The recent measures taken by the Australian government in combatting the spread of coronavirus seriously impede the ability of entities with 31 December 2019 financial year ends to hold their annual general meetings (AGM) by the deadline of 31 May 2020.
For these AGMs, the Australian Securities and Investments Commission (ASIC) has indicated that it has adopted a two-month ‘no-action’ position. This means ASIC will not take any action against an entity with a 31 December 2019 year end that fails to hold its AGM by 31 May 2020 as long as the AGM is held by 31 July 2020. ASIC will continue to monitor the COVID-19 situation and extend the no-action period if deemed necessary.
ASIC has also indicated its support of holding AGMs using appropriate technology to circumnavigate the COVID-19 containment measures that have been implemented. Entities wishing to hold their AGM by 31 May 2020 or during the extension period could do so via a ‘hybrid’ AGM (where there is a physical location and online facilities) or a ‘virtual’ AGM (which is conducted purely online). ASIC reminds entities to first consider the legal status of such AGMs (for example, by confirming that their constitution allows them) and to seek legal advice if the validity of such meetings is in question.
ASIC stated in its media release that it will take a no-action position where an entity holds a virtual AGM in order to meet the 31 May 2020 deadline or during the extension period. This is on the condition that members are given a reasonable opportunity to participate in the meeting by:
- being able to ask questions of the auditor and about management; and
- voting by a poll rather than a show of hands.
Where there is concern that the technology will not facilitate the above, entities should rather postpone their AGM to a later date based on ASIC’s no-action position on deferred AGMs discussed above.
In relation to entities with 31 March and 30 June balance dates, ASIC will continue to monitor the COVID-19 situation and how it is impacting financial reporting and AGM obligations for these entities. Guidance will be updated as ASIC deems necessary.
To read ASIC’s full media release (20-068MR), click here.
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