Time to clean up the paper-based mess: Governance Institute calls for coherent laws on virtual meetings and e-documents in submission to Treasury
Temporary changes allowing virtual meetings and e-signing of documents during the pandemic should be made permanent, Governance Institute of Australian has said in a submission to Treasury. Without action these temporary changes finish in March 2021.
The submission follows a year when the Corporations Act – devised when business was conducted in a paper-only format – has been exposed as needing a significant overhaul, with organisations forced to grapple with holding a legal AGM while adhering to COVID-19 distancing restrictions.
“The reason we are in this mess is because the key laws assume all business communications are paper-based, a system that existed 20 years ago,” Governance Institute CEO Megan Motto said.
“This year’s events have firmly highlighted how key parts of the law are not fit for purpose in our digital-focused world where business must be dynamic, reactive and ready to innovate. It’s time for a permanent change.”
- The Corporations Act should be technology neutral. Currently laws do not account for technology, let alone future digital innovations/ crises.
- Meeting formats (ie: virtual, hybrid, face-to-face) should not be prescribed. Companies to be able to choose format most suited to them and their members.
- Allow companies to execute documents electronically.
- Allow companies to send notices of meeting and materials using an electronic or physical address nominated by the shareholder or member rather than paper-based methods. This will help reduce costs and paper waste.
- Not to require all votes at virtual meetings be taken on a poll, a proposal that would particularly disadvantage smaller companies.
- Not to require imposing more stringent requirements for minutes of virtual meetings than for minutes of physical meetings, ie: hard wiring a requirement to record questions and comments at virtual meetings in the minutes.
Meeting formats in the spotlight
Ms Motto said Governance Institute members had reported either virtual or physical meetings as their preferred means of holding an AGM.
Those running virtual meetings reported increased numbers of attendees, companies better able to engage with shareholders who typically could not attend due to travel, and the digital format was more appealing to the future generation of investors who are ‘digital natives’.
Hybrid meetings are perceived by some as more logistically arduous (essentially two types of events are being covered – physical and online – for the one meeting) which also doubles the risk profile of the meeting.
However, what works well for one type of company won’t always be as effective for another, Ms Motto said.
“Companies need to be able to adopt the format most suited to them and their shareholders. Our members support the facilitative approach taken in the Bill.”
Ms Motto said the Modernising Business Communications Expert Panel, of which she is a member, will continue to work with the government on these reforms.
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Media contact: Hannah Edwards, firstname.lastname@example.org
About Governance Institute of Australia
A national membership association, advocating for a community of 40,000 governance and risk management professionals from the listed, unlisted and not-for-profit sectors. Our mission is to drive better governance in all organisations, which will in turn create a stronger, better society.