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The COVID Age and How it Changed AGMs

Veronique Morgan-Smith - 05-Oct-2020

Spring is upon us! And spring means AGMs… but watch out! The AGMs of yesterday might be a thing of the past… so update your video settings, grab a drink and relax.

The COVID pandemic has seen the regulatory authorities relax their watchful eye regarding AGMs as they realised that it would be unpractical for companies to organise the assembly of a great number of people in a confined space.

Some key issues obviously conflicted here, the need for shareholders to be informed and to be able to ask questions to management versus the immediate need for personal and community safety.

The "no action" position of ASIC gave some relief and clarified for companies a path out of this conundrum, commenting on the use of "virtual" or "hybrid" meetings where the company's constitution allowed for it. A "virtual" meeting is now recognised as one organised entirely remotely by way of video-conference and electronic voting, a "hybrid" meeting being one organised at a specific venue but encouraging shareholders to attend by way of videoconferencing and electronic voting and/or proxies.

Those measures have now been extended to include companies which closed their accounts on 30 June 2020 and their AGMs are coming up in the next couple of months.

Interestingly, the temporary determination by the Treasurer seems to be the seed for a more fundamental change of the communications between companies and investors as orchestrated by the Corporations Act. As the Corporations Act has been overdue for a facelift for quite a while, this is very welcome.

In the case of most public companies, especially listed companies, their constitutions are sufficiently modern to include virtual or hybrid meetings and electronic communications for AGMs and other meetings. The recent constitutions I have seen all provide for the possibility to do so.

So, if you are a director, this may be the time to consider polishing up your constitutional documents at the next AGM in order to meet the expectations of investors to attend meetings remotely in the future.

And if you are an investor, watch out for the mail (or the email How to do your spring cleaning, when you are a shareholder…) with instructions on how to attend your next AGM!

Veronique Morgan-Smith

Principal
Legal Corporate Services and Company Secretary

www.morgansmithlegal.com

Morgan-Smith Legal