The Australian Government’s social distancing policies, in an attempt to contain the spread of the novel coronavirus (COVID-19), are creating a host of issues and implications for the corporate governance of companies and associations. As companies and associations enter Annual General Meeting (AGM) season, many are considering changing the format of their AGM from an in-person meeting to a virtual-only or hybrid meeting.
Given social distancing efforts and changing laws with respect to public gatherings (public meetings are now generally prohibited, for the time being) many companies and associations are considering changing the format of their AGM from an in-person meeting to a virtual-only or hybrid meeting. Companies and associations looking to incorporate technology into their AGMs need to ensure that their constitutions permit the use of electronic communication devices and that their online platforms and processes are up to the task, otherwise the legality of such actions may be questionable.
What is a Virtual-Only AGM?
A virtual-only AGM is a meeting whereby members are given the opportunity to participate in the AGM using technology which allows members to vote, ask questions and participate electronically in real-time, rather than attend the meeting at a physical venue.
What is a Hybrid AGM?
A hybrid AGM consists of characteristics of both a traditional and a virtual meeting, allowing members to opt between attending the meeting in-person at a physical venue or participating in the meeting through technology.
How Can You Still Hold a Legally Acceptable AGM?
Given the social distancing restrictions and ever evolving status of the law around COVID-19, an advantage from a legal perspective of reconstituting the meeting would be enabling the meeting to clearly be conducted on a basis compliant with the association’s constitution.
The Corporate Affairs Commission, on the written application of the association, or on it owns motion, has the ability to exempt associations from the AGM timeframe obligations. The exemption may be granted upon such conditions as the Commission thinks fit and may, at any time, be varied or revoked by the Commission. The unique reason and special circumstances of the COVID-19 pandemic will likely enliven this power of the Commission.
Office Holder’s Tenure
If an AGM is deferred, one consequence that may arise is the status of internal governance bodies which are dependent on AGM processes. Seeking legal advice to understand and interpret the constitution and rules is recommended to determine whether the office holders will continue in their roles until the deferred AGM takes place.
Other Important Points to Remember
- Keep abreast of the updated advice from governments, regulators and public health bodies on whether or not an AGM can be held.
- Keep open communication with the board and members / shareholders so they are fully informed.
- Consider logistics of holding or deferring the AGM.
- Encourage early return of proxies (if permitted).
- Seek legal advice before acting.
This content is current as at 23 March 2020. The speed with which COVID-19 is spreading and the varied responses both internally within Australia and externally change on a daily basis. It is important that you regularly keep up to date with all relevant information and be prepared to respond as the landscape in which the virus is moving changes.