Annual General Meetings in the time of Covid-19

Annual General Meeting season is here and so it is time to reflect on the achievements of your organisation.  Your AGM is an opportunity for input from members on the organisation’s future and (more practically) appointing/removing directors and approving financial reports.

Annual General Meetings (AGMs) are a fundamental aspect of running companies, co-operatives, associations and mutuals. For organisations with a financial year ending on 30 June, an AGM must be held by 30 November, and there is every chance your 2020 AGM will not be “business as usual”.  As Australia faces down a second wave of COVID-19 cases, social distancing measures are likely to stay in place for some time. Now is the time to develop a contingency plan to ensure you can achieve quorum and transact business.

Some organisations will have the ability to manage the notification and holding of an AGM via the use of technology – this is determined largely by their constituting documents (Rules or Constitution). Those organisations that have this ability should start considering now how they will manage this process – investigating available technologies that allow members to really engage in the AGM and ensure notices contain sufficient details on how members can access and use the technology.

For those organisations whose constituting documents do not provide for the use of technology you will need to start preparations now, although there may be some relief.

On 6 May 2020, temporary modifications to the Corporations Act 2001 (Cth) took effect providing practical mechanisms for companies and mutuals incorporated under the Corporations Act 2001 (Cth)[1]. The key modifications made by the Determination include:

• A meeting may be held using one or more technologies to allow people to participate without being physically present. “Participate” includes a requirement that those attending must be able to speak in real time;
• Persons attending the meeting via technology are taken to be present at the meeting for the purposes of reaching and achieving quorum;
• Votes at such a meeting must be taken on a poll that allows people to participate in real time or, where practicable, records their vote in advance;
• A proxy may be appointed using technology specified in the notice to members; and
• The notice of meeting (and any related information) may be provided to those entitled to receive the notice using one or more technologies. The notice must explain how members are able to vote and ask questions and include any other information they need to know to participate in the meeting.

These modifications will expire at 11.59pm on 5 November 2020[2].

For associations, the Associations Incorporation Act 1991 (ACT) has also recently been amended to include a new section 70AA, which:

• allows a committee to authorise a general meeting to be held using a method of communication, or a combination of methods of communication; and
• allows members who take part to hear or otherwise know what other members taking part say without being in each other’s presence.[3]

Members will be taken, for all purposes to be present at the meeting and may vote by proxy. This provision overrides any inconsistency in an association’s rules. Examples of “method of communication” include a phone, satellite or internet link, or in writing.

For co-operatives, the Co-operatives National Law doesn’t specifically allow for AGMs (or even special general meetings) to be called or held using technology, however the Model Rules (which are often used) do allow for the use of technology when giving notice to members. If your Rules do not contain the right to use technology to give notice or hold a meeting then we recommend you investigate potential venues with the capacity to hold at least a quorum of your members (along with the directors and auditor), detail the social distancing measures you expect from all those attending to protect members, so that you can proceed with your AGM without difficulty. You might also consider proposing amendments to your Rules to allow for the use of technology in the future.

Despite the temporary modifications to the Corporations Act and the Associations Incorporation Act, an AGM held virtually may still breach members’ rights if the meeting is held in such a way that members are not provided a reasonable opportunity to effectively participate; those rights will still be enforceable at common law.

If you have any questions about how best to prepare for your upcoming AGM under these new measures, please contact Katie Innes or the Business & Commercial at BAL Lawyers.

Written by Katie Innes who is grateful for the assistance of Nicole Harrowfield.

[1] Pursuant to the Corporations (Coronavirus Economic Response) Determination (No. 1) 2020 (Determination).

[2] Unless the Determination is withdrawn or reissued beforehand.

[3] This section is only applicable when, due to COVID-19, a state of emergency has been declared under s 156 of the Emergencies Act 2004 or an emergency has been declared under s 119 of the Public Health Act 1997.