A lot has changed since our last "unhappy bedfellows" alert on shareholder meetings. This note summarises the key takeaways that we have been discussing with clients.
ASIC comes to the party with guidance and relief
- ASIC has come to the party with an information sheet and no-action position regarding some of the matters we raised in the alert.
- ASIC's relief provides comfort for companies to hold "hybrid" or "virtual" AGMs. For companies whose constitution does not permit holding "virtual" AGMs or for whom reliable, safe or affordable technology is not available, "hybrid" AGMs should be possible, combining a limited physical meeting with online attendance. In all cases, the company should seek to ensure a reasonable opportunity for shareholders as a whole to participate.
- Additionally, ASIC's no-action position permits companies with a 31 December year end to hold their AGMs any time before July 2020 and it has indicated this will be reviewed as required. The no-action position also allows companies to dispatch supplementary AGM material electronically only provided it occurs at least 2 business days before the AGM is held.
No more shareholder handshakes under the 2-person rule
- As announced on 29 March 2020, the Prime Minister has implemented a "2 person" rule. In summary, at any gathering, whether indoors or outdoors, in a private or public space, there can be no more than 2 people present.
- Further, the Prime Minister has asked that Australians not leave their houses other than for shopping, medical care or compassionate needs, to exercise provided it is in compliance with the gathering rules (no more than 2 people in a group) or for work and education.
- Companies will need to consider putting in place appropriate arrangements to apply the "2 person" rule for their AGM/EGM. We're telling clients that what is appropriate will depend on the particular company in question and the requirements of its constituent documents in relation to quorum, meeting procedures and other matters. However, this is not the time for activist or disgruntled shareholders to get sassy. Companies that genuinely try to provide a reasonable opportunity for shareholders as a whole to participate should be left to run their meeting as they see fit.
Let's hope the Treasurer fixes this
- Last week's law changes included a new temporary power for the Treasurer to amend the Corporations Act to deal with issues arising from COVID-19.
- We are working together with other lawyers and stakeholders to encourage the Treasurer to modify the Corporations Act and facilitate online AGMs and EGMs to proceed online.