Annual General Meeting Rules: What are the New Rules for COVID-19

By Sara Drury

Recent changes to the guidelines governing how companies must communicate hold their annual general meetings to cope with the current COVID-19 pandemic are expected to see a surge in virtual AGMs in the upcoming Australian AGM season.

Investor relations is already dominated by digital communications channels, according to a recent survey conducted by Redback Connect in partnership with the Governance Institute of Australia.

In fact, 22% of respondents already prefer online investor events to physical ones, the study showed.

But on March 20, the corporate regulator ASIC updated its guidelines to take account of government restrictions banning indoor and outdoor gatherings to no more than 2 people, restricting travel and requiring businesses to operate remotely where possible.

It also noted that investors may not wish to attend physical AGMs given the potential risks associated with contracting the COVID-19 coronavirus.

ASIC is falling into line with a number of global corporate regulators in giving notice of their intention to allow virtual-only AGMs. It is expected to spark a dramatic increase in the number of companies holding online-only AGMs for the first time.

Here’s how the new guidelines will affect IR professionals and their communications planning when it comes to virtual AGMs:


1. 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, but ASIC has acknowledged this may change again.

“At present, these entities ideally will be able to hold their AGM by the end of July 2020, but the situation will remain under review.”


2. Hybrid and virtual AGMs are allowed…

ASIC has for the first time given companies the green light to conduct virtual Annual General meetings without the need to also hold a face-to-face event.

In its statement, the regulator said it supports the holding of AGMs using “appropriate technology”. While it already considered hybrid AGMs permissible under the Corporations Act, it will take no action against a Company if it holds a virtual AGM.

“ASIC understands the benefit of hybrid and virtual AGMs in the current circumstances, including encouraging members to vote by proxy and participate electronically,” the regulator said.

The consensus used to be that hybrid AGMs were permitted under the Corporations Act provided information about the use of the online platform to host the online version was  included in the notice of meeting. The position on virtual AGMs was less clear.


3. … but individual entities must check their own constitution

Some organisations may not be allowed to hold a hybrid or virtual AGM under their constitution. ASIC advises individual entities to check their constitution and postpone their AGM if hybrid or virtual events are not allowed.


4.Virtual event tech that facilitates access and participation is key

ASIC cautioned companies against holding AGMs “unless the entity can provide members as a whole with a reasonable opportunity to participate in the meeting”.

ASIC defines a “reasonable opportunity to participate” in a virtual AGM as including:
– members being able to ask questions of the auditor, and about management; and

– 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.


5. 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.


6. 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.

“Our position is under continuous review,” ASIC Commissioner John Price said. “We are liaising closely with advisors and industry bodies so that we can understand our stakeholders’ needs and respond proactively.”

Shareholder groups have welcomed the changes and asked for them to be made permanent — notably Ian Matheson, CEO of the Australasian Investor Relations Association (AIRA).

“AIRA welcomes ASIC no-action letter … allowing listed entities to hold hybrid or virtual AGMs over the next few months,” Matheson wrote on LinkedIn. “Legislation [is] urgently needed though to make this permanent.”

We can’t agree more. IR teams are already communicating with investors mostly in digital channels. Let’s bring AGMs into the 21st century, with all the accessibility, accountability and interactivity that entails.

Redback Connect helps Australian and New Zealand organisations connect with investor communities across distance, providing a secure, feature-rich virtual conferencing platform that enables shareholders to interact fully with company executives. We design and deliver high quality digital events from concept to completion including AGMs, virtual conferences and live-streamed company announcements. Contact us to find out how we can help you hold your next shareholder event online.





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