Virtual meetings for companies under the Corporations Act 2001 (Cth) and Australian Charities and Not-for-profits Commission (ACNC) registered charities
By Geoff Musgrove & Benita Williams• 15 March 2021 • 5 min read
Many company constitutions do not include provision for virtual meetings. To address this during COVID-19, the Treasurer issued the Corporations (Coronavirus Economic Response) Determination (No 1) 2020 (Determination) to enable any meeting to be held virtually. There have been further updates since our original notification that impact on company meetings occurring virtually, which are addressed below.
Currently, the Corporations Act 2001 (Cth) does not envision virtual meetings and requires that general meetings are held at a physical venue, even if attended by some members via technology. This is because, under section 249R of the Corporations Act, a meeting of members is required to be held at a reasonable time and place, which has been interpreted to mean at a physical gathering of persons. Although there are provisions to allow for technology to be used to allow members to participate in the meeting from 2 or more venues, a physical venue is required. This rule cannot be displaced by a company’s constitution.
Conversely, meetings of directors are allowed to be called and held via technology.
The provisions relating to general meetings under the Corporations Act do not apply where a company is registered as a charity with the ACNC. Instead, the company’s constitution will determine how meetings can be called and held. Therefore, charities can hold virtual meetings where these are permitted by their constitution.
Temporary measures during COVID 19
Evidently, the current requirements, relating to meetings, created difficulties during COVID-19 for companies needing to hold meetings. As a consequence, a number of temporary measures have been put in place by Treasury. This includes the ability for companies to hold any meeting virtually. The Determination by Treasury was made on 5 May 2020, in order to amend the Corporations Act, and has been extended several times. Maddocks previously provided an update on what COVID-19 meant for the holding of company meetings.
Section 5 of the Determination provides that any meeting may be held using one or more technologies, that give all persons, entitled to attend the meeting, a reasonable opportunity to participate without being physically present in the same place. Where a meeting is held in this manner, the following is taken to apply:
- all persons participating in the meeting are taken, for all purposes, to be present at the meeting;
- a vote taken at the meeting must be taken by poll, and not a show of hands, by using one or more technologies to give each person entitled to vote the opportunity to participate in the vote in real time and, where practicable, by recording their vote in advance of the meeting;
- a requirement to allow an opportunity for persons attending the meeting to speak may be complied with by using one of more technologies;
- a proxy may be appointed, using one or more technologies, specified in the notice of the meeting; and
- notice of the meeting may be given using one or more technologies to communicate it to those entitled to receive notice of the meeting.
Therefore, until the Determination expires, any company registered under the Corporations Act is able to hold director and general meetings (including annual general meetings) virtually. However, it should be noted that the Determination does not apply to companies registered as charities with the ACNC. This is due to a charity’s constitution determining how meetings can be called and held, as opposed to the provisions relating to general meetings under the Corporations Act, as stated above.
It is important to note that the sunset date for these measures has been extended to 21 March 2021, and once the Treasury Laws Amendment (2021 Measures No. 1) Bill is passed will be further extended to 15 September 2021.
15 September 2021 onwards
When the temporary measures end on 15 September 2021, the position will revert to the existing requirements under the Corporations Act.
However, Treasury is proposing to make the temporary measures implemented during COVID-19 permanent. On 19 October 2020, Treasury released the Corporations Amendment (Virtual Meetings and Electronic Communications) Bill 2020 (Cth) for consultation. Under the proposed legislation, any company registered under the Corporations Act will be able to hold meetings virtually.
Amongst other things, the draft legislation proposes to establish a regime which substantially mirrors the provisions for virtual meetings contained in the Determination. The draft legislation also specifically provides that where a meeting is held virtually, and there is no physical location, the place for the meeting is taken to be the company’s office.
Therefore, if the draft legislation is enacted, any company will be able to call and hold meetings virtually, so long as the proper notice requirements are fulfilled.
The way in which the proposed legislation is drafted means that these provisions will apply to companies that are registered with the ACNC also, regardless of what is contained in their constitution.
Although the proposed legislation relating to virtual meetings might apply automatically to all companies in the future, it is advisable that all companies, and particularly charities review their constitution to ensure that their constitutions comply with the relevant laws and that the company’s individual requirements are reflected.
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