The Australian Institute of Company Directors (AICD) has welcomed the recent passage of reforms to enable virtual AGMs, electronic signatures and electronic communications on a permanent basis.
On 10 February 2022, the Corporations Amendment (Meetings and Documents) Bill 2021 (Bill) passed Parliament making permanent the temporary changes introduced at the height of the COVID-19 pandemic relating to AGMs and the signing and sending of electronic documents.
Specifically, the reforms provide greater certainty and flexibility to companies and registered schemes by enabling:
- physical and hybrid meetings, and if expressly permitted by the entity’s constitution, wholly virtual meetings;
- technology to be used for virtual meetings allows members to participate in the meeting orally and in writing;
- technology to be used to execute documents electronically, including corporate agreements, deeds and meeting minutes; and
- documents to be sent in hard or soft copy, as well as giving members the flexibility to receive documents in their preferred format.
This is welcome news, given many organisations are still operating under pandemic conditions that present challenges for enabling face-to-face gatherings. The ongoing impact of the COVID-19 pandemic has demonstrated how critical it is that our legislation provides flexibility for companies to adopt the best meeting format for their circumstances, whether that be physical, hybrid or wholly virtual.
The AICD, working together with stakeholders including the Governance Institute, Law Council of Australia, and Australian Investor Relations Association, has been a strong advocate for these reforms. The passage of this Bill represents an important and overdue modernisation of Australia’s corporations law and has been a key priority for the AICD.
Virtual AGMs still subject to constitutional requirements
The AICD recognises that many companies with a 31 December year end will still, however, face challenges with convening an AGM this upcoming mini-AGM season - whether that be a physical, hybrid or wholly virtual format.
The temporary relief introduced in 2021 under the Treasury Laws Amendment Act (2021 Measures No.1) (TLAB1) overrode any constitutional limitations regarding virtual meetings. However, this relief is due to expire on 30 March 2022.
In the absence of the TLAB1 relief, under these new permanent reforms, virtual meetings may only be held if they are permitted by the company’s constitution. To benefit from these legislative changes, many companies will therefore need to seek shareholder/member approval to amend their company’s constitution to permit virtual AGMs at their next AGM.
While many companies were intending to hold physical or hybrid meetings in coming months, we understand there are still concerns with holding face-to-face gatherings across the different States and Territories in light of increased community transmission of the Omicron variant.
Accordingly, the AICD, together with other stakeholders, is engaging with ASIC regarding the use of its new emergency relief powers introduced under TLAB1 to allow an extension for the convening of virtual AGMs, notwithstanding constitutional restrictions for the upcoming mini-AGM season. We will continue to keep members updated on developments with this potential relief measure.
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