ASIC takes 'no action' position on hybrid, virtual and deferred AGMs
Recent restrictions in response to the corona virus in Australia presently prevent mass gatherings of over 100 people taking place. Publicly listed companies are required to hold an annual general meeting each year by law. However, to address the challenge of holding a meeting at which more than 100 people may gather, when that is not allowed, ASIC has issued a 'no action' letter for listed and unlisted public companies that would be required to hold an Annual General Meeting (AGM) by 31 May 2020.
ASIC will adopt a two-month 'no-action' position for entities with
a financial year end of 31 December 2019 that do not hold their AGM by 31 May 2020.
This means that ASIC will not take action against an entity who fails to comply with section 250N(2) of the Corporations Act 2001 (Cth), provided that the entity holds the AGM by 31 July 2020 (or such later date to be advised by ASIC).
ASIC also intends to take a 'no action' position on "virtual AGMs" if those meetings would be non-compliant with the Corporations Act if held before 31 May 2020, so long as the technology used for the meeting provided the meeting complies with section 249S.
Section 249S expressly allows a company to hold hybrid AGMs (held both in a physical location and online) at two or more venues using any technology. However, there is uncertainty that purely "virtual AGMs" conducted solely online, and the resolutions voted on at such a meeting, would be valid under the Corporations Act.
Public companies need to review their constitutions and seek legal advice on the manner in which the meeting is proposed to be held so that they can make a decision as to whether they can hold a virtual or hybrid AGM.
We expect a significant growth in development and demand for virtual voting systems and perhaps blockchain powered voting services such as by Horizon State or MyStake will see an increased adoption given their ability to provide an audit trail on votings. Restrictions on mass gatherings in Australia are likely to continue for some time and with other international bodies such as the India's Election Commission and the Virginia Legislature are already looking into online voting, technology in this space is well placed to buck the downward trend of the economy.