Federal Treasurer Josh Frydenberg has announced he will use his COVID-19 emergency powers to amend the Corporations Act to allow online annual general meetings for six months from 6 May.
“Under the social distancing measures that are currently in place, it is difficult for shareholders to physically gather with members of the board at annual general meetings,” the Treasurer noted in a press release.
Under the changes, company boards will be able to:
- provide notice of annual general meetings to shareholders using email;
- achieve a quorum with shareholders attending online; and
- hold annual general meetings online.
“Meetings must continue to provide shareholders with a reasonable opportunity to participate. As a result, shareholders will be able to put questions to board members online and vote online,” the press release states.
Further changes will also allow company officers to sign a document electronically to ensure that documents are able to be properly executed during the crisis.
The Australian Securities and Investments Commission had previously taken a no action position for companies with a 31 December 2019 year end (that had been required to hold an AGM by 31 May) if they held a virtual AGM. “There is some doubt as to whether the Corporations Act permits virtual AGMs and there may also be doubt as to the validity of resolutions passed at a virtual AGM,” the regulator said at the time.
The AICD has welcomed the temporary changes and is calling for wider reform.
“These changes highlight the need for a modernisation of outdated Corporations Act requirements post the COVID-19 period. The capacity for technology to improve accountability through visibility and accessibility, and to improve efficiency and manage costs at the same time has been demonstrated across the economy,” AICD Manageing Director and Chief Executive Officer Angus Armour said.