The Government has passed the Treasury Laws Amendment (2021 Measures No. 1) Bill (PDF 726KB) (Bill) which amends the Corporations Act 2001 (Corps Act) and Australian Securities and Investments Commission Act 2001, where relevant, with the following effects:
- renewal of temporary relief for virtual meetings and electronic communications (including measures to facilitate the electronic execution of company documents)
- reforms to the continuous disclosure laws.
These changes commence on 14 August 2021.
Virtual meetings and electronic communications
The Bill renews the temporary relief that allows companies to use technology to meet regulatory requirements under the Corps Act.
These temporary relief measures will allow companies to hold virtual meetings and use electronic communications to send meeting-materials and execute company documents until 31 March 2022.
This relief ensures that companies can meet their obligations as they continue to deal with the uncertainty of the COVID-19 pandemic. In particular, the renewed relief will give certainty to listed and unlisted companies that are expected to hold an annual general meeting later this year and early next year (see below for further discussion). The relief applies to holding meetings of directors of a company, meetings of shareholders of a company and meetings of members of a registered scheme.
The legislation also gives ASIC permanent powers to provide individual or class order relief in relation to meetings and sending documents. ASIC will be able to provide this relief in circumstances beyond companies’ control, such as those caused by the COVID-19 pandemic.
The Government will seek to introduce permanent reforms later this year to give companies the flexibility to use technology to hold meetings, such as hybrid meetings, and sign and send documents.
The renewal of these temporary measures to facilitate virtual meetings and the use of electronic communications will be welcomed by entities given the continuing evolving COVID-19 impacts on physical meetings and deliveries. Making permanent reforms will modernise the provisions of the Corporations Act in this area.
Reforms to continuous disclosure laws
The Bill makes permanent the temporary changes to Australia’s continuous disclosure laws made in May 2020.
The Bill amends the Corps Act so companies and their officers will only be liable for civil penalty proceedings in respect of continuous disclosure obligations where they have acted with “knowledge, recklessness or negligence”.
The temporary changes made on 25 May 2020 were in response to concerns that the heightened level of uncertainty around companies' future prospects as a result of the COVID-19 crisis could cause companies to be seen to be falling foul of their continuous disclosure obligations if their forecasts are found to be inaccurate. This could also expose companies to the threat of opportunistic class actions for such alleged statements. These temporary changes were in effect until 23 March 2021. The Bill has made these changes permanent with effect from 14 August 2021.
The Bill requires an independent review of its impact within six months after the second anniversary of commencement of the Bill, being 14 August 2021.
Subject to certain exceptions, ASX Listing rule 3.1 requires listed entities to notify the ASX immediately of any information concerning it which a reasonable person would expect to materially affect its share price. The ASX Listing rules relating to continuous disclosure have not changed.
Companies may seek legal advice to ensure that they have appropriately discharged their continuous disclosure reporting obligations.
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For further explanation on the impacts to AGMs, and more details on the communications benefitting from electronic execution, read our Reporting Update.