As a response to the COVID-19 pandemic, both the Treasurer and ASIC introduced several measures to accommodate the new situation. The measures address the ability of companies to hold their Annual General Meetings (AGMs) and make for certain temporary allowances.
The Treasurer introduced the Corporations (Coronavirus Economic Response) Determination (No. 1) 2020 which made temporary modifications to the Corporations Act 2001 (Cth). These modifications allow companies to hold virtual or hybrid (part physical part virtual) AGMs. This resolves the concern that virtual AGMs may not be permitted by the Corporations Act. This also has the effect of overriding any company constitution that does not permit virtual AGMs. Before this determination, ASIC took a ‘no action’ position on virtual AGMs, which meant that it would take no action against any potential breaches by a company of its legal AGM obligations. This position, however, did not help companies whose constitutions did not allow virtual AGMs. The modifications change the law, rather than just change the way it is enforced, and also enable all companies to hold virtual AGMs regardless of their constitutions.
In addition, ASIC has announced that they will allow public companies to delay their AGM for up to two months. Public companies usually have up to five months from the end of their financial year to hold an AGM. ASIC will now take a ‘no action’ stance against entities that their financial year ends between 31 December 2019 to 7 July 2020, and that take up to seven months instead of five months to hold an AGM.
However, virtual AGMs must be held in such a way that it would not infringe on shareholders rights to participate and vote. The virtual AGM must be set up such to allow shareholders to ask questions, make comments, and participate in debates and discussions. Voting in the virtual AGM must be by poll rather than a show of hands, to ensure proper transparency and fairness. To see ASICs full instructions on how to conduct a virtual or hybrid AGM, click here.
The deadlines for the lodgment of financial reports, directors’ reports and audit reports for listed and unlisted entities have also been extended. The full details can be found here.
If you have any questions about how to hold an AGM or fulfil your reporting obligations under the COVID-19 restrictions, please do not hesitate to contact us.