Virtual shareholder meetings

What you need to know

• The Treasury Laws Amendment (2021 Measures No. 1) 2021 (Cth) (the Amending Act) makes temporary amendments to the provisions in the Corporations Act 2001 relating to meetings of directors, meetings of members of companies and meetings of members of registered schemes, to facilitate the use of electronic technology. 
• The new provisions allow:
  
  • meetings to be held virtually, provided that the members as a whole have a reasonable opportunity to participate; and
  • electronic means or alternative technologies to be used to meet the requirements in the Corporations Act relating to, among other things, provide notice of a meeting and give other documents relating to meetings to the prospective attendees.
• In addition, the Amending Act makes temporary amendments to allow the electronic execution of company documents.  See our separate update here on this aspect of the Amending Act.
• Although they are temporary amendments, they will helpfully be in place for the forthcoming AGM season.  The amendments have effect until 31 March 2022.  
• By the Amending Act, ASIC is also given power (on a permanent basis) to grant short-term relief from the requirement to hold a meeting at a physical location, or extend the timeframe for holding a meeting, if it may not be reasonable to expect compliance with the meeting requirements due to circumstances that are beyond the control of the entity or class of entities (such as those related to COVID-19).
• The Government is finalising permanent meetings and company document execution reforms, with a view to these reforms being in place prior to the relief provided by the Amending Act ending.
• The Amending Act also makes permanent (subject to an independent review being conducted in two years' time) the temporary changes to the continuous disclosure laws which were introduced last year in response to the Coronavirus pandemic and expired in March this year.

What you need to do

• If you are planning to hold a virtual general meeting this AGM season, you will need to ensure it is conducted in accordance with the new provisions of the Amending Act. Key requirements include that the notice of meeting contains sufficient information about how a member may participate in the virtual meeting and that the meeting is held in a manner that gives the members as a whole a reasonable opportunity to participate in the meeting. 

Background 

Since the temporary measures introduced in May last year in response to the Coronavirus pandemic permitting Australian companies to hold virtual general meetings expired on 21 March 2021, there has been doubt about the legal efficacy of virtual general meetings of companies.  The amendments made by the Amending Act remove the doubts.  The amendments facilitate the use of electronic means to hold meetings. The amendments are broadly consistent with the temporary measures that expired in March this year.

Accordingly, meetings may now be held by: 

• using virtual meeting technology; 
• inviting persons to physically attend at a designated location; 
• inviting persons to physically attend at different locations and using virtual meeting technology to connect the different locations together; or 
• using a combination of the above methods.

These new provisions apply to meetings of members of companies, directors of companies and members of registered schemes.  They apply until 31 March 2022.

What does the Amending Act require for virtual meetings?

The Amending Act has made numerous detailed amendments to the Corporations Act for this purpose.  Broadly speaking, the amendments provided that:

• for a meeting to be held using technology, the notice of the meeting needs to include sufficient information to allow the persons entitled to attend the meeting to participate using the virtual meeting technology;
• the company needs to ensure that a virtual meeting is held in a manner that gives the members as a whole a reasonable opportunity to participate in the meeting.  As the Explanatory Memorandum for the Amending Act says, the phrase ‘members as a whole’ ensures that the meeting cannot be invalidated merely because a member experienced technical issues and is unable to participate virtually;
• documents may be tabled at a meeting by providing the documents to the person in advance of the meeting or making the documents accessible to persons attending the meeting in any way. For instance, the documents might be shared using a ‘screen sharing’ facility with virtual attendees or handed out in hard copy to physical attendees;
• at a virtual meeting of members, votes must be taken on a poll rather than a show of hands unless the company‘s constitution provides otherwise;
• all participants who are entitled to vote must be given the opportunity to vote at the meeting.

The Amending Act has also made amendments allowing documents relating to meetings to be given or signed using electronic means.  These amendments apply regardless of whether the meeting is held using electronic technology or in person.  

There are broadly two conditions that must be satisfied before a document can be given electronically.  The first condition is, unsurprisingly, that it must be reasonable to expect that the document would be readily accessible so as to be useable for subsequent reference at the time that the document is given.  

The second condition is that an election by the recipient to receive documents in hard copy only is not in force.  Members may elect to receive documents in hard copy.  There is no requirement for the company to notify members of their right to “opt-in” to receiving hard copies of documents relating to meetings.  

The amendments also provide that information may be recorded electronically in a minute book if at the time of recording the information it is reasonable to expect that the information would be readily accessible so as to be usable for subsequent reference.  They also allow minute books to be kept electronically if the method used to keep the minute book provides a reliable means of maintaining the integrity of the information and it was, at the time of generating the electronic minute book, reasonable to expect that the information would be readily accessible so as to be usable for subsequent reference.  If stored electronically, the minute book must be open for inspection at the same place where a hard copy would have been required to be retained under the Act.

The new rules will also apply to meetings of members of registered schemes.  

As the rules are facilitative in nature, they will not preclude meetings being held using traditional means or by hybrid means. 

Temporary measures

The provisions of the Amending Act facilitating virtual meetings are temporary only.  The provisions will cease to apply on 31 March 2022.  According to the Explanatory Memorandum, these temporary amendments are designed to provide companies with additional flexibility during the Coronavirus pandemic, and the Government is finalising permanent meetings with a view to the reforms being in place prior to the relief provided by Amending Bill ending. 

Additional powers granted to ASIC 

The Amending Act has also provided emergency relief powers for ASIC to: 

• extend the timeframe for companies to hold an AGM on a class basis; 
• allow companies to hold a wholly virtual meeting even after the expiration of the temporary relief provided in the Amending Act; and 
• allow ASIC to modify the manner or timeframe in which documents must be given under the Act.