Bringing shareholder communications into the 21st century
The Policy and Advocacy Team has spent a lot of the last two weeks talking to members, regulators and other stakeholders about the multitude of ways coronavirus (COVID 19) is impacting daily corporate life and what needs to be done in a rapidly changing environment. These discussions lead to ASIC’s Guidelines for meeting upcoming AGM and financial reporting requirements and the Guidance we issued the same day with Australasian Investor Relations Association (AIRA) and the Business Law Section of the Law Council of Australia. The ASIC Guidelines provide some temporary assistance for companies who are now trying to hold AGMs and communicate with their shareholders in unprecedented circumstances.
The fact that the guidance was needed highlights some of the many shortcomings of the current corporate legislative environment. In a situation where most of corporate Australia is working from home remotely using an array of technology and platforms, the Corporations Act still requires companies to send hard copy Annual General Meeting and other communications to their shareholders. In normal circumstances, this can be a significant expense for companies — up to $1 million for a company with a large retail shareholder base. It can also lead to significant wasted paper at a time when companies are trying to reduce their paper waste in line with their sustainability goals.
At a time when the Australian Government is keen to interact with citizens online and when Australians are now very comfortable interacting with not only government agencies but also a range of private and not-for-profit organisations online, the process of engaging with shareholders has barely changed since the invention of the internet. The requirements of the Corporations Act are holding back digital innovation in the way that companies can engage with their shareholders. A simplified regulatory framework that accommodates evolving technologies for shareholder communication will facilitate shareholder rights and improve shareholder engagement.
Our joint submission with AIRA encourages the Government to amend the Corporations Act to enable digital shareholder communications. We consider there is a real opportunity to make some lasting changes to the Corporations Act to bring it into the 21st century — watch the video!