General meetings: Modernising Corporate Constitutions for the Digital Age

You can meet and send documents electronically, but you need to know and to follow the rules. Warning – fully virtual general meetings need to be expressly permissible under the constitution. So it’s time to check your constitutions and brush up on what needs to be done. 

You can hold fully virtual general meetings but only if empowered in the constitution of the company or scheme.

1. A few housekeeping rules

Members of a registered scheme or a company may hold hybrid meetings, being meetings with participants attending virtually and in-person, even if their constitutions do not contain provisions specifically facilitating them. All persons participating in the meeting, whether by being physically present or using electronic means, are taken to be ‘present’. This means that all persons attending virtually at the time that the quorum is called must be counted for the purposes of determining whether there is a quorum.

However, companies and registered schemes are only permitted to hold wholly virtual meetings if it has been expressly required or permitted by the entity’s constitution. For registered schemes, the provisions of the scheme’s constitution that require or permit virtual-only meetings must have been included in the constitution either at the time the scheme was established or by special resolution of scheme members.

Unmute or forever hold your peace

For hybrid or virtual-only meetings, entities are required to ensure that they give each member entitled to attend the meeting a reasonable opportunity to participate in the meeting. This includes holding the meeting at a reasonable time and ensuring any virtual technology allows members at the meeting to exercise any rights they have to ask questions or make comments orally or in writing.

Disable the “raise-hand” function

For listed companies and listed registered schemes, a resolution put to the vote at a meeting of members must be decided on a poll (and not a show of hands) in the following circumstances:

• the notice of the meeting set out an intention to propose the resolution and stated the resolution;
• the company has given notice of the resolution in accordance with section 249O of the Corporations Act (members’ resolutions); or
• a poll is demanded.

Members of a company or registered scheme with at least 5% of the votes that may be cast at a meeting of members may request the company to appoint an independent person to observe and prepare a report on the conduct of the poll.

Location, location, location

A hybrid meeting is deemed to be held at the main physical venue, and the meeting will be considered to be held at a reasonable time if it would be reasonable to hold the meeting at the time at the physical venue as set out in the notice.

If you hold a virtual-only meeting, the meeting is deemed to be held at the time and place of the registered office of the company or responsible entity for the registered scheme. The timing of the meeting is considered ‘reasonable’ if it would be reasonable to hold the meeting at the time at the physical venue.

These requirements are crucial to the validity of the hybrid or virtual meeting.

2. Meeting materials

Companies and registered schemes may send meeting materials to members:

• in a physical form;
• through physical notice or an electronic notice that allows for electronic access to the document;
• by sending the document itself electronically; or
• in respect of annual financial reports only, making it available on a website.

The meeting materials captured by these provisions include:

• those relating to a meeting of members of the company or registered scheme;
• those relating to a resolution to be considered by members;
• an annual financial report; and
• a notice of members’ rights.

However, members are entitled to make an election as to their preferred means of receipt, either on a standing basis or through ad hoc requests relating to particular documents. It is imperative that companies and registered schemes adhere to these requests, which may occur after receipt of a document in a different format.

Key takeaways

• Hybrid meetings are permissible, but if a company wishes to hold an entirely virtual meeting, the constitution will need to require or permit this. Companies without a provision to this effect will first need to amend their constitutions if they wish to hold wholly virtual general meetings. Permission to hold a wholly virtual meeting of registered scheme members must have been included in the constitution either at the time the scheme was established or by special resolution of scheme members.
• Companies and registered schemes must give the members entitled to attend the meeting a reasonable opportunity to participate to ensure the validity of the meeting. An assessment of reasonableness will involve consideration of the meetings’ timing, location and use of technology to facilitate participants’ questions and comments.
• Companies and registered schemes should be particularly mindful of any requests to receive a physical or electronic copy of a particular meeting material document, and make provisions for members to indicate their preferences. A failure to comply with a member’s election will result in the commission of a strict liability offence.
• Directors’ meetings may be called or held using any technology consented to by all the directors. The consent may be a standing one. A director may only withdraw their consent within a reasonable period before the meeting.
• Check your processes in this space to ensure that appropriate measures are taken to meet the legislative requirements.

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