ASIC has released details of its temporary (and conditional) no-action position on electronic meetings
In light of the ongoing uncertainty around COVID-19 restrictions, and following the expiry of relief under Corporations (Coronavirus Economic Response) Determination (No. 3) 2020 (the Determination) on 21 March 2021, the Australian Securities and Investments Commission (ASIC) has adopted a temporary ‘no-action’ position on non-compliance with requirements around holding/convening electronic meetings.
This ‘no-action’ position will be reviewed in September 2021 (or earlier if relevant measures are introduced by Parliament).
Details
(Conditional) no-action position on holding virtual meetings
The no-action position applies to electronic meetings held between the date at which relief under the determination expired (21 March 2021) and the earlier of: 31 October 2021 and the date that any relevant measures are passed by parliament.
ASIC states that reliance on this position is conditional on:
- companies ensuring the technology used enables members 'as a whole' to have a 'reasonable opportunity to participate' in the meeting, including ensuring that those not physically present are able to ask questions and/or make comments at the meeting
- voting at the meeting occurring by a poll rather than a show of hands
- ensuring that all participants entitled to vote at the meeting have the opportunity to do so 'in real time' as well as 'where practicable' in advance of the meeting
- the notice of meeting including sufficiently detailed information about participating in the meeting. ASIC states that this should include how participants can vote, ask questions, make comments/speak at the meeting, as well as the 'extent they are entitled to do so'.
ASIC advises entities who opt to rely on the no-action position to review the following guidelines: ASIC guidelines for investor meetings using virtual technology which have been updated to reflect ASIC's current position.
No action on meeting-related communications
ASIC has also adopted a ‘no-action’ position on non-compliance with requirements for sending a notice of meeting, sending supplementary information about the meeting and/or using technology to communicate with those entitled to receive the notice of meeting.
The position applies to communications relating to meetings held between 21 March 2021 and the 31 October 2021 or the date at which any relevant measures are passed by Parliament, whichever is the earlier.
ASIC states that reliance on this position is conditional on:
- the Notice of Meeting or supplementary information about the meeting (whether provided electronically or in hardcopy) including either the electronic location from which the relevant information can be viewed/downloaded or the contents of the notice or the supplementary information
- instructions for accessing the contents of the notice being provided to anyone who has not nominated an electronic address being provided 'personally or by post'
- supplementary instructions for online participation in the meeting being given at least two business days before the meeting is held by: electronic message (if the member has provided the relevant details) a notice on the entity’s website and a market announcement if the entity is listed on a market.
The no-action position is intended to cover any failure of the supplementary instructions to comply with sections 249J of the Corporations Act.
No action for AGMs held within 2 months after their due date
ASIC has also adopted ‘no-action’ position for public companies with a financial year end between 7 January 2021 and 7 April 2021 that do not hold their AGMs within five months after the end of the financial years, where these meetings are held up to seven months after year end.
No further relief from financial reporting obligations
While ASIC has given a ‘no-action’ position for AGMs up to financial years ending 7 April 2021, ASIC states that it is 'not currently intending to extend the class relief for financial reports to entities with financial years that end between 8 January 2021 and 7 April 2021'.
ASIC states that entities may apply for individual financial reporting relief 'should that be necessary in their circumstances'.
Electronic execution is not covered by the no-action position
ASIC’s no-action position does not apply to electronic execution of documents. ASIC explains that this is because 'these measures as they are primarily concerned with the capacity of companies to enter arrangements with third parties rather than Corporations Act obligations administered and enforced by ASIC.
ASIC does not have the power to modify the operation of these provisions in a way that affects third party rights and our no-action position similarly does not affect third party rights'.
Legal status of the no-action position
The 'no action' position is a 'statement of regulatory intention'. As such, it does not either preclude either:
- third parties (eg the Office of the Director of Public Prosecutions) from taking action in relation to the conduct covered by the no-action position
- a Court from holding that particular conduct infringes the relevant legislation.
Further, though the position may remain in place until 31 October 2021, it may be withdrawn earlier should Parliament pass relevant measures (for example: Treasury Laws Amendment (2021 Measures No. 1) Bill 2021).
The position also does not cover electronic execution of documents.
As such, though ASIC has said the position provides business with 'certainty in the current environment', this is somewhat limited.
The Governance Institute has said that it 'will continue to advocate for resolution of this uncertainty. We remain committed to working collaboratively with the Government, the Opposition, the crossbench and all industry stakeholders to enhance the digital shareholder experience'.
