An Annual General Meeting (AGM) is a meeting where company officeholders and members gather to discuss company affairs. An AGM provides an opportunity for those involved in a company to:
- ask questions;
- share information;
- discuss important business decisions; and
- essentially participate in company affairs.
All public companies with more than one member must hold an AGM at least once every calendar year. You must hold the AGM within five months of the end of the company’s financial year. Failure to hold an AGM on time may result in a penalty of up to $6,600 for the company. Although proprietary companies (i.e. private companies) do not have to hold an AGM, they may choose to do so.
In the uncertain era of COVID-19, where social distancing is required and the Federal Government has cancelled all non-essential gatherings, you may wonder if public companies still need to hold an AGM.
How Has ASIC Responded to COVID-19?
Given the extraordinary circumstances, the Australian Securities and Investments Commission (ASIC) has introduced some flexibility to ensure that companies can carry on with business in a way that prioritises health and safety and allows them to focus on the most pressing issues they are facing.
To address your company’s upcoming AGM before the end of May 2020, ASIC will not take action if you:
- postpone the AGM for up to two months (until the end of July);
- conduct the AGM as a virtual meeting, held solely online; and
- send your members supplementary instructions for participating in a virtual AGM.
How Do I Postpone My Company’s AGM?
If you need to postpone your AGM, you must apply to ASIC for an extension before the original deadline for the AGM. You should lodge your application well in advance of the AGM’s cut-off date. This will provide ASIC sufficient time to consider the application. You must pay ASIC a fee when applying to postpone an AGM.
ASIC will consider each application on a case-by-case basis. They will likely not object if:
- the reason for postponing the AGM is beyond the company’s control; and
- delaying the AGM is in the shareholders’ best interests.
If your company postpones an AGM for up to two months according to ASIC’s relief package, you do not need to apply to ASIC for an extension. It will simply have to comply with the company’s constitution (or the Corporations Act 2001 (Cth)) when scheduling the postponed meeting.
However, if a company needs to postpone for a longer period of time (or needs to postpone and is not a company due to hold an AGM before the end of May 2020), then it will need to go through this application process.
Continue reading this article below the formHow Do I Hold My Company AGM Virtually?
If there are pressing business decisions that need to be made sooner rather than later, you may find that delaying your AGM is not a practical solution. In this case, you may consider holding your meeting virtually.
The law requires AGMs to occur at a physical location. However, ASIC is permitting companies to host their meetings solely online through the use of appropriate technology. Virtual meetings are permitted by ASIC if the technology allows members to:
- ask questions and actively participate; and
- vote through a poll, rather than the usual practice of a show of hands.
Before opting for a virtual AGM, companies should first consider whether their constitution places any restrictions on holding a virtual AGM. As well as this, companies should exercise common sense before proceeding with a virtual meeting, and should only go ahead with this option if their nominated technology platform is capable of hosting a functioning AGM that will sufficiently involve members.
If you have already scheduled an AGM, ASIC has also ruled that, even if you are not in compliance with the law, you can issue a supplementary notice to inform members that the meeting will proceed virtually.
You need to issue this supplementary notice:
- at least two days before the scheduled meeting; and
- must provide instructions for online participation.
These instructions should be provided by:
- electronic message (where contact details have been provided by members);
- a notice on the company’s website; and
- a market announcement if the company is listed on a market.
Update – Permanent Amendments to AGM Requirements
When you hold virtual or hybrid meetings, you must give any member attending virtually a reasonable opportunity to participate. This includes holding the meeting at a reasonable time and day and using a platform that allows two-way engagement, such as letting members ask questions or make comments. You can also sign and distribute any documents related to the meeting electronically.
If you plan to hold future AGMs virtually, you should amend your constitution to allow for virtual meetings. Additionally, make sure you have the right technologies in place to facilitate these virtual meetings.
As a business, you are legally obligated to provide a safe workplace, regardless of where your employees work—from the office, home, or on the road. This factsheet outlines common health and safety risks and provides a risk mitigation checklist.
Key Takeaways
Whilst ASIC’s new policies are helpful in allowing businesses to respond to the challenges of the coronavirus, they do not prevent third parties from bringing proceedings against companies. Furthermore they do not overrule the provisions in a company’s constitution. Accordingly, although ASIC may be allowing more leniency in the current circumstances, you should always check the specific requirements of your company’s constitution to ensure you do not contravene them.
If you need to hold your AGM at a physical location to comply with your company’s constitution, try to have the minimum number of people physically present. The rest of the members can attend digitally or virtually if possible to maintain social distancing.
Visit our COVID-19 Resource Hub For Business for information on how to manage the impact of COVID-19 on your business. If you need guidance on your corporate governance obligations in the era of coronavirus, our experienced commercial lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.
Frequently Asked Questions
Yes, but ASIC allows public companies to postpone the AGM for up to two months or hold it virtually with supplementary instructions for online participation.
Use technology that lets members ask questions, participate actively, and vote through a poll. Ensure your constitution permits virtual AGMs and issue a notice with online participation instructions at least two days before the meeting.
We appreciate your feedback – your submission has been successfully received.
