ASIC provides ‘no action’ relief for conducting virtual meetings and delayed AGMs

After the Federal Government’s proposed legislation to extend the temporary relief for corporations to conduct virtual meetings stalled in the Parliament, we speculated in our recent update as to whether ASIC would issue a ‘no action’ position, electing not to take regulatory action against companies conducting virtual meetings despite requirements to do so in the Corporations Act 2001 (Cth) (Corporations Act).

ASIC’s new ‘no action’ position

ASIC has now issued such a ‘no action’ position. In summary, ASIC will not take regulatory action in respect of the following matters.

Virtual meetings

As noted previously, while (subject to a company’s constitution) the Corporations Act permitted ‘hybrid’ meetings (i.e. a combination of a physical location and the use of technology), there was doubt as to whether a ‘virtual’ meeting (i.e. online only) was permitted by the Act. ASIC’s position therefore is that, until the earlier of 31 October 2021 and Parliament passing its own measures, companies may convene and hold meetings from 21 March 2021 onward using ‘virtual’ technology and may issue notices of meeting electronically.

For virtual meetings, the conditions of relief require:

• the technology used to hold the meeting must provide members as a whole a reasonable opportunity to participate;
• voting at the meeting to occur by poll rather than a show of hands;
• each person entitled to vote must be given the opportunity to participate in the vote in real time; and
• the notice of meeting to include information about how those entitled to attend can participate in the meeting.

For notices of meeting, the conditions of relief require:

• notice of the meeting, and supplementary information in relation to the meeting, to include the contents of the notice or details of an online location where the contents of the notice can be viewed or from where they can be downloaded;
• for persons entitled to receive notice but have not nominated an electronic address, they must be given notice personally or by post of how the contents of the notice of meeting can be accessed;
• supplementary instructions for online participation in a meeting to be given at least two business days before the meeting is held.

ASIC has re-issued its guidelines for conducting meetings using technology.

AGMs

For public companies with financial years ending up to 7 April 2021, ASIC will not take action for AGMs that are deferred for up to two months beyond the statutory deadline.

For entities with financial years that end after 7 January 2021, ASIC has not extended its ‘class’ relief for lodging financial reports under Chapters 2M and 7 of the Corporations Act. Any entity seeking such relief will need to make an individual application to ASIC.

Impact for companies

As was the case last year, ASIC’s position will provide a degree of comfort for companies that the regulator will not take action for these limited forms of statutory non-compliance. However, companies will need also to assess the risk of shareholder action alleging a virtual meeting or use of electronic notices is unlawful or, where applicable, inconsistent with the company’s constitution, and/or action by other regulators or prosecutors.

Gadens’ experienced corporate governance practitioners can assist your company navigate the impact of ASIC’s relief for your organisation.

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Authored by:

Adam Walker, Partner
Matthew Burge, Partner