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Virtual meetings a ‘welcome’ change
Changes to the Corporations Act, inspired by COVID-19, should be seen as reassuring for businesses and provide greater certainty for AGMs this year.
Jerome Doraisamy
Last week, Treasurer Josh Frydenberg announced changes to the Corporations Act which will allow virtual AGMs, electronic execution of documents by company officers and providing notices of annual general meetings for a six-month period from 5 May 2020.
“Under the social distancing measures that are currently in place, it is difficult for shareholders to physically gather with members of the board at annual general meetings. Meetings must continue to provide shareholders with a reasonable opportunity to participate,” Treasurer Frydenberg said in a statement.
Governance Institute CEO Megan Motto welcomed the changes, saying they deliver some certainty for many companies planning their annual reporting to shareholders this year.
“Many organisations have been facing significant hurdles recently including restrictions on their ability to use technology to hold meetings, communicate with their shareholders, or use electronic signatures on documents – as required under the nearly 20-year-old legislation,” Ms Motto said.
“We have consistently advocated that the requirements of the Corporations Act are holding back digital innovation in the way that companies can engage with their shareholders, particularly in the current environment. In the long-term a simplified regulatory framework that accommodates evolving technologies for shareholder communication and enables shareholders to participate will facilitate shareholder rights and improve shareholder engagement.”
Gilbert + Tobin partner Costas Condoleon and lawyer Beverly Parungao agreed that the changes should be welcomed by businesses, against the backdrop of the pandemic.
“This is a welcome and sensible move to provide greater certainty to companies whose constitutions make it difficult for them to hold virtual meetings. It is also reassuring for shareholders,” the pair said.
“It allows companies to transact shareholder business virtually so as to protect the health of those wanting to attend the meeting while also ensuring the company meets its legal obligations.”
When asked how best lawyers can assist clients to navigate the temporary changes – which cease to operate in early November of this year, Mr Condoleon and Ms Parungao said that lawyers should be working with their clients to consider sensible changes to the client’s constitution “that allow the company to hold virtual meetings and facilitate direct voting in the future, should a physical meeting be impossible or undesirable”.
“Companies with restrictive constitutions that can utilise these changes should also consider holding their annual general meetings prior to 6 November if it remains the case that precautionary health measures such as social distancing are operational or recommended at that time,” they said.
Jerome Doraisamy
Jerome Doraisamy is the editor of Lawyers Weekly and HR Leader. He has worked at Momentum Media as a journalist on Lawyers Weekly since February 2018, and has served as editor since March 2022. In June 2024, he also assumed the editorship of HR Leader. Jerome is also the author of The Wellness Doctrines book series, an admitted solicitor in NSW, and a board director of the Minds Count Foundation.
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