ASIC is still okay with virtual meetings, but your shareholders may not be…

The temporary relief which allowed companies to hold meetings virtually during the COVID-19 pandemic lapsed on 21 March 2021. While it was anticipated that Parliament would extend those measures, this has not happened.

The Corporations (Coronavirus Economic Response) Determination (No. 3) 2020 (Determination) was introduced last year to temporarily amend the Corporations Act 2001 (Cth) (Corporations Act) by removing the barriers to holding company meetings using virtual technology and permitting the dispatch of notices of meeting electronically.

In the absence of an extension of these measures, ASIC has temporarily issued a 'no action' position. This means that companies may convene and hold meetings using virtual technology and issue notices of meeting electronically without risk of enforcement action by ASIC, provided that:

1. the technology used to hold the meeting provides members as a whole with a reasonable opportunity to participate, including by enabling members to ask questions and make comments during the meeting;

2. voting at the meeting occurs by poll rather than a show of hands;

3. each person entitled to vote is given the opportunity to participate in the vote in real time (and also, where practicable, in advance of the meeting);

4. the notice of meeting includes information about how those entitled to attend can participate in the meeting;

5. the notice of meeting or supplementary information, whether given electronically or otherwise, includes either the contents of the notice or details of an online location where those contents can be accessed; and

6. any supplementary instructions for online participation are given at least two business days before the meeting is held by:

   1. electronic message (if the member has provided the relevant details);

   2. a notice on the company's website; and

   3. if the company is listed, a market announcement.

ASIC's 'no action' position applies until the earlier of 31 October 2021 and Parliament passing any further relevant measures.

In addition, for public companies with financial years ending on or before 7 April 2021, ASIC will not take action in circumstances where the company defers its AGM for up to two months beyond the statutory deadline (that is, AGMs can be held up to seven months after year end), in relation to lodging financial reports under Chapters 2M and 7 of the Corporations Act.

However, ASIC has not extended its relief for lodging financial reports under Chapters 2M and 7 of the Corporations Act 2001 for public companies with financial years ending after 7 January 2021. Any entity within that category will need to apply to ASIC to seek financial reporting relief.

But beware…

While ASIC’s 'no action' position continues to provide some comfort for companies, it does not necessarily remove the risk of legal action being brought by third parties. A shareholder may challenge the ability of a company to hold a virtual meeting or the validity of a resolution passed at a virtual meeting, as there remains uncertainty as to whether the Corporations Act permits company meetings to be held in a wholly virtual format. A company that wishes to hold a meeting virtually should also check its constitution to ensure that the company is not restricted from doing so.

In addition, ASIC's position does not necessarily mean that the same 'no action' position will be taken by other regulators.

How can we help?

If you require any advice or assistance regarding corporate governance or the holding of meetings, please contact our Commercial Team.

---

The material in this article was correct at the time of publication and has been prepared for information purposes only. It should not be taken to be specific advice or be used in decision-making. All readers are advised to undertake their own research or to seek professional advice to keep abreast of any reforms and developments in the law. Brown Wright Stein Lawyers excludes all liability relating to relying on the information and ideas contained in this article.

contact

Amanda Comelli

Senior Associate
E akc@bwslawyers.com.au
P 02 9394 1044

Simon griesz

Partner
E swg@bwslawyers.com.au
P 02 9394 1082

---