The Australian Institute of Company Directors (AICD) has welcomed the exposure draft bill seeking to make permanent amendments toCorporations Actrequirements that will support companies to use technology to hold meetings, execute company documents and send meeting-related materials.
AICD CEO and Managing Director, Angus Armour, said, “We are very pleased to see the Government moving forward on this important modernisation of our corporations law.”
Building on the Treasurer’s temporary measures put in place during the COVID-19 pandemic, this bill:
- Includes provisions to allow all companies and registered schemes to hold physical, hybrid or wholly virtually AGMs (if expressly required or permitted by the constitution) on a permanent basis;
- Makes it clear that members, as a whole, must be given a reasonable opportunity to participate in meetings whether the meeting is physical, hybrid or virtual;
- Ensures that a show-of-hands is the default method for voting at both physical and hybrid meetings;
- Allows members who hold at least 5 per cent of voting capital to have polls independently scrutinised;
- Allows for documents (including minutes) relating to meetings to be signed and sent electronically, regardless of whether the meeting is a physical, hybrid or virtual meeting; and
- Allows for documents to be executed electronically.
Mr Armour said, “We particularly welcome provisions in the bill that will provide appropriate safeguards to ensure effective and meaningful shareholder participation at meetings, including an opportunity for shareholders to have votes independently reviewed.
“Since the onset of the COVID-19 pandemic, through to what continues to be an uncertain time across Australia, these measures are a very welcome step and will bring us into line with other international jurisdictions.”
Importantly, this bill is to be read in parallel with the Government’s earlier Treasury Laws Amendment Bill (2021 Measures No.1) (TLAB1), which proposed extending the COVID-19 relief to hold virtual AGMs and is still currently before Parliament.
Unlike the COVID-19 relief measures which temporarily override any restrictions in a company’s constitution from holding a virtual meeting, the new draft bill proposes virtual meetings may only be held in this way if they are expressly permitted by the company’s constitution.
Many organisations will therefore need to seek shareholder approval to amend their constitutions to realise the full effect of the new bill’s proposed changes.
“The ongoing disruptions in the Australian community due to the COVID-19 pandemic and continued lockdowns in this past week, demonstrate how critical it is for the extension of the COVID-19 relief in TLAB1 to pass Parliament as a matter of urgency.
“These relief measures allow for more certainty in planning by companies, who may not be able to hold a physical meeting, and better engagement with shareholders as the 2021 AGM season continues,” Mr Armour said.
The AICD looks forward to participating in the consultation period which closes on 16 July 2021.