Changes to Virtual AGMs

02/11/2021 - 09:53

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Changes to Virtual AGMs

Shareholders’ Pushback Against Virtual AGMs

The Federal Government has proposed a new law to allow publicly listed companies to virtually hold their Annual General Meetings (AGMs).  However, this proposed reform has created significant concerns around the implications for shareholder involvement, and key shareholder groups are opposing the change.

What Changes Are Being Proposed?

Under the proposed reform, the Government seeks to make permanent the temporary, COVID related reforms towards AGM requirements. The proposed law allows publicly listed companies to host AGMs in either a hybrid capacity – held both physical and online – or entirely online, signifying the continued push away from conventional office requirements.

How Will the Proposed Change Work?

Should the proposed reform become law, a company must satisfy two requirements prior to holding an online AGM, these being that:

  • the company’s constitution must expressly permit AGMs to be held online; and
  • investors must still be given a reasonable opportunity to participated in the meetings.

What has been the Response to the Proposed Reform?

The proposed reform has been met with significant opposition by key shareholder groups, including the Australian Shareholder’s Association (ASA) and the Australian Council of Superannuation Investors (ACSI). The main concern is that virtual-only AGMs reduce retail shareholders’ access to a company and the transparency required from company Boards, impacting the ability of shareholders to hold companies accountable for their actions.

Whilst hybrid meetings are being supported, the ASA believes that technology is not yet of a standard which provides investors with a “reasonable opportunity to participate” in virtual-only meetings”

What Does The Proposed Change Mean for You?

The proposed reform represents the move towards an increasingly virtual workplace. If you are a stakeholder in a public company, either as a shareholder or board member, it is important that you

  • monitor the proposed reform to see if it becomes law; and
  • determine how the proposed change will impact your current involvement in any public company.

If you require assistance in relation to your corporate governance objectives, Pragma’s lawyers can provide advice to you and your business to minimise your future risk. Contact us today by emailing Aaron or calling us on (08) 6188 3340.

 

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