COVID-19: Governance – Holding AGMs during a pandemic

KEY TAKE OUTS:

• Changes to the Corporations Act to allow online AGMs have been extended to 21 March 2021.
• The changes provide greater flexibility to corporations to facilitate AGMs online in light of COVID-19.

Earlier this year, ASIC released guidance regarding the effect of COVID-19 on Annual General Meeting (AGM) and financial reporting requirements, because there was a lack of clarity regarding whether AGMs could be held online. The Corporations Act was temporarily amended by the Federal Treasurer (The Corporations (Coronavirus Economic Response) Determination (No. 1) 2020) to allow companies to conduct online AGMs, even where company constitutions explicitly prohibit their use.

These changes which were due to expire on 5 November 2020 have now been extended to 21 March 2021. Companies must still provide shareholders with ample opportunity to engage with online meetings including the ability to vote and to question board members. Companies should provide members with instructions on how they may attend the virtual AGM and exercise their voting and questioning rights. Questions may be taken in advance or live, but the option to vote live must be facilitated via a poll and not a show of hands. It is advised that the technological solution be tested beforehand to minimise issues, with a Plan B in the event the initial solution faces technical problems. If a significant number of members are unable to attend due to technical difficulties, the meeting is to be postponed until this can be addressed. It is suggested that companies contact their Share Registrar for advice on software solutions for conducting the AGM and the voting process. The minimum period of notice of the AGM is 28 days, which must be provided as normal to directors, members and auditors. Documents may also continue to be digitally signed in lieu of a physical copy until March next year.