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Aug 06, 2020

Australia extends measures allowing virtual AGMs

AIRA CEO repeats call for change to be made permanent

The Australian government has extended measures allowing companies to hold virtual annual shareholder meetings amid a spike in Covid-19 cases in Victoria, the country’s second-most populous state.

Last Friday, Treasurer Josh Frydenberg said special rules allowing online-only shareholder meetings would be extended for a further six months, making them valid until March 21, 2021. 

‘Under the social distancing measures that are currently in place, and the ongoing challenges in Victoria, it is difficult for shareholders to physically gather and for companies to execute documents in person,’ says Frydenberg in a statement.

The announcement came two days before a ‘state of disaster’ was declared in the Australian state of Victoria, handing authorities additional powers to enforce lockdown measures. In the last week, the region has recorded record numbers of new cases and deaths from Covid-19.

The ‘temporary relief measures’ also allow companies to use email to provide notice of AGMs and achieve a quorum through online attendance. In addition, the government has extended separate rules covering the signing of electronic documents for a further six months. 

Ian Matheson, CEO of the Australasian Investor Relations Association, has welcomed the extension to the AGM rules and repeated calls for them to be made permanent. 

‘With the Covid-19 crisis deepening in Victoria, and New South Wales on high alert, the extension gives these companies certainty and flexibility to navigate a pandemic that is far from over and a recession that is just beginning to take effect,’ he says in a statement.

‘The next step is permanent reform. The coronavirus crisis will eventually subside, but Australia’s corporate legislation will remain outdated. Digital investor communications and virtual AGMs must become a permanent feature of the Corporations Act.’

Ann Bowering, Computershare’s CEO for issuer services for Australia and New Zealand, also backs the change. 

‘The government’s plans to modernize the Corporations Act represents a key step toward accelerating innovation and the digital transformation of Australian financial markets. Shareholders and listed companies will directly benefit,’ she tells IR Magazine.

‘Covid-19 has helped to accelerate the much-needed reform of Australia’s Corporations Act. Virtual AGMs enable companies to conduct business more efficiently, while continuing to engage shareholders and maintain good corporate governance.’

The use of online meetings appears to have boosted attendance at Australian AGMs, according to a study by Computershare covering April and May meetings, pushing back against the idea that a virtual format hinders access. 

Between 2019 and 2020, overall attendance at AGMs rose by 36 percent, notes the research. Computershare adds that the variety of people joining meetings has also increased, with more employees, regulatory authorities and other interested parties taking part. 

In addition, notes Computershare, there has been a rise in shareholders registering for AGMs but only as guests, meaning they want a company update but have no plans to ask questions or vote.