The general meeting is a feature of the Australian listed environment – hundreds of members milling around with management of the organisations where their life savings are invested. On the other hand, management of listed entities need to obtain the sanction of their members for more than 20 different types of corporate activities. All of these meetings have traditionally involved interactions that are now impossible because of the risk of infection in the time of the COVID-19 pandemic.
To help listed entities hold an effective virtual meeting, the Treasurer Josh Frydenberg announced several key initiatives yesterday designed to facilitate a new age of corporate governance.
Member meetings in a world of regulated physical proximity
As previously discussed, the Corporations Act requires meetings of members to be held at a reasonable time and place. However physical proximity for members of Australian listed entities is likely to be constrained for some time. Organisations had been relying on rules for hybrid meetings and ASIC's 'no action' position on AGMs. But it was clear that more was needed.
Many of our clients found themselves having to comply with their obligations to hold shareholder meetings within the time limits prescribed by the Corporations Act when the options for holding those meetings were severely restricted, for example, s 250N in relation to Annual General Meetings and s 249D in relation to requisitioned meetings .
The Treasurer's announcement
On 4 May 2020, the Treasurer announced temporary reforms so that organisations can effectively hold virtual general meetings. Under the changes, boards will be able to provide notice of general meetings to members using email, satisfy quorum requirements with members attending online and hold virtual general meetings.
The Treasurer took steps to place virtual meetings on a more secure legislative footing until 6 November 2020 by relying on powers granted to him (under the new s 1362A) to temporarily modify the operation of the Corporations Act and Regulations provisions where it would not be reasonable to comply with the provisions because of the impact of COVID-19 or to facilitate continuation of business or mitigate the impact of COVID-19.
How to hold a 'virtual' meeting?
A virtual meeting is one where all members attend electronically and no physical venue for the meeting is nominated. The new rules apply to any meeting required for the Corporations Act, the Insolvency Practice rules and the Passport Rules. We expect that they will likewise apply to the ASX Listing Rules.
The rules permitting a virtual meeting require that:
- You must include in your notice of meeting information about how those entitled to attend can participate in the meeting (including how they can participate in a vote taken at the meeting, and speak at the meeting).
- If the notice has already been sent at least seven days before the meeting is held you must give a fresh notice of the meeting that includes the information referred to above.
- You must treat a duly appointed proxy in the same way as the appointer for the purpose of conducting the meeting.
- The technologies deployed must give all persons entitled to attend a reasonable opportunity to participate despite them not being physically present.
The provisions go on to specify that:
- everyone attending the meeting are taken for all purposes (for example, a quorum requirement) to be present at the meeting;
- a vote taken at the meeting must be taken on a poll using technologies that give each person the opportunity to participate in the vote in real time and, where practicable, by recording their vote in advance of the meeting;
- people attending the meeting may be permitted to speak (for example, by asking questions); and
- a proxy may be appointed using one or more technologies specified in the notice of the meeting.
These are sensible procedural rules that sit well with the existing technologies and are in line with the general meetings that we have been involved with in the last three months.
The rules also deal with notice requirements for the virtual meetings beyond the content requirements discussed above. They provide that the notice of a meeting may be given electronically and other information to be provided with notice of a meeting, or at or in relation to a meeting, may be provided electronically including by providing details of an online location where the key notice matters can be viewed or downloaded.
This means that a listed entity that has email addresses for some of its members can send those members an email setting out or attaching notice of a meeting, and other material relating to the meeting, or providing a link to where the notice and other material can be viewed or downloaded. However, the other members for which it doesn't have an email can be notified by sending them a letter or postcard setting out a URL for viewing or downloading the notice and other material.
Steps to take relating to members meetings
- If you plan to conduct a 'virtual' meeting, you should notify members and intermediaries in the proxy process, and other market participants, of such plans and disclose clear directions as to the logistical details of the meeting including how members can remotely access, participate in and vote at such a meeting.
- If you have mailed a notice of meeting you have until seven days before the meeting is held to make sure that you have sent additional materials.
- Communicate clearly with your shareholders to keep them informed of any changes to meetings already announced.
- Make sure that your arrangements for a meeting include a demonstrated and verified opportunity for members to participate in the meeting, including having a reasonable opportunity to ask questions, make comments and to vote.
- Use a virtual meeting services provider that has extensive experience delivering comprehensive registry and meeting services.
Finally, you should consider each of the following:
- Planning of meeting notices and proxy to communicate key information on how a virtual meeting will work for your security holders and other key stakeholders such as employees, proxy holders, analysts and members of the press;
- Registration of attendees online – security holders, proxy holders, key stakeholders such as employees, members of the press and visitors;
- Reporting to clearly show those attending online;
- Webcasting services (audio or video);
- The ability for online security holders to lodge questions online;
- Scrutineering of resolutions by poll – the votes received from online security holders and proxy holders; and
- Preparation of a report establishing those who logged in to the virtual meeting, the capacity with which they attended the meeting and any questions asked online and by whom.
The Treasurer's changes are a welcome response to the problems posed to our normal meeting processes. If these changes work, and we believe they will, this will be a powerful incentive to look at ways to bring governance generally into the 21st century and to recognise the potential of our digital economy to provide new and better ways to deliver shareholder democracy.
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