Governance Institute welcomes Treasurer’s announcement to allow electronic execution of documents and communications, but virtual AGMs placed in holding pattern
Governance Institute of Australia has welcomed the Treasurer’s announcement today that temporary regulations that allowed organisations to execute and send documents electronically during the pandemic will be made permanent.
However, the regulations allowing virtual AGMs, due to expire next month, have only been extended to September.
“With the mini-AGM season about to start, this extension is welcome news, but it maintains the pre-COVID regime for the main 2021 AGM season” Governance Institute CEO Megan Motto said.
“In 2020 the temporary relief measures helped hundreds of organisations run their AGMs using technology while adhering to social distancing requirements and also served to speed up a much-needed modernisation of business,” Ms Motto said.
However, failing to make the ability to hold virtual AGMs a permanent change is a significant missed opportunity that will perpetuate further uncertainty, Ms Motto said.
“The level of engagement and participation at many AGMs increased during COVID-19, with technology playing a strong role as an enabler for this. It would be a shame for this to go backwards.
“Keeping these measures in a temporary state means that many organisations, eager for clarity and confidence, have been placed into an extended holding pattern.”
Ms Motto said the benefits of virtual AGMs spreads much further than the ASX 200.
“Virtual meetings and electronic shareholder communications were especially helpful for charities, membership associations, not-for-profits and other companies limited by guarantee with large member bases spread widely across Australia.
“One of these companies saved an estimated $1 million in 2020 by not sending paper AGM notices.”
In a statement, the Treasurer says: “Following 15 September 2021, member meetings will need to be conducted consistent with pre-COVID-19 laws which require an in person meeting to be held.”
Ms Motto said that reverting to pre-COVID-19 measures for AGMs would be a step backwards for business.
“The implementation of these business relief measures brought the Corporations Act – which does not account for the use of technology – closer to the 21st century. We simply cannot go backwards.
“We look forward to continuing to work with all stakeholders and advocate for our members on these issues and will monitor developments closely.”
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About Governance Institute of Australia
A national membership association, advocating for a community of more than 43,000 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.