The Morrison government will allow virtual AGMs for another six months
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Whatever your thoughts on virtual AGMs, they’re here to stay for a little while longer.
When COVID-19 first broke, the Morrison government introduced legislation into the Australian parliament allowing AGMs to be held virtually.
ASX companies must hold an AGM annually, within five months after the end of their relevant financial year.
Virtual AGMs ensured compliance with social distancing measures and overcame logistical issues state border closures presented.
These measures were due to expire on March 21 but now will expire on September 15.
“Extension of this temporary relief will allow businesses to continue to comply with their regulatory requirements as they continue to deal with and emerge from the COVID-19 pandemic,” said Treasurer Josh Frydenberg yesterday.
However, certain other changes caused by COVID-19 are here to stay with one being changes to continuous disclosure laws.
Companies and their officers will only be liable for civil penalty proceedings if they acted with “knowledge, recklessness or negligence”.
The government made it clear that it will still be able to prosecute criminal breaches without proving fault but says the changes will discourage “opportunistic class actions”.
Under pre-COVID laws, shareholders didn’t have to prove intention, they just had to show they failed to disclose information.
The government has also extended laws enabling the electronic signature of documents.
Prior to COVID-19, companies were only validly bound to documents if signed by two company officers, in the same room at the same time.
However, while the measures aren’t ending next month it appears that come September things are set to return to pre-COVID norms.
“From 15 September 2021, member meetings will need to be conducted consistent with pre-COVID-19 laws which require an-in person meeting to be held,” the government said.
Nevertheless, the government has also said it would conduct a 12-month opt-in pilot for companies to hold hybrid AGMs to enable an assessment of the shareholder benefits of virtual meetings.
As the majority of ASX companies, at least those using the July 1-June 30 financial hold their AGMs in October and November (hence the term “AGM season” for that time period), it appears 2020’s season of virtual meetings was a “one off” for most companies.