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2020 AGM Regulatory Changes

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What you need to know:

As a result of ASIC’s “no action” guidelines (see ASIC updates on 20 March 2020 and 13 May 2020) and the Treasurer’s temporary modifications to the Corporations Act (see the Corporations (Coronavirus Economic Response) Determination (No. 1) 2020 announced on 5 May 2020 and extension announced on 31 July 2020) there have been a number of regulatory changes that impact the 2020 AGM season.

 

These changes can be summarised into 3 main considerations for entities when conducting their AGM process this season:

1. Hold the meeting virtually – historically there have been doubts as to whether a meeting held virtually is a properly constituted meeting under the Corporations Act 2001 (the Act). The amendments, first by ASIC’s “no action” guidance and second by the Treasurer’s temporary modifications to the Act mean that (constitution permitting) an entity can now hold their AGM either as a hybrid (both physically and virtually) or a fully virtual meeting. However a company looking to hold their meeting virtually (either fully or as a hybrid) should note that their constitution must allow for the holding of such a meeting and shareholders must be given the same opportunity to participate in the meeting (i.e. vote and ask questions) as though they were physically present.

Automic have a purpose-built solution to ensure you meet these requirements, click here for more information.

2. Delay – under the Act an entity is required to hold their AGM within 5 months of their financial year end. For 30 June year end entities this means a deadline of 30 November. The “no action” position adopted by ASIC means that ASIC will not take action against an entity who fails to hold their AGM within 5 months after its financial year end provided it holds the AGM within 7 months of the financial year end. This effectively provides an entity with a 2 month extension to hold their AGM. ASIC introduced this position for those entities that may find it difficult to hold their AGM within the required time period due to restrictions on gatherings, travel restrictions and to allow more time for those entities that may also be relying upon an extension of time for lodging their financial reports.

3. Send notices electronically – historically the Act has required that written notices of meeting be given individually to each member unless the member nominates an electronic means for the notice to be provided. The temporary modifications to the Act now permit an entity to send the notice and any accompanying information by using “one or more technologies”. This permits an entity to send the notice of meeting by email to any member that it has an email address recorded for and for those that it does not, the entity can now send a letter setting out a URL for viewing or downloading the notice and other material.

How can Automic help?

For more information on Automic’s purpose-built solution for holding a compliant virtual meeting click here.

Automic’s legal and company secretary divisions are available to help understand these requirements, call us on (02) 8072 1429 for more information.