technology for meetings. In this regard, some companies may wish to seek shareholder approval to amend their constitutions to allow for wholly virtual meetings.
- Section 249S requires meetings that are held in any manner to be held at a reasonable time. It must also be reasonable to hold a meeting in the chosen physical, hybrid or virtual environment.
- Section 252P allows a registered scheme to hold members meetings physically, in a hybrid manner (physical venues and virtual venues), or a virtual meeting if the company’s constitution allows.
- Section 1687E allows a member to elect to receive annual reports from a company, registered scheme or disclosing entity in hard copy or as an electronic copy.
- Sending Documents
- Section 110D a document may be sent to a recipient in a physical form, or sufficient information may be sent in physical form to allow the recipient to access the document electronically, or by sending a document in electronic form. In practice:
- where shareholders have nominated an email address for communications to the company’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 the company’s share register (ie, 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.
Significant benefits exist in companies being able to utilise electronic dispatch; namely, saving on printing costs associated with large documents (annual reports, control transaction disclosure documents, notices of meeting etc) that are being despatched to large shareholder bases.
- Section 110E where a member of the company, the registered scheme, the disclosing entity or the managed investment scheme is the recipient, a member can elect to be sent documents in physical or electronic form.
The Corporations Amendment Bill’s introduction will clarify and enshrine both the new measures of dispatching documents to shareholders, and the procedures for conducting hybrid meetings.
For further information please contact 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.