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The ‘major overhaul’ to AGMs in recent years

As the annual general meeting (AGM) period nears, a new comprehensive guide has been released to help organisations navigate updated laws and legislation around AGMs.

user iconLauren Croft 01 September 2022 Big Law
The ‘major overhaul’ to AGMs in recent years
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As organisations across Australia head towards peak AGM season, the Governance Institute of Australia has issued a guide to holding an AGM under laws that now permanently allow hybrid and online options. 

The AGM of members of companies remains a key milestone in the calendar of a company, and the preparation for the AGM, particularly for listed companies, is often a costly and time-consuming exercise.

To help companies safely meet their legal obligations during the pandemic, temporary regulatory relief was introduced in 2020 to allow companies and incorporated associations (in most Australian states) to hold AGMs virtually or as a hybrid meeting.

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This year’s meeting season will be the first significant test of the recently updated Corporations Act, amended to allow organisations to meet in a hybrid or online format (as long as their company constitutions allow), according to the guide.

“The nature of the annual general meeting (AGM) has changed significantly in recent years. This change has been precipitated by a widespread uptake in the use of technology due to COVID-19 followed by permanent legislative reform in 2022 to facilitate meetings being held using technology. The changes have also driven greater shareholder and member interest in governance issues and organisational recognition of the need for stakeholder engagement,” it stated.

“For listed companies, shareholder activism has continued to increase, with institutional and retail shareholders alike keen to review performance and participate in the governance of the companies in which they invest. The ongoing interest in board and executive remuneration and increased focus on environmental, social and governance (ESG) risks has spread beyond shareholders to the media, regulators and special interest groups, all of whom have become more demanding in pursuit of their agendas.”

Governance Institute of Australia chief executive Megan Motto said that this season’s AGMs are likely to come under greater scrutiny by regulators, shareholders and other stakeholders as the updated laws are rolled out. 

“AGMs have had a major overhaul in recent years due to the impact of the pandemic that struck just as many organisations were about to hold their annual meetings — but were suddenly unable to meet due to physical distancing requirements,” she said. 

“Following a major campaign by Governance Institute, temporary regulatory relief introduced during the pandemic allowing companies to meet and communicate with members and shareholders using technology has been made permanent. And that means that all eyes will be on AGMs this year as the new formats are put to the test.” 

The new Effective AGMs report outlines the purpose of the AGM, what organisations should be doing before, after and during the AGM, as well as outlines a regulatory timeline for AGMs and an AGM logistics checklist.

It also reveals that whilst the planning and execution of the AGM requires a lot of skill and effort from the company secretary to meet both legislative and regulatory compliance requirements and member expectations, there are a number of things organisations need to do after the AGM.

“There are a number of mandatory steps, together with potential opportunities for further engagement with members, to be taken after the meeting. There are a series of procedural steps to be taken immediately after the meeting, including preparation of the minutes of meeting and filing of copies of resolutions with ASIC (where required for companies incorporated under the Corporations Act) and preparation of notices to ASX (for listed companies),” according to the guide.

“Importantly, there are opportunities for further engagement with members and other stakeholders that need to be considered after the AGM, including communicating the outcomes of the meeting, either in writing or by posting relevant information on the company’s website.”

Ms Motto added this long overdue update means many organisations are currently navigating a newly flexible, digital landscape for their AGMs. 

“A vast number of companies are currently traversing a changed legal landscape as they plan and prepare to hold one of their most significant events of the year. This latest report from Governance Institute Effective AGMs is a complete guide to holding an AGM under the new laws. It also provides guidance on effective member engagement. It’s mandatory reading for all directors, senior managers and governance and risk management professionals. Now is the time to ensure you are up to speed on the new requirements,” she said.

“The new report also offers some key tips for using technology to conduct the meeting: “There are many logistical aspects that need to be worked through in advance of an AGM to ensure the use of technology during the meeting is seamless, particularly in relation to how questions will be conducted.”

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