We have been assisting a number of clients with contingency planning for their upcoming AGM, in light of recent guidance and emerging market practice.
Contingency planning for your AGM and COVID-19
Amendments to the Corporations Act
On Tuesday 5 May 2020 the Treasurer announced temporary amendments to the Corporations Act 2001 (Cth). The Corporations (Coronavirus Economic Response) Determination (No. 1) 2020 (the Determination) will allow companies to hold AGMs and other meetings entirely online. The changes will be in effect for 6 months until 6 November 2020.
Under the Determination, company boards will be able to:
- provide notice of annual general meetings to shareholders using email (but only for those shareholders who have provided an email address – the balance will still need to get a letter or postcard by mail telling them how to find the notice online); and/or
- hold hybrid or virtual annual general meetings using one or more technologies without attendees being physically present.
While the risk of technology failure and meeting invalidity is not addressed, the temporary provisions make the process to adjourn or postpone relatively inexpensive because everything can be done electronically (including distributing the notice of meeting), provided it is done while the temporary amendments remain in force.
The day after the Determination was released, ASIC released further guidance on AGMs held during the COVID-19 pandemic. While restrictions on movement and large gatherings remain in place, ASIC now strongly encourages companies and responsible entities to hold either virtual or hybrid meetings.
What this means for your upcoming AGM
For companies with upcoming AGMs, some things to start thinking about are:
- whether to move to a hybrid or virtual meeting, and the practicalities and ramifications of doing so. Certainly, proceeding with a hybrid or virtual meeting this year under the temporary legislation should not compel companies to continue with that approach going forward and to assume the unnecessary risks of doing so;
- whether to send electronic copies of the notice of meeting in line with the Determination (for those shareholders that have provided an email address); and
- whether to bring the date of your AGM forward in order to be able to rely on the Determination (for example, companies planning to hold their AGM at the end of November may wish to consider bringing it forward).
Please contact a member of the Head Office Advisory Team if you would like to discuss the steps for implementing a hybrid or virtual meeting, including consideration of your constitution.
The contents of this publication are for reference purposes only and may not be current as at the date of accessing this publication. They do not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking any action based on this publication.
© Herbert Smith Freehills 2020