Shareholder AGMs move online permanently

Making the COVID-19 changes permanent will be welcomed by company directors and big business, but could face resistance from some shareholder groups.

The temporary relief was introduced during COVID-19 to allow social distancing and to overcome travel restrictions.

The measure had been extended until March 31, 2022, but will now be made permanent by Treasurer Josh Frydenberg in proposed legislation to be released into Parliament on Wednesday.

The amendments to the Corporations Act will apply to companies of all shapes and sizes, from small proprietary companies to publicly listed companies, as well as to registered schemes and charities.

Under the permanent extension of COVID-19 relief measures for companies and their directors, they will also be allowed to electronically distribute meeting-related materials to shareholders and counterparties, and validly execute documents.

Rather than physically mailing documents such as annual reports and other company information, companies will be able to distribute them by email or by posting links on a website.

The government said shareholders will also be able to elect to receive some documents in a physical format such as annual reports.

Before the pandemic, meetings of shareholders could only be held physically, while some entities offered “hybrid” meetings. However, only shareholders who attended physically were taken to have attended the meeting.

Mr Frydenberg said the government was modernising the way firms did business and embracing technology.

“With so much of corporate Australia having shifted online throughout the pandemic, these reforms reflect the fact that the way we do business is changing, with these reforms to benefit around one million firms and deliver deregulatory savings of $450 million each year, averaged over 10 years.”

“As corporate Australia comes through the other side of the COVID pandemic, the Morrison Government is ensuring our regulatory settings are fit-for-purpose.”

“Our Bill, to be introduced to Parliament today, will modernise the Corporations Act by permanently allowing companies and registered scheme holders to hold virtual meetings, distribute meeting-related materials and validly execute documents.”

The legislation also provides a statutory right in members of companies and registered schemes, with five per cent of voting power to require an independent person being appointed to report on the conduct and outcome of a poll.