The Corporations Act was recently amended to facilitate the use of technology to hold and give notice of annual general meetings, general meetings and directors’ meetings. The amendments:
- allow clubs to hold virtual meetings; ie. meetings whereby everyone participates using online technology; and
- make it easier for clubs to give notice of meetings to members electronically.
These amendments are principally a response to the current Covid pandemic and the consequential restrictions on movement and gatherings. They are scheduled to expire on 1 April 2022.
However, there is a recommendation from a Senate Committee which considered the legislation that the amendments be made permanent after that date, but whether that will happen is not presently known.
What follows is a summary of some of the principal features of these amendments which apply only to clubs that are companies limited by guarantee.
Chapter 2G Meeting
There is a new concept called a “Chapter 2G Meeting”.
A Chapter 2G Meeting means:
- a meeting of the club’s members (i.e., a general meeting, including an annual general meeting); or
- a meeting of the directors of a club (including a committee of directors).
Virtual meeting technology may be used to hold a Chapter 2G Meeting, provided that the technology gives the persons entitled to attend the meeting, as a whole, a reasonable opportunity to participate in the meeting without being physically present at the same place.
A reasonable opportunity to participate includes a reasonable opportunity to exercise a right to speak orally for the purpose of asking questions and making statements during the meeting.
Also, all persons participating in the meeting who are entitled to vote must also be given the opportunity to vote in real time and may be given the opportunity to record a vote in advance of the meeting.
Voting at a virtual meeting by poll only
If a resolution is put to the vote at a virtual meeting of a club’s members, then the vote must be decided on a poll (i.e., in writing). There can be no voting by a show of hands or on the voices on that resolution. Most computer technology allows a poll to be conducted.
Also, as indicated above, the opportunity may be given to record a vote in advance of a meeting. Clubs will need to give careful thought about whether voting on the resolution will be permitted before the meeting if the resolution is an ordinary resolution.
A special resolution cannot be amended from the floor of the meeting, except for typographical errors. But an ordinary resolution can be amended if the resolution is within the scope of the resolution. However, any votes cast before the meeting will be on the resolution as set out in the notice, not as amended.
Accordingly, if there is voting before the meeting, a resolution could not be amended from the floor.
Notice of Meeting
A notice of a Chapter 2G Meeting may be given to members by means of an electronic communication (e.g., by email). This applies even if members have not previously elected to receive notices of meeting in that manner.
However, a member may elect to receive documents in relation to a Chapter 2G Meeting (including the notice of meeting) in hard copy only. A member who wishes to do this must give notice in writing to the club at least 31 days before the meeting.
Accordingly, if a club has the email addresses of members, it may give notices of meetings and other documents relating to a Chapter 2G Meeting to those members by email.
The notice of meeting must contain the usual information, including the date, time and place of the meeting and the business to be transacted at the meeting.
This includes any resolutions to be considered at the meeting such as ordinary resolutions dealing with honorariums and directors’ expenses and special resolutions to amend the club’s constitution.
Additionally, clubs will also be able give notice by sending an email or text message to members which contain a link where those members can access the notice of meeting.
Of course, clubs will still have to use the conventional method of sending notices by post to those members who have not given their email addresses or mobile phone numbers to the club.Some practical considerations
If clubs are proposing to hold their AGMs or other general meetings as virtual meetings, careful consideration must be given to the technological aspects of such a meeting well in advance of the meeting and appropriate expert advice should be obtained.
The notice of the meeting must give sufficient information to allow members to participate in the meeting by means of the technology. Clubs will need expert advice about this. Simply stating that the meeting will be conducted using, for example, “Zoom” will not be sufficient.
Also, consideration should be given to the extent to which the membership as a whole has access to technology that will permit participation in a virtual meeting and what (if anything) can be offered to members who wish to participate, but do not have ready access to the technology.
Many clubs have constitutional rules about the election of directors before or at AGMs. These rules will need to be considered carefully to see if they will prevent or impact on the conduct of the election by use of technology.
Calling, conducting and chairing a virtual meeting may be challenging for members as well as the chairperson and management. This is particularly the case if there are complex or controversial issues to be considered at the meeting. Careful preparation by all who are concerned in the organisation of the meeting will help to avoid problems.
Delaying the AGM may be an option
The current Covid restrictions on movement and gatherings will apply at least until the end of September 2021 for Greater Sydney. Additionally, as at the date of this newsletter, it is unclear when the current Covid restrictions will cease to apply for “Regional New South Wales”.
The Corporations Act provides that clubs (like other public companies) have five months from the date of the end of their financial year to hold their AGMs. However, some club constitutions provide for a shorter time. ASIC has a current “no action position” for companies that have an end of financial year date up to 7 July 2021 which allows those companies to hold their AGMs up to 7 months after the date of the end of their financial year.
This means that for the many clubs that have a 30 June end of financial year, they can delay holding their AGMs until as late as the end of January 2022.
Clubs that are in this position may choose to wait to see if the Covid restrictions are lifted and thereby possibly avoid having to hold virtual AGMs. However, it is recommended that this is carefully considered in the light of a club’s constitution and other issues and probably after consulting with the club’s legal advisers and auditors.
Specific advice will need to be sought if a club has already called their meeting as to how best proceed.
While ASIC may have a “no action” position, there are a couple of matters to be aware of:
- the “no action” position does not extend to a club’s financial reporting obligations where a club’s end of financial year falls between 8 January 2021 and 22 June 2021 (ie those clubs must still make the financial reports available to members and lodged with the ASIC within four months of the end of the clubs financial year); and
- it is possible, although unlikely, for members to seek orders from the Supreme Court to require a club to hold its AGM within the statutory or constitutional time limit.
Boards of clubs and management should be having conversations about these issues now and plan a way forward with alternatives depending on how events unfold over the next eight to ten weeks.
It may also be a good idea to give members advance notice of those plans.
Further Information and Contact Details
Should you wish to discuss any aspect of this Newsletter or want any legal advice about these matters, please contact any member of the Clubs team on 8251 7777 or by email: