On 5 May 2020, the Treasurer made a determination which temporarily permits companies to convene company meetings such as annual general meetings (AGM) and shareholder meetings entirely online, rather than face to face.
Application of the Determination
The Corporations (Coronavirus Economic Response) Determination (No. 1) 2020 (Determination) took effect on 6 May 2020 and will apply for six months.
The Determination will not apply to foreign companies and other entities such as statutory corporations, governments and partnerships of non-companies.
The Determination modifies:
any provision of the Corporations Act 2001 (Cth) (Corporations Act) or the Regulations that requires or permits a meeting to be held, or deals with giving a notice of a meeting or the conduct of a meeting;
the operation of the constitution of a company or registered scheme; and
any other arrangement that requires or permits a meeting to be held, deals with giving a notice of a meeting or the conduct of a meeting.
Key elements of the Determination
The key elements of the Determination are as follows:
virtual meetings - a meeting may be held using one or more technologies that give all persons entitled to attend a reasonable opportunity to participate without being physically present in the same place;
quorum - all persons participating in the meeting will be taken to be present at the meeting while participating (this means that a requirement for physical attendance for purposes such as achieving a quorum may be met using technology);
votes – show of hands may not be used where a meeting is being facilitated using technology. Instead, votes must be taken on a poll and each person entitled to vote must have the opportunity to participate in the vote in real time and, where practicable, by recording their vote in advance of the meeting; and
proxy – a proxy may be appointed using technology.
In relation to the giving of notice:
notices of a meeting (and any other information in relation to the relevant meeting) may be given using technology (such as email) and must include details as to how to attend and participate in the meeting virtually (including how to speak and vote at the meeting). If, for example, a company does not have on its files an email address for a member, the company may send a letter or other correspondence setting out a URL for viewing or downloading the notice and other materials; and
if a company has already sent out a notice of a meeting before the Determination came into force, the company must issue another notice with details of the virtual meeting at least seven days prior to the virtual meeting.
ASIC’s guidelines for conducting virtual meetings
The Australian Securities and Investments Commission (ASIC) is encouraging companies to hold either entirely virtual meetings or ‘hybrid’ meetings (i.e. small face-to-face meetings linked by technology to allow remote participation).
ASIC has highlighted in particular the importance of complying with the requirement in both the Corporations Act and the Determination that all meetings are conducted in a way that provides a reasonable opportunity for members to participate - now more than ever members want to understand how companies are dealing with the economic and social challenges created by the COVID-19 pandemic.
ASIC has published additional guidelines for facilitating such virtual meetings. In addition to the issues covered by the Determination, ASIC has also advised that:
the virtual technology used should enable those participating virtually to follow the proceedings of the meeting uninterrupted;
members should be given a reasonable opportunity to ask questions live during the course of the meeting;
members entitled to vote on resolutions put at the meeting should have the opportunity to consider responses to questions and debate before doing so;
companies should hold a short rehearsal to iron-out potential complications or technical issues with the technology;
companies should consider backup solutions and plans to overcome technical issues, and advise members in advance of the steps to be undertaken if technical issues do arise; and
if technical issues result in a number of members being unable to reasonably participate, the meeting should be adjourned until the problem is fixed (noting this may require an extension of a statutory timeframe).
The principles outlined in this information sheet are for guidance only and specific responses and advice will vary depending on the particular facts of your circumstances. The content above is therefore general information only and should not be relied upon as legal advice.
If you have any questions about ensuring that your legal documents are executed correctly, please do not hesitate to get in contact with Blueprint Law via our website or give us a call on +61 (2) 9300 3100.