The Annual General Meeting is a cornerstone event in the calendar of Australia’s corporate and not-for-profit organisations alike. But unprecedented changes to the way we live and work caused by the COVID-19 pandemic have disrupted the way businesses, membership organisations and registered charities operate.
Organisations have been forced to develop alternative plans for holding scheduled events such as AGMs to avoid contravening social distancing rules or restrictions prohibiting mass gatherings.
For many executives, company secretaries and industrial relations professionals, this is new ground. Previously, planning for the AGM involved assessing venue providers and sending out physical information packs to shareholders ahead of a face-to-face event. This year it is more likely to include determining the available options for postponing the AGM, assessing the requirements for holding a virtual AGM or a hybrid event, and ensuring shareholders are fully informed, whichever path is chosen.
Organisations must also ensure shareholders have a reasonable opportunity to participate in the AGM, whichever option they choose, by asking questions, making comments and voting.
If you choose to hold a hybrid or online AGM, you should take the opportunity to develop a model that best suits your shareholder community and your organisation — how each organisation manages the event will depend on individual circumstances in the current climate.
We hope this step-by-step guide to holding a virtual AGM will help explain the available options, and take the mystery out of how to hold your own virtual or hybrid AGM.
What are the New Rules for COVID-19?
All listed companies must hold an AGM at least once a year, according to the Corporations Act (2001). Other organisations, such as registered charities and not-for-profits, are not required to hold an AGM but many choose to do so to keep their stakeholders informed.
On March 20, the Australian Securities and Investments Commission updated its guidelines to take account of COVID-19 pandemic rules restricting indoor and outdoor gatherings, limiting travel and requiring businesses to operate remotely where possible.
The new ASIC guidelines allow companies, and associations that are companies limited by guarantee, to change the way they host their AGM to meet social distancing requirements during the COVID-19 pandemic. This is expected to spark a surge in virtual AGMs in the upcoming reporting season.
Here are the major changes and how they will affect IR professionals:
- The deadline to hold an AGM has been extended by 2 months
Companies with a December 31 balance date have two extra months to hold their Annual General Meeting without fear of being penalised by the corporate regulator ASIC. That extends the deadline from May 31 to July 31 — although ASIC has acknowledged this may change again.
- Hybrid and virtual AGMs are allowed
ASIC has for the first time given companies the green light (via a no-action letter) to conduct virtual Annual General meetings — including encouraging members to vote by proxy and participate electronically — without the need to also hold a face-to-face event.
Previously, the consensus was that hybrid AGMs were permitted under the Corporations Act provided information about the use of the platform to host the online version was included in the notice of meeting. The position on virtual AGMs was less clear.
Now ASIC’s no-action letter means it will not take action against any company that holds a virtual AGM providing there is a reasonable opportunity for shareholders to participate in the meeting.
- Individual entities must check their own constitution
Some organisations may not be allowed to hold a hybrid or virtual AGM under their constitution. Individual entities should check their constitution and postpone their AGM if hybrid or virtual events are not allowed.
- Virtual event tech that facilitates access and participation is key
ASIC cautioned companies against holding AGMs “unless the entity can provide members with a reasonable opportunity to participate in the meeting” including:
- Members being able to comment on or ask questions of management/the auditor;
- Voting must occur via a poll rather than a show of hands.
This means organisations must use virtual AGM technology that can facilitate Q&A sessions and accurate online polls.
- Supplementary notice of an online meeting is permitted
Where a company’s stakeholders have already been notified of a physical AGM, they may be sent supplementary notice of an online meeting with 2 business days’ notice via email, on their website and via market announcement.
- The changes may be extended to companies with later balance dates
ASIC will continue to monitor the situation and may extend these changes to companies with March 31 and June 30 balance dates.
To Hold or Postpone your AGM?
The ASIC guidelines outlined in Section 1 provide options for company secretaries and IR professionals wondering whether to hold or postpone their AGM.
According to guidance provided by the Governance Institute of Australia and outlined by Director of Policy and Advocacy Catherine Maxwell in a recent webinar on virtual and hybrid AGMs conducted with Redback, there are a number of options:
You may adapt the basis on which you hold the AGM — such as holding a physical AGM observing social distancing guidelines and incorporating online voting and a shareholder Q&A prior to the event.
- Postpone or delay the AGM
If permitted by your organisation’s constitution, you may postpone your AGM to any date up until July 31; you may delay convening the AGM, if a notice has not yet been issued, by up to 2 months, relying on ASIC’s no-action position; or you may apply to ASIC for explicit permission to hold your AGM later than July 31.
If you can’t postpone your AGM you may choose to open it, and then adjourn it to a later date.
- Hold a hybrid or virtual AGM
Hold a hybrid AGM if permitted under your constitution or hold a virtual AGM relying on ASIC’s no-action position.
Incorporated associations that operate in different states should check with their state regulator as the rules are slightly different in each state.
The Australian Charities and Not-for-Profits Commission has also advised registered charities looking to hold an AGM to demonstrate accountability to their members that they should consider holding their meeting remotely via video or phone conference.
If they are not permitted to do that under their constitution, they should postpone the meeting and:
- Advise or consult with members on the reasons for postponing
- Document the reason why the meeting did not occur or could not occur digitally
- Use alternative ways to communicate the information that it would have provided at that meeting
- Schedule a future date for the meeting (even if this has to be amended again later).
Decide your Model
Organisations that opt to go ahead with their AGM, rather than postponing or delaying it, must decide whether to hold a hybrid or virtual AGM. A hybrid AGM is one where there is a physical location and online facilities. A ‘virtual’ AGM is conducted solely online.
While some company secretaries and IR professionals may be nervous about the prospect of holding an online or hybrid model, there is an opportunity to develop a unique model that suits both your organisation and your shareholder community.
This might include having executives present from a studio environment, opening your Q&A to shareholders in the lead-up to the event, taking live questions via audio, in writing, or both, and recommending voting by proxy to your shareholders.
You may even consider holding your AGM as a virtual or hybrid event in the current environment to meet your statutory obligations and supplementing that at a later time with a physical shareholder event to facilitate interaction with your organisation.
In developing your model, firstly check your constitution to ensure you’re able to hold a hybrid or virtual AGM.
If both are allowed, be aware that if you decide to hold a virtual AGM, ASIC’s no-action position doesn’t protect you from actions by third parties, such as unhappy shareholders.
However, the primary legal requirement is to keep shareholders informed and offer them a “reasonable opportunity” to participate. The business of the meeting would only be likely to be invalidated if a court found under Section 1322 of the Corporations Act that there had been, or might be, a substantial injustice that could not otherwise be remedied. You may wish to obtain legal advice to clarify your position.
The COVID-19 pandemic is a fast-moving situation that can quickly throw plans into disarray. If you have already issued your notice for a physical-only meeting, but your constitution allows a hybrid AGM, you may change to a hybrid AGM with two business days’ notice under the guidelines listed in Section 1. An announcement should be made to reflect this decision, shareholders informed by email and your website updated with the additional information.
Hybrid AGMs: What to consider
- Do your shareholders want to attend in person?
- How will you maintain social distancing for staff and shareholders?
- How will you inform shareholders about the hybrid model?
- Changes to venue requirements eg. Should you include overflow facilities to meet social distancing requirements?
- How will your executives present?
- How will you conduct your Q&A?
- How will you conduct voting?
- How will you handle technical difficulties for remote speakers or attendees?
- Will you use audio or video?
- Will your executives present from a studio, from an external venue or your office, or are they presenting from home?
- Is your technology platform secure?
- How will you enable Q&A, commentary and voting online?
- What technical support can you offer speakers and attendees?
- What is your back-up plan in case of connectivity issues?
Choose your Technology Supplier
To hold a hybrid or digital-only AGM you’ll need to select a technology partner.
If your executives are comfortable operating and troubleshooting digital technology, you may decide to go with a do-it-yourself webinar platform.
If you would like the back-up of technical support for your presenters and attendees, or the ability to broadcast from a studio environment, you may opt for a managed webinar provider.
To make that decision, you’ll need to ensure whichever platform you choose offers your shareholders or members the accessibility and interactivity that ASIC guidelines mandate — particularly when it comes to the ability to post questions, make comments and vote online.
Questions to ask webinar platform and managed webinar solution providers:
- How can my speakers present? (Studio, Webcams, Slides, Audio)
- Which interactive features do you offer? (Q&A, Polling)
- Do you offer a teleconference as a backup solution?
- How secure will my AGM be?
- Are you able to take names of attendees upon entry?
- What reporting will I have access to after the event?
- Do you provide support for my speakers and attendees if they experience any problems?
- How and when will I receive the recording?
- Do you offer a transcript of my event within 24 hours?
- Do you offer captioning?
Digital Registration and Reporting
Companies must usually give at least 21 days’ notice to members about a general meeting, while listed companies are required to give at least 28 days’ notice. If your organisation is holding a hybrid or online AGM, it makes sense to inform shareholders and members electronically in advance of that timeframe. Companies should coordinate with share registries to notify members via email where possible, as well as posting the notice of meeting on your website and notifying the market.
Create a page on your website dedicated to your AGM and include the details of
arrangements for the meeting, links for web-streaming and the full text of notices and accompanying materials. Create an online registration page to collect acceptances from shareholders who would like to attend and capture any additional information you need to collect. You may also wish to restrict the number of non-shareholder attendees.
An organisation’s AGM may include consideration of the annual financial report, directors’ report and auditor’s report, the election of directors, the appointment of the auditor, adoption of the remuneration report, and so on. Discuss with your technology supplier the information you need to capture, such as questions and voting, as well as the data you need to report on later regarding shareholder attendances, and so on. You may also want a transcript of proceedings the following day to assist in compiling the minutes.
Shareholders must be provided with an opportunity to ask questions about or make comments on the company’s remuneration report. Discuss with your technology supplier if you want participants to be able to pre-submit questions. You should also consider the process for enabling verified shareholders to lodge direct votes or proxies electronically.
The notice of meeting will set out the nature of the meeting’s business and the resolutions to be put to the meeting. Send the notice of meeting and the agenda with instructions to your members on how to remotely join, participate, and vote in the meeting — including clear instructions on accessing the meeting platform or app.
Ensure registrants receive login details as soon as they register, and circulate the ground rules for how the meeting will be run to ensure all shareholders have a reasonable opportunity to participate, comment and vote in the meeting, as required.
Confirm the Agenda and Format
When you have the event agenda and you know the technical boundaries within which you’ll be working, you can confirm the format of your digital or hybrid AGM.
Consider who will facilitate the meeting, as the Chair may need additional training on how to conduct a virtual AGM effectively — including how to use your chosen technology platform to take questions and polls.
Decide where your facilitator and your speakers will be based. Determine if you will use video or audio and slides. Conduct a broadband speed test to ascertain if the internet connection of remote presenters is stable enough to produce a reliable video feed. If internet quality isn’t great, consider audio and slides or telephone dial-in options.
Confirm the opportunities for shareholder participation in advance of, during, and after the meeting when it comes to questions for the executive and auditor, voting on resolutions to be presented at the AGM, and the ability to comment.
Have a contingency plan for what you will do if there are connectivity issues.
So how do executive teams facilitate participation via hybrid or virtual AGMs while retaining control of the agenda? The best way is via an online webinar platform such as Redback. Read our blog – 7 Ways to Manage Active Investors on the Redback Platform
Additionally use our checklist to bring your AGMs into the 21st century,ensure you check off every step in the planning process, and in turn, run AGMs with all the accessibility, accountability and interactivity. Download Checklist.
Outlook for AGMs
As organisations such as Rio Tinto are finding, the COVID-19 pandemic has created a rapidly changing set of circumstances affecting corporations, charitable organisations and professional associations alike. While some organisations will opt to postpone or delay their AGM as a result, many are likely to change their plans and run hybrid or virtual AGMs.
Industrial relations professionals already know the new IR paradigm is virtual. While the Corporations Act favours physical and paper-based communications, new research Redback conducted into the communications channels preferred by IR professionals found four in five prefer digital channels ahead of physical channels. While email is the most popular communications channel, webinars already rank second, preferred by 22% of respondents. Download our latest research report for more insights – Investor Relations, The New Virtual Paradigm. Download Report.
The webinar platforms on which many of these events will run are experiencing increased adoption as organisers and attendees discover that they are uniquely placed to meet the communications challenges of these difficult times. Webinars are a key part of the marketing activities for a large majority of organisations in 2020, and investment in the channel is increasing.
Our own experience shows that customers who are substituting virtual events for physical events due to COVID-19 are experiencing increased attendance and engagement, with some saying they may never return to holding face-to-face events.
“We had attendance [to a virtual event] that we wouldn’t have had to a physical event which allowed us to get messaging out that’s critical to the project,” one customer in the industrial sector told Redback. “Generally we’d celebrate if we got 100 people to a meeting like this. We had more than 500 people register to attend [the virtual event], and 385 people attended it — and counting.”
Other benefits to holding virtual AGMs include lower costs, increased accessibility to members in other geographic locations and the possibility that shareholder engagement via submitted questions and online voting will increase.
While ASIC’s no-action position on virtual AGMs indicates the corporate watchdog accepts virtual events can provide shareholders and members with all the opportunity they need to hold executive teams to account, organisations must still examine their own constitution and consider making changes if it only allows for physical AGMs.
“It will be interesting to see, once that step is taken, what AGMs will look like in the future if companies find themselves a lot more comfortable with that as an option,” Rio’s Tim Paine says.
Read our second blog as a part of the Step-by-Step Guide: The step-by-step guide to hosting your AGM online