In response to COVID-19, Parliament provided temporary relief measures through an amendment in the Corporations Act 2001 (Cth) (‘Corporations Act’).

The amendment allowed electronic signatures of documents, virtual meetings, and electronic notice of those meetings. It was expected that these amendments would be extended, but now the pre-COVID requirements of the Corporations Act are in order.

To give companies some certainty, the Australian Securities & Investments Commission (‘ASIC’) has incorporated a ‘no action’ position. The position will:

  • support the holding of meetings using appropriate technology,
  • facilitate electronic dispatch of notices of meetings including supplementary notices, and
  • allow public companies an additional two months to hold their Annual General Meeting (‘AGM’).

Only meetings held between 21 March 2021 and 31 October 2021 are affected by the ‘no action’ position. Any meetings scheduled after that time are presumed to be held in person.

The position does not cover electronic signatures. Rather, companies must return to the traditional pre-COVID framework and sign documents in ink. Further, ASIC has stated that it will not provide any additional position to cover electronic signatures.

Virtual meetings

The Treasurer decided to amend the Corporations Act for a period of six months starting on 6 May 2020. The determination allowed meetings, including AGMs, meetings for member approvals or to consider a proposed arrangement, to be held virtually so that everyone was given a reasonable chance to participate without being physically present.

ASIC also allowed entities to hold either virtual meetings or hybrid meetings, in which a physical meeting takes place but allows remote participation. It is up to the discretion of the party to decide how to hold meetings that are appropriate and inclusive.

Remote members should be able to participate in the meeting as though they were attending in person, bet it a virtual or hybrid meeting. Remote participators should be allowed to:

  • follow the proceedings of the meeting uninterrupted without lag.
  • have genuine and effective interaction with other members of the meeting. Any changes are tailored to match the needs of virtual members.
  • have an opportunity to ask questions live. They should also be able to comment on and raise questions about presentations, debates, or other matters in the meeting.
  • vote during a live meeting even if the option to vote beforehand is also available. They should also be allowed to be fully informed before the meeting. As a condition of the ‘no action’ position, it is required that all voting be taken by a poll instead of a show of hands.

In the case of technical problems during a virtual or hybrid meeting, it is suggested that responsible entities take the time to plan ahead. It is important to ensure that all involved technology can adequately facilitate participation and handles high usage. Should there be any technical issues mid-meeting, be sure to consider backup solutions and communicate effectively. ASIC also encourages entities to adjourn meetings when technical issues arise until the problem is fixed.

Entities that cannot sanction online participation in their meetings can also rely on the ‘no action’ position in terms of deferral of AGMs. Postponing an AGM where significant preparation has been made may be costly and inconvenient, but holding an AGM where members cannot participate violates the Corporations Act.

Entities should examine their constitution’s restrictions before holding virtual or hybrid meetings. Despite the ‘no action’ position, ASIC cannot modify the Corporations Act to allow hybrid AGMs if they are not permitted under an entity’s constitution.

While ASIC considers hybrid AGMs permittable under the Corporations Act, there is some doubt about virtual meetings and the validity of votes passed at a virtual AGM.

Supplementary Electronic Notices

ASIC will not take any action on any violation of the Corporations Act if an entity dispatches a notice for a meeting held on or before 31 May 2020. If an electronic message, notice on an organization’s website, or a market announcement is made at least two business days before a meeting is held, ASIC will not take any action.

Annual General Meetings

Public companies are not required to hold their AGMs within five months after financial years that end between 31 December 2019 and 7 July 2020. The ‘no action’ position also applies to public companies whose financial year ends are between 1 June 2020 and 7 July 2020 where an AGM would be held in January or February 2021, resulting in the 2020 required AGM not being held.

The Corporations Act requires public companies to hold their AGM at least once every calendar year. It takes place within five months of the year-end. Companies that do delay their AGMs should also abstain from holding these meetings through the holiday period of December and January.

The ‘no action’ position also provided extended deadlines for financial reports, directors’ reports, and audit reports. Listed entities are extended from three months to four months. Unlisted entities, disclosing or registered schemes, are extended from three to four months, and for all other unlisted entities the extension is from four months to five months.

The deadline for lodgement of depositing profit and loss and balance sheets is also extended under Chapter 7. Bodies corporate that are unlisted Australian financial services licensees (‘AFS licensees’) are extended from three to four months if they are disclosing entities or registered schemes. For those that are not disclosing entities or registered schemes, is extended from four to five months. The extension is from two months to three months for AFS licensees that are not bodies corporate. No relief is applied to registered foreign companies.

For those that use extended deadlines, more relief will also be available. Similar deadlines are available for sending members reports. Commissioners of continuously quoted securities will still be able to use reduced fundraising disclosers (ASIC, 2021). Grandfathered status remains for grandfathered proprietaries that use the extended deadlines.

ASIC plans to continue monitoring market changes and COVID-19 developments that affect financial reporting.

Blaine Hattie is a commercial lawyer at Sutton Laurence King Lawyers.

 If you are questions about the relief provisions call Sutton Laurence King Lawyers on 03 9070 9810 or email us at info@slklawyers.com.au.