On 19 July 2024, the AICD provided a submission to the statutory review of the meetings and documents amendments.
Building on temporary relief measures during the COVID-19 pandemic, the AICD welcomed the amendments to the Corporations Act 2001 (Cth) to enable companies to use technology to hold meetings, execute company documents and send meeting-related materials on a permanent basis (Amendments). At the time, these reforms represented an overdue modernisation of Australia’s corporations law. The Review presents an important opportunity to assess the efficacy and impact of the Amendments in practice.
Overall, the Amendments have been received positively by AICD members and provided companies, both in the NFP and ASX listed sector, with the opportunity to reinvigorate the AGM format, through removing geographic and physical barriers to attendance and increasing engagement with shareholders/members. That said, there are certain aspects within the drafting of the Amendments which have, in practice, limited the practical impact of the reforms.
Our submission makes the following key points:
- It is critical that, as an objective of this Review, the legislation remains non-prescriptive and technology-neutral to ensure companies can choose the best meeting format depending on their circumstances, resources and shareholder/member base. Given the legislation covers a broad range of organisations, from small NFPs to large ASX listed companies, the legislation should not: impose minimum expectations that are overly prescriptive; unduly burdensome or expensive to comply with; or otherwise at risk of becoming outdated as technology continues to evolve.
- Since the Amendments took effect, companies in Australia have adopted a range of meeting formats for their AGM. However, in many cases, companies are not convening their preferred meeting format. We note that:
- While hybrid meetings are the most common meeting format, there has been a steady increase in companies reverting to physical-only meetings, particularly for ASX listed companies; and
- Although there has been a stronger uptake of wholly virtual meetings by NFPs, wholly virtual meetings have been convened by very few ASX listed companies since the COVID-19 pandemic despite a high level of interest in doing so.
- There is an opportunity for this Review to consider ways to address limitations within the drafting of the Amendments that would remove barriers for companies in convening the best meeting format for their circumstances. The AICD strongly encouraged the Review Panel to consider recommendations for:
- Replacing the requirement prescribed under the legislation for shareholders/members attending a meeting using virtual technology to ask questions and make comments ‘orally and in writing’ with a requirement for ‘orally or in writing’ (while ensuring that physical attendees can continue to ask questions orally). Doing so would provide companies with the option to elect the most appropriate method of communication with shareholders/members and significantly reduce the costs of convening a hybrid meeting; and
- Removing the requirement prescribed under the legislation for a company’s constitution to expressly permit a wholly virtual meeting.
- Any recommendations for reforms should be evidence-based rather than premised on perceived risks of abuse of virtual meeting formats. To the extent that there is compelling evidence presented to the Review Panel of poor management of AGMs, the AICD encouraged enforcement action by ASIC and the development of updated regulatory guidance on better practice standards for companies without embedding unnecessary prescription in legislation – particularly where concerns relate to a small sub-set of companies rather than the thousands of entities to which the legislation applies.
- The ability for companies to send meeting-related materials electronically has created significant process efficiencies and cost savings for companies. The optionality for shareholders/members to elect to receive either electronic or hard copy materials should be retained under the legislation.
- The ability for documents (including meeting-related materials) to be signed electronically have increased the productivity of companies and directors in being able to transact at a faster pace. The AICD is aware however that there continue to be complexities for directors signing statutory declarations and deeds where the requirements are governed by differing state and territory laws. We encouraged the Review Panel to consider a recommendation for Government to continue progressing reforms that will harmonise requirements and introduce a uniform set of rules across Australia.
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