Virtual and Hybrid AGMs during COVID-19
2021 AGM Season Update
From early May 2020 temporary modifications introduced initially by the Corporations (Coronavirus Economic Response) Determination (No 1) 2020 provided relief to companies in the context of COVID-19 restrictions from Corporations Act provisions regulating the holding, and giving notice, of shareholder meetings. These modifications allowed companies to hold virtual (conducted solely online) or hybrid (combining a physical location and online facilities) meetings. The modifications, which initially expired on 5 November 2020, were extended to 21 March 2021. ASIC then adopted a temporary 'no action' position in relation to the convening and holding of meetings using appropriate technology.
Treasury Laws Amendment (2021 Measures No 1) Act 2021
From 14 August 2021, the Treasury Laws Amendment (2021 Measures No 1) Act 2021 temporarily amended the Corporations Act to allow notices and other meeting-related documents to be provided electronically, and to permit companies to hold fully virtual and hybrid meetings even if their Constitutions do not expressly contemplate meetings being held this way. Importantly, these temporary amendments cease to have effect on 1 April 2022.
Exposure Draft Legislation
From 1 April 2022, it is contemplated that permanent changes to the Corporations Act regarding hybrid and virtual meetings will have been implemented; indeed exposure draft legislation - the Treasury Laws Amendment (Measures for Consultation) Bill 2021 - has been released for consultation.
As currently drafted, the exposure draft legislation allows meeting-related documents to be provided electronically (subject to election), and for companies to use technology to hold meetings. Significantly, a company will be permitted to hold meetings using virtual meeting technology only if expressly permitted to do so by its Constitution. It is very unlikely for a company's Constitution to contemplate, let alone permit, fully virtual meetings; this is even more so if the Constitution was adopted before the COVID-19 pandemic.
Companies should 'future proof' their Constitution in anticipation of the exposure draft legislation being passed, and the probability of ongoing disruption related to COVID‑19 beyond 31 March 2022.
Public companies that wish to hold, or have the option to hold, fully virtual shareholder meetings after 1 April 2022 should review their Constitutions now and if necessary seek shareholder approval of appropriate amendments to their Constitution at their 2021 annual general meeting.
Proprietary companies should similarly review and if necessary amend their Constitutions as soon as possible before 1 April 2022.
We are able to assist with the review and amendment of company Constitutions. Please contact us if you wish us to review your Constitution, document any necessary changes and ensure the changes are properly implemented.