The Australian Securities and Investments Commission (ASIC) has now confirmed its ‘no action position’ for holding virtual meetings, giving electronic notice of meetings and allowing additional time for public companies to hold their AGMs (see the previous article on QLS Proctor).
ASIC’s media release confirms its ‘no action position’ is temporary and will be reviewed in September 2021 or earlier if relevant measures are introduced by Parliament.
As outlined in the media release:
“The position relating to the convening and holding of meetings using virtual technology applies to meetings held between 21 March 2021 and the earlier of:
- 31 October 2021; and
- The date that any measures are passed by the Parliament relating to the use of virtual technology in meetings of companies or managed investment schemes.
“The position relating to the 2-month deferral of AGMs applies to entities with financial years ending up to 7 April 2021.”
ASIC has also reissued its guidelines for investor meetings, as the temporary modifications under the Corporations (Coronavirus Economic Response) Determination (No.1) 2020 and the Corporations (Coronavirus Economic Response) Determination (No.3) 2020 (the Determination) ceased to have effect on 21 March 2021.
Proposals to extend the measures in the Determination in the Treasury Laws Amendment (2021 Measures No.1) Bill 2021) were passed by the House of Representatives on 17 March 2021, but the Bill is awaiting debate in the Senate.
The reissued guidelines:
- discuss ASIC’s ‘no-action’ position on non-compliance with provisions of the Corporations Act that may prevent the holding of AGMs and other investor meetings via technology that allows members to participate remotely by online or other electronic means (virtual technology), including conditions on the conduct of the meeting to facilitate participation of and voting by members, and
- provide guidance to entities as to the appropriate approach to conducting virtual meetings should entities seek to rely on the ‘no-action’ position.
ASIC has also clarified that:
- The no-action position does not extend to the measures facilitating the electronic execution of company documents in the expired Determination. “Those measures are primarily concerned with the capacity of companies to enter arrangements with third parties rather than Corporations Act obligations administered and enforced by ASIC. ASIC does not have the power to modify the operation of these provisions in a way that affects third party rights and our no-action position similarly does not affect third party rights.”
- While ASIC has given a ‘no-action’ position for AGMs up to financial years ending 7 April 2021, ASIC is not currently intending to extend the class relief for financial reports to entities with financial years that end between 8 January 2021 and 7 April 2021. However entities may apply to ASIC for individual financial reporting relief should that be necessary in their circumstances. ASIC will have regard to the factors in s340 of the Corporations Act, as well as Regulatory Guide 43 Financial reports and audit relief and Regulatory Guide 51 Applications for relief, in deciding whether individual relief is appropriate.
ASIC indicated that it considers that hybrid meetings are permitted under the Corporations Act. However, ASIC encourages entities to check whether their constitution restricts the holding of hybrid or virtual meetings, highlighting that there is “some doubt as to whether the Corporations Act, in the absence of the amendments made by the Determinations, permits virtual AGMs and there may also be doubt as to the validity of resolutions passed at a virtual AGM”.
Entities concerned about the validity of virtual meetings may wish to seek legal advice on section 1322 of the Corporations Act.