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.

Under Commonwealth law, 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 $1000 and/or imprisonment for three months. Although proprietary companies (i.e. private companies) do not have to hold an AGM, they may choose to do so.

So the question arises: in the uncertain era of COVID-19, where social distancing is required and the Federal Government has cancelled all non-essential gatherings, are public companies still required 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.

This newly introduced flexibility applies to listed and unlisted public companies whose previous financial year ended on 31 December 2019 (as they would otherwise have been required to hold an AGM by 31 May 2020). However, because the coronavirus may prevent ‘business as usual’ for some time to come, ASIC’s recent guidance may shape corporate governance for the foreseeable future.

ASIC has determined that for companies due to hold an AGM before the end of May 2020, there will be no action taken if:

  • their AGM is postponed for up to two months (i.e. until the end of July);
  • the AGM is a ‘virtual meeting’ (i.e. conducted solely online); or
  • the company sends members supplementary instructions for participation 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 last date when the AGM would have been held. 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, though they will likely withhold any objections if it can be shown that:

  • the reason for postponing the AGM is beyond the company’s control; and
  • delaying the AGM is in the shareholders’ best interests.

It should be noted that if a company is postponing an AGM for a period of up to two months in accordance with ASIC’s relief package, then it will not have 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. 

How Do I Hold My Company AGM Virtually?

Delaying your AGM may not be a practical solution if there are pressing business decisions that need to be made sooner rather than later. 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 an AGM has already been scheduled, ASIC has also ruled that (despite not being in compliance with the law), companies are able to issue a supplementary notice informing members that the meeting will proceed virtually.

This supplementary notice has to be issued:

  • 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.

 

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 do need to hold your AGM at a physical location in order to comply with your company’s constitution, try to ensure that the minimum number of people are physically present (with the remainder of the members attending digitally if possible) to ensure social distancing can be upheld.

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, or have any other legal questions about the running of your business, please get in touch with our corporate team. Just fill out the form on this page or call 1300 544 755.

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Thomas Nickoll
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