ASIC releases guidelines for virtual investor meetings

ASIC has issued guidelines on how companies should use technology to conduct hybrid and virtual meetings of members.

Following changes to the Corporations Act allowing companies to hold online general meetings (see further here), ASIC has released guidelines to assist companies in meeting their legal requirements while holding ‘virtual’ or ‘hybrid’ meetings.

The guidelines apply to all public company AGMs, as well as any other meeting of company or scheme members, such as meetings for member approvals required under the Corporations Act or ASX Listing Rules, or to consider a proposed scheme of arrangement.

ASIC has strongly encouraged companies to move their meetings online (either in a fully virtual or hybrid format) while restrictions on movement and large gatherings remain in place.

Enabling member participation

The key issue that companies will be grappling with as they move to virtual investor meetings is how to give members a reasonable opportunity to participate, as required under the Corporations Act.

On this, ASIC states that:

• The technology should enable participants to follow the meeting uninterrupted
• Any changes to how the meeting is run should be tailored to promote genuine and effective interaction between members and the board
• Members should be given a reasonable opportunity to ask questions live during the meeting, whether they are attending in person or online. This includes being able to respond to presentations and debate arising at the meeting, as well as being able to ask questions and comment on the management of the company, the remuneration report, and questions to the auditor
• Where companies review and select members’ questions or comments in advance, the process for doing this should be balanced and representative. Companies should be transparent about the number and nature of questions asked and not answered, including keeping appropriate records of these.

Voting during virtual meetings

Where practicable, members should be able to lodge their votes ahead of the meeting. In addition, they should have the option to cast a vote live during the meeting via virtual technology in the same way that they would if they attended in person (even if the option to vote prior to the meeting is also available).

All voting should be by a poll rather than a show of hands.

Content of the notice of meeting

As many members may be using new technology for the first time, the notice of meeting should include clear and concise explanations of:

• how to use the technology to observe, vote, make comments and ask questions
• how members can vote, comment and ask questions online.

At the very least, companies and responsible entities should specify an email address (or other online submission facility) in the notice of meeting for the service of proxy appointments and proxy appointment authorities.

Some listed entities may have already called a meeting and so may need to update the notice to include information about the use of technology. Where this is the case, the entity should issue a fresh notice containing the new details at least seven days before the meeting.

Technology problems during a hybrid or virtual meeting

Of course, moving online may result in technology challenges that can disrupt the meeting. ASIC encourages companies to plan ahead, in particular to:

• Assess the capacity of their chosen platform ahead of the meeting, including whether it can adequately facilitate member participation and handle anticipated usage
• Hold a short rehearsal to iron-out potential complications or technical issues
• Consider backup solutions and plans to overcome technical issues. Plan for how you might communicate in real-time to members participating virtually to provide new instructions or a change in plans. Let participants know at the beginning of the meeting how you will communicate these updates if technical issues do arise.

If technical issues result in a number of members being unable to reasonably participate, the meeting should be adjourned until the problem is fixed. An extension to a statutory timeframe may be required to facilitate this. In the case of AGMs required to be held before 31 May 2020, a company or responsible entity may rely on ASIC’s ‘no action’ position.

ASIC observing meetings

ASIC has started to observe hybrid and virtual meetings held during the COVID-19 restrictions and may issue further guidance if warranted or requested. ASIC notes that given physical restrictions on gathering, it would be concerned if a company or responsible entity were to hold a physical or hybrid meeting that did not give an effective opportunity for members to ask questions or cast votes. Companies that hold meetings in such circumstances may risk breaching the Corporations Act.