Latest update: ASIC issues 'no-action' position on virtual AGMs and notices of meeting
ASIC has today issued a ‘no-action’ position on virtual meetings and electronic notices of meeting.
The regulator adopted this position after temporary measures permitting Australian corporations to hold virtual and hybrid meetings and enabling the electronic execution of documents and digital shareholder communications expired on 21 March. The Federal Government attempted unsuccessfully in the March sitting of Parliament to pass a Bill that would have extended the temporary measures.
ASIC’s ‘no-action’ position will apply between 21 March 2021 and 31 October 2021 but may be withdrawn earlier if Parliament passes the relevant Bill.
The situation now is:
- The Corporations Act has reverted to its pre-COVID form.
- Virtual-only AGMs and electronic notices of meeting and electronic supplementary notices are temporarily protected from ASIC enforcement action. However, ASIC’s ‘no action’ position does not necessarily remove the risk of legal action from third parties, for example a shareholder challenging the validity of a resolution passed at a virtual meeting.
- ASIC considers that hybrid meetings are permitted under the Corporations Act. However, entities may risk shareholder legal action if their constitutions do not expressly permit hybrids.
- There is once again uncertainty about the legality of company officers executing documents electronically. ASIC’s no action position does not extend to electronic execution of company documents.
- Under ASIC’s no-action position, companies reporting between 7 January 2021 and 7 April 2021 will have up to seven months to hold their AGMs, rather than the usual five months.
No vote on the relevant Bill is possible in Parliament until 11 May at the earliest.
Governance Institute will continue to advocate for resolution of this uncertainty. We remain committed to working collaboratively with the Government, the Opposition, the crossbench and all industry stakeholders to enhance the digital shareholder experience.
We will keep members and the broader network updated on this important issue.