Virtual and hybrid AGMs introduced as permanent option: Governance Institute welcomes modernisation of Corporations Act
Governance Institute of Australia has welcomed the successful passing of new laws today that will modernise the Corporations Act by permanently allowing a wide range of entities, including large and small companies and not-for-profits, to use technology to hold meetings and sign and send key documents.
The Corporations Amendment (Meetings and Documents) Bill 2021 was passed with bipartisan support, giving shareholders and members the choice between virtual, hybrid and physical AGMs and enabling the electronic distribution of AGM-related documents and the electronic execution of documents.
The legislation makes permanent the temporary measures introduced at the onset of the pandemic as 1,000s of organisations grappled with the prospect of holding a legally binding meeting – and signing and sending documents – with social distancing and lockdown measures in place.
“These reforms, which we have long supported, will enable Australians outside the big cities to more easily participate in shareholder democracy and reduce the waste and expense of paper-based communication,” Governance Institute CEO Megan Motto said.
“Governance Institute will work closely with all industry stakeholders to provide guidance on best practice to ensure shareholder engagement is enhanced by these measures and that organisations continue to meet their regulatory requirements.”
The legislation contains key shareholder safeguards, including the requirement for an independent review in two years’ time to ensure the new framework is operating as intended, and for virtual-only AGMs to only be permissible if at least 75% of shareholders agree to a constitutional amendment.
“Governance Institute is satisfied that the legislation balances the need for scrutiny, accountability and shareholder protections with the benefits of modern digital technology, although holding physical meetings remains challenging given the continuing uncertainty driven by COVID-19,” Ms Motto said.
“We expect most AGMs will remain physical or hybrid but it is useful for virtual-only to be an option for emergency situations or where shareholders prefer it.”
As a next step, organisations, particularly charities and not-for-profits who find virtual meetings drive greater engagement, will need to amend their constitutions.
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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.