Corporations (Coronavirus Economic Response) Determination (No. 3) 2020 (Determination No. 3) which operated to temporarily remove legal uncertainty around the validity of virtual meetings and to enable electronic execution of documents by company officers under section 127 of the Corporations Act 2001 (Cth) expired on 21 March 2021.
In consequence, pre-COVID requirements now apply. That is, the temporary changes to requirements in the Corporations Act 2001 (Cth) and regulations have reverted to their pre-COVID form.
Wasn't there a Bill that would have further extended relief?
A government Bill - Treasury Laws Amendment (2021 Measures No. 1) Bill 2021 (our summary here) – which would have temporarily extended and expanded on the changes in Determination No. 3, passed the House on 17 March, but has so far failed to pass the Senate, notwithstanding the Economics References Committee's recommendation that the Bill be passed without amendment. You can find details of the Committee's report on the Bill here.
The Senate has now agreed to refer to Bill back to the Committee for inquiry and report by 30 June 2021 to allow more time for submissions. Senate debate on the Bill has been adjourned until the first sitting day in August 2021.
Short term relief (may be) in prospect?
On 23 March, ASIC announced that it will adopt a temporary no-action position on virtual AGMs , though the regulator makes clear that this will not extend to electronic signatures.
ASIC has said it will make the details of its position available 'over the coming days' including providing guidance around the 'appropriate approach to conducting virtual meetings'.
In the interim, in order to 'provide the market with a degree of certainty' the regulator has said that the no action position will:
- 'support the holding of meetings using appropriate technology;
- facilitate electronic dispatch of notices of meeting including supplementary notices; and
- allow public companies an additional two months to hold their AGMs'
This appears to signal that there may be some relief in prospect for those companies who had planned to hold electronic meetings in the next month or so and who have already issued their notice of meeting to shareholders on that basis.
Longer term outlook for reform?
The Senate report on Treasury Laws Amendment (2021 Measures No. 1) Bill 2021 found there is broad stakeholder support for the measures included in Schedule 1 (which relate to electronic meetings and electronic execution) at least on a temporary basis, as well as the necessary political support from opposition parties. Shadow Assistant Treasurer Stephen Jones has separately underlined Labor's support for a further temporary extension of the measures.
However, the proposed changes in Schedule 2 (relating to the permanent relaxation of continuous disclosure requirements) remain controversial.
It remains to be seen whether the government will bow to pressure to split the Bill to enable passage of the less controversial reforms in Schedule 1. However, given the level of support for modernising existing requirements and the continued uncertainty around COVID-19 restrictions, it appears unlikely that changes will be allowed to stall indefinitely.
The Law Council has called on the government to take 'emergency' action on the issue, though as the measures have been allowed to expire this appears unlikely. So for now at least it's back to wet ink signatures and physical meetings, though some entities may (once full details become available) opt to rely on ASIC's no-action position in the immediate term.
[Sources: Treasury Laws Amendment (2021 Measures No. 1) Bill 2021; Law Council of Australia media release 18/03/2021; Shadow Assistant Treasurer Stephen Jones media release 17/03/2021; ASIC media release 23/03/2021]
