Temporary measures to assist business with their meetings during COVID have now ceased to have effect.
The Treasury Laws Amendment (2021 Measures No 1) Bill 2021 which provides for a continuation of virtual meetings and electronic documentation until 16 September 2021, is awaiting debate in the Senate.
In a media release on 29 March 2021, ASIC advised that it will take a ‘no action’ position in relation to companies convening and conducting virtual meetings.
The recent lockdown in Brisbane is a timely reminder that a return to ‘business as usual’ is still uncertain. This article explores the Australian Securities and Investments Commission (ASIC)’s ‘no action’ position, which is intended to facilitate businesses to hold their meetings effectively despite restrictions on gatherings and travel.
On 29 March 2021, ASIC confirmed by media release that it will take a ‘no action’ position, in relation to companies convening and conducting virtual meetings. A ‘no action’ letter from ASIC is an expression of regulatory intention about how ASIC will exercise its powers.
ASIC is supporting business during the ongoing pandemic by:
- supporting the holding of meetings using appropriate technology;
- facilitating the electronic dispatch of notices of meeting, including supplementary notices; and,
- allowing public companies an additional two months to hold their AGMs.
ASIC’s ‘no-action’ position is temporary and will be reviewed in September 2021 or earlier if relevant measures are introduced by Parliament.
Importantly, ASIC will not be adopting a ‘no-action’ position for electronic signatures. Furthermore, the position does not extend the class relief for financial reports to entities with financial years that end between 8 January 2021 and 7 April 2021.
Waiting for Parliament
The ASIC position comes as temporary modifications to the Corporations Act 2001 (Cth) ceased to have effect on 21 March 2021. Those modifications permitted companies to conduct virtual meetings and execute and use electronic documents. Business was hopeful that the Treasury Laws Amendment (2021 Measures No 1) Bill 2021 (the Bill) would extend those modifications until 16 September 2021. However, the Bill is awaiting debate in the Senate. In this context, ASIC’s position is sensible.
What does this mean for your company?
ASIC is will take ‘no action’ in relation to:
- meetings convened electronically or held using virtual technology between 21 March 2021 and 31 October 2021; and,
- upcoming AGMs that need to be deferred.
Some caveats to the position
ASIC reissued its guidelines for investor meetings using virtual technology which lapsed on 21 March 2021. These guidelines have been updated to reflect the current ‘no-action’ position.
Whilst there are benefits to hybrid and virtual AGMs in the current environment, it is important to safeguard the rights of members to participate.
ASIC encourages entities to check whether their constitution restricts meetings being held in this way. ASIC also acknowledges there may be doubt as to the validity of resolutions passed at a virtual AGM. Entities should also consider whether they can hold a virtual meeting under their constitution.
The ‘no-action’ position on virtual meetings is conditional on:
- the technology used providing members a reasonable opportunity to participate (sections 249S and 252Q), including the ability of members to ask questions and make comments;
- voting at the meeting occurring by a poll rather than a show of hands;
- each person entitled to vote being given the opportunity to participate in the vote in real time; and,
- a comprehensive notice of meeting (including attendance and voting information).
Parliament is unable to vote on the Bill until 11 May at the earliest.
Post by Hicksons Partner, John Kell and Solicitor, Aidan Allen.