Virtual AGMs, electronic document reforms under review

The government has commenced an independent review of permanent changes made to the Corporations Act in 2022 to enable virtual and hybrid AGMs, electronic signatures and sending of documents. The review will examine the impact of the reforms, including costs for companies and the participation of shareholders. Members are invited to share feedback to the AICD to inform our submission to the review.

Building on temporary relief measures in place during the COVID-19 pandemic, in 2022 the then Australian Government introduced permanent changes to the Corporations Act to enable the use of technology to hold wholly virtual or hybrid AGMs, provide meeting-related materials and sign documents electronically (Permanent Changes).

At the time of passage, the Corporations Amendment (Meetings and Documents) Act 2022 represented an important and overdue modernisation of Australia’s corporation laws.

Specifically, the Permanent Changes enabled technology to be used to:

• Facilitate hybrid meetings and wholly virtual meetings (subject to being permitted under a company’s constitution);
• Sign documents electronically, including corporate agreements, deeds and meeting minutes; and
• Send documents electronically, as well as giving shareholders/members the flexibility to receive documents in their preferred format (e.g. in hard or soft copy).

Recent analysis by King & Wood Mallesons (KWM) indicates that hybrid meetings remain the preferred format for ASX 200 companies, with 62 per cent of AGMs opting for this format in the 2023 AGM season. However, despite the Permanent Changes, the number of ASX 200 companies holding fully physical AGMs since 2021 has steadily increased – with 32 per cent of AGMs opting for this format (up from 28 per cent in 2022).

Key areas under review

On 26 June 2024, the government announced a review of the Permanent Changes by an independent panel, to be informed by public submissions and with a final report expected by 14 August. 

Key areas under review include the effects the Permanent Changes have had on:

• Costs of holding virtual or hybrid meetings compared to physical meetings;
• The conduct and quality of a virtual or hybrid meetings compared to physical meetings;
• The participation and voting rights of shareholders/members in virtual or hybrid meetings;
• The operation of directors’ meetings, where technology has been used to convene a virtual or hybrid format;
• The sending and receipt of electronic meeting-related materials (e.g. notices of meeting); and
• Electronic signing of documents.

The panel will also have regard to the experience in other countries that have adopted virtual and hybrid meeting format options and any lessons that could apply to Australia.

AICD focus and request for feedback

The AICD was a strong proponent of these reforms, advocating for changes that would provide companies flexibility to adopt the best meeting format for their circumstances. We have heard concerns, however, that the Permanent Changes have not had their intended effect, due in part to certain limitations of the 2022 legislative amendments.

For example, while the Permanent Changes have enabled wholly virtual meetings, a company may only convene a wholly virtual meeting to the extent it is permitted by the company’s constitution.

Unless already expressly provided for in the constitution, for many companies this has required shareholder/member approval to amend the constitution. KWM’s analysis of the 2023 AGM season notes that only one company sought to amend their constitution to enable wholly virtual meetings, however subsequently withdrew the resolution in response to stakeholder feedback.

The AICD is seeking input from members on the key areas of the review outlined above and how the Permanent Changes have impacted organisations. We are particularly interested to hear from directors on the preferred meeting format of your organisations and what (if any) barriers to convening those there may be in practice.  

Please provide any comments by Friday 12 July to policy@aicd.com.au.