Venks Ananthakrishnan and PJ Beran

ASIC confirms ‘no action’ for delayed AGMs

Venks Ananthakrishnan and PJ Beran

20 March 2020

Legislation & Regulatory Updates

In response to the impact COVID-19 may have on a company’s ability to hold upcoming AGMs, ASIC issued media release 20-068MR on 20 March 2020 containing guidelines for companies seeking to meet AGM requirements. The takeaways from the release are outlined in this blog.

Postponement 

Companies with a financial year end of 31 December 2019 that are required to hold an AGM by 31 May 2020 may postpone their AGM to a later date that is before 31 July 2020. No postponement application is required.

ASIC supports the holding of ‘hybrid’ or ‘virtual’ AGMs using appropriate technology

A hybrid AGM involves a central physical location combined with remote connection through online facilities. ASIC considers hybrid AGMs as permitted under the Corporations Act provided the relevant company’s constitution does not prohibit the company from holding meetings in this manner.

A virtual AGM is conducted entirely online. In contrast to a hybrid AGM, ASIC is undecided on whether virtual AGMs are permitted under the Corporations Act even if the relevant company’s constitution allows for virtual AGMs. ASIC encourages entities to seek legal advice on the validity of virtual meetings. ASIC adopts a no-action position on virtual AGMs that are held in order to comply with the statutory deadline of 31 May 2020 provided that:

  • members as a whole are afforded a reasonable opportunity to participate in the AGM;
  • the technology used enables members to ask questions of the auditor and about management; and
  • voting occurs by a poll rather than a show of hands.

Online instructions

Where companies have already dispatched notices of upcoming AGMs, companies can electronically issue supplementary instructions to members for online participation provided the issue occurs at least two business days prior to the AGM. ASIC requires the issue to be made by way of electronic message, a notice on the entity’s website and a market announcement if the company is listed.

Summary

Importantly, the positions described above represent ASIC’s ‘no-action’ position (as opposed to a class waiver). ASIC’s ‘no-action’ position does not preclude third parties from taking legal action in relation to the types of conduct that ASIC contemplates in the media release.  The full text of media release 20-068MR can be viewed here.

Written by: Venks Ananthakrishnan and PJ Beran