COVID-19: Holding members meetings using technology

Are you able to hold members meetings using various available technology during this COVID-19 pandemic? Yes you can, but there are a few things you will need to consider.

The Corporations (Coronavirus Economic Response) Determination (No.1) 2020 (“the Determination”) commenced on 6 May 2020. The Determination temporarily modifies certain provisions of the Corporations Act (and other relevant regulations or rules) to assist with the impact COVID-19 has had on company operations.

By now, we are all familiar with the various technology apps and platforms that can assist people to meet virtually (e.g. Zoom, Microsoft Teams or Google Hangouts). Due to COVID-19, many companies have had to reconsider the way they hold their annual general meeting (AGM) in 2020. The use of such technology for members meetings, such as an AGM, is usually provided for in section 249S of the Corporations Act which states:

“A company may hold a meeting of its members at 2 or more venues using technology that gives the members as a whole a reasonable opportunity to participate”

The provision appears to make no restriction on the number of venues or type of technology that can be used for a general members meeting. However, when this provision is read in conjunction with other requirements, such as to notify members of the AGM and specify the place of the meeting or requiring members to attend in person to vote, there are uncertainties as to how s 249S operates. This has left companies concerned about breaching their obligations if they hold their AGM over Zoom.

Whilst there has been little to no guidance on this issue previously, section 5 of the Determination provides some welcomed clarity on the issue of holding meetings by technological means. It is important to note from the outset that these provisions exist for a period of 6 months only.

1. Reasonable opportunity to participate – s 5(a) and (d)

The requirement for all persons to have a reasonable opportunity to participate in the meeting is even more important when conducting the meeting via technology. In order for members to be able to participate fully in the meeting via technology, the members must be given the opportunity to speak.

We also suggest that the technology should allow members to view all visual presentations and hear or read all discussions, questions by other members and deliberations.

Consideration must also be given to members who may be prejudiced by the decision to hold a meeting via technology if they do not have access to the technology being used.

2. Physical presence – s 5(a) and (b)

All persons participating in meeting via technology are taken to be ‘present’, without being physically present at the same place. Additionally, all persons present via technology are to be counted towards the quorum.

3. Voting – s 5(c)

Votes taken at the meeting must be taken on a poll, not by a show of hands. This can be done using one or more technologies to give each person entitled to a vote the opportunity to participate in the vote in real time, or where practicable, recording their vote in advance of the meeting.

4. Notice of meeting – s 5(f)

The usual requirements for providing members with a notice of the meeting are still required to be complied with. However, where the meeting is being held via technology, the notice must include information about how those entitled to attend can participate in the meeting – i.e providing a video link – and must include how they can vote or speak at the meeting.

If a notice has already been given, at least 7 days before the meeting a fresh notice must be provided that meets the new provision requirements.

Don’t forget about your Company Constitution

It is also important that companies still have regard to their Constitution when making a decision to hold an AGM by technological means, as a Constitution provision may prevent them from doing so.

In the absence of a provision preventing holding a virtual AGM, it is ultimately a matter for each company to determine whether there is a technological solution that will enable them to go ahead with the meeting.

Important Note for ACNC Companies

For ACNC registered companies, the provision on technology in s 249S is one of a raft of sections in the Corporations Act that does not apply. Instead, ACNC Governance Standard 2 will apply, which requires accountability to members.

Reminder: deadline for holding AGM extended

As of 26 March 2020, the ACNC has provided a two-month extension for companies to hold their AGMs (i.e. by 31 July). Additionally, ASIC will not take any action against charities for failing to hold their AGM before the end of May as per usual requirements.

Written By Melissa Sidney

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