Earlier this year, ASIC issued guidelines for satisfying upcoming AGM requirements given the difficulties many companies now face in light of current restrictions on gatherings and travel. The guidelines, which are directed towards public companies who are due to hold their AGM by 31 May 2020, set out ASIC’s ‘no action’ approach to non-compliance with provisions of the Corporations Act 2001 (Cth) (Act). ASIC has provided these companies with a two-month extension to convene meetings required under the Act and has also indicated its support for the holding of AGMs via technology. This would involve the convening of ‘hybrid’ (through the use of a physical location and online facilities) or ‘virtual’ (entirely online) AGMs. However, doubt was expressed as to whether the Act permits virtual AGMs and whether resolutions passed at such meetings would be valid.
The recently issued Corporations (Coronavirus Economic Response) Determination (No 1) 2020 (Cth) (Determination) addresses this uncertainty. In addition to establishing relaxed methods for the execution of documents as discussed in our recent article, the Determination modifies each provision of the Act, the Corporations Regulations 2001 (Cth), the Insolvency Practice Rules (Corporations) 2016 (Cth) and the Corporations (Passport) Rules 2018 (Cth) requiring or permitting a meeting to be held, or dealing with notice or the conduct of a meeting. Companies, responsible entities and external administrators are now able to hold meetings remotely as virtual meetings, rather than face to face. Meetings that can take place in this manner include AGMs and creditors’ meetings. The modifications also affect provisions governing the operation or enforceability of a company’s constitution.
The changes, which apply until 6 November 2020, provide that:
The Determination explains a company may give notice or provide information via email enclosing the notice or information, or a link through which members can view or download the materials. For members who have not provided an email address, companies can send them a letter enclosing a URL which provides access to the notice or information. The notice must include information about how attendees can participate at a virtual meeting, including information as to how they can speak and vote. If notice of a meeting was issued prior to the Determination, a fresh notice can be issued setting out the virtual meeting information at least 7 days before the meeting is held.
The Determination will undoubtedly help mitigate the impact of COVID-19. It overcomes many of the obstacles companies, responsible entities and external administrators were previously confronted with when coordinating and holding meetings. Further, officers and members residing interstate are no longer required to travel and self-quarantine prior to attending a meeting, and the provision of notices via email (where possible) will not be disrupted by postal delays. Despite the new measures, both the Determination and a company’s constitution must be carefully complied with to ensure the validity of any notice provided or resolution made during a virtual meeting.
Please contact us if you’d like to discuss holding a virtual meeting or visit our COVID-19 Hub for more legal updates.
This article provides general comments only. It does not purport to be legal advice. Before acting on the basis of any material contained in this article, we recommend that you seek professional advice.
Justin Sharman, Principal in our Disputes Team
Phone: +61 8 8210 2279
Annabel Nettle, Lawyer in our Disputes Team
Phone: +61 8 8210 2291