New guidance on COVID-19 and the impact on AGMs
As many organisations approaching the May AGM season scramble to hold their meeting in accordance with the restrictions in place due to Coronavirus (COVID-19), while still upholding their legal requirements, the Governance Institute of Australia has said some key failings of the laws governing AGMs have been exposed.
Many organisations are turning to alternatives to the traditional AGM, swiftly preparing contingency hybrid style meetings, but at the same time are facing hurdles such as restrictions on their ability to use technology to hold meetings or communicate with their shareholders or use electronic signatures on documents - as required under the nearly 20-year-old Corporations Act.
Governance Institute of Australia CEO Megan Motto said the current difficult situation for companies of all sizes has put a spotlight on the need for an overhaul of the laws.
“It is time to bring the Corporations Act into the 21st century,” Ms Motto said.
“Business currently finds itself exposed to many of the shortcomings of our existing legislation – and this has sped up the need for an overhaul.”
To assist companies currently planning their AGM (or other General Meetings, and Scheme meetings), the Governance Institute and the Australasian Investor Relations Association, with the assistance of the Business Law Section of the Law Council of Australia, has today issued a ‘Guidance — COVID-19 and the impact on AGMs’, outlining in detail the options currently available.
"In the current environment shareholder engagement is more important than ever. Every effort should be made to facilitate that in the most cost-effective way. Hybrid and virtual meetings are a great way to do so and should become commonplace in Australia on a permanent basis" AIRA CEO, Ian Matheson said.
ASIC has also just provided some comfort to those companies struggling to organise their AGM in light of the changed circumstances, issuing a statement that that they will take no action against companies for a delay of up to two months in holding their AGM or holding meetings using technology.
AGM coming up soon? Here are the current options:
- Adapt the basis on which you hold the AGM.
- Delay convening the AGM, if notice has not yet been issued.
- Postpone the AGM, if permitted by the company constitution (constitution).
- Adjourn the AGM.
- Apply to ASIC for an extension of time to hold the AGM.
- Conduct a hybrid AGM, if permitted under your constitution, or
- From 20 March 2020 – rely on an ASIC ‘no-action’ position, to conduct an online AGM, or to hold your AGM up to two months past the prescribed deadline.
For detailed information on each of these points, please see the Guidance here.