In response to the coronavirus pandemic, the Australian government has provided ‘short term regulatory relief’ to corporations and related entities that are prevented from meeting requirements under the Corporations Act 2001 (Cth) (‘Act’) and Corporations Regulations 2001 (Cth) (‘Regulations’).
The determination, released on Tuesday, 5 May 2020, alters mandated requirements for meetings and document signatures that were deemed incompatible with public health and social distancing requirements. In the determination released Tuesday, Federal Treasurer Josh Frydenberg said the temporary changes were made to facilitate compliant operation and continuation of business in Australia, and would remain in operation for six months, ending Thursday, 5 November 2020.
The reform is consistent with the earlier ‘no action’ relief granted by the Australian Securities and Investments Commission (‘ASIC’). In mid-March, ASIC announced it would not take action against public companies that postponed AGM’s due by 31 May up until the end of July 2020, or against entities holding Annual General Meetings (‘AGM’) entirely online in response to the public health crisis.
What temporary relief does the declaration offer?
Meetings
Rules relating to notice, conduct and voting for meetings have been temporarily relaxed, as the declaration temporarily alters requirements stipulated by the Act, its Regulations, and the constitution of any company or registered scheme.
Meetings are now permitted to be held online whilst public health restrictions (such as social distancing) are in place. Accordingly, those who are participating in the online meeting can be taken to be ‘present at the meeting’ in achieving quorum. A proxy may also be appointed using technology.
Whilst the reform may present some challenges, the meetings are still required to provide shareholders ‘with a reasonable opportunity to participate’, and should in any event provide an opportunity for participants to ask questions.
Notice
Notice requirements have been relaxed to permit notices to be sent to all those entitled to attend the meeting (‘Participants’) by email. Where no email has been provided, a letter or postcard containing instructions on how the Participant may retrieve the relevant information online (i.e. the reports or resolutions to be put before the meeting that would have otherwise been attached to the email containing the notice) is sufficient.
The details of the notice must include sufficient information on how Participants may attend, participate, ask questions and vote (including by proxy) in the meeting online.
Voting
Voting in virtual meetings must be taken by a poll, and every person entitled to vote must be given an opportunity to cast a vote in real-time, or where possible, ahead of the meeting.
In light of the changes, and the need to ensure a reasonable opportunity to participate, the use of virtual AGM platforms such as Vero AGM may be useful in facilitating real-time interaction, voting and participant engagement.
Electronic Signatures
Whilst the relief is in place, documents signed by company officers electronically (within the meaning of the Electronic Transactions Act 1999 (Cth)) or in physical form in counterparts, are documents taken to be validly executed and enforceable under the Act.
Whilst the temporary reform brings welcome change, entities should seek to uphold standards of transparency and accountability and safeguard interests to mitigate risk and loss during these uncertain times. If you would like tailored advice in relation to how the temporary reform effects your company, please reach out to one of our specialists, Aaron McDonald or Sophia Kailis on hello@pragma.law.
