The Australian Securities and Investments Commission (ASIC) has formally extended the time public companies have to hold their Annual General Meeting (AGM). This extension came into effect on 8 September 2021 following the introduction of the ASIC Corporations (Extension of Time to Hold AGMs) Instrument 2021/770 (the Instrument). This article summarises the implications for Australian public companies.
Background
In April 2021, ASIC re-affirmed its ‘no action’ position which enabled public companies to hold their AGM up to seven months after their year end. This applied to public companies with financial year-end dates up to 7 July 2021. Under the Instrument:
- all public companies with balance dates between 21 February 2021 and 7 July 2021 have an additional two months to hold their AGM, and
- public companies limited by guarantee with balance dates between 24 January 2021 and 7 April 2021 have an additional four months to hold their AGM.
The Instrument is a positive act that formalises ASIC’s position and has been issued under the powers granted to ASIC by the Treasury Laws Amendment (2021 Measures No. 1) Act 2021 (Temporary Measures) (summary available here).
Purpose
ASIC explained that the purpose of the extension was to address uncertainty given the Temporary Measures were only introduced on 14 August. The Instrument will therefore create certainty of the AGM requirements while allowing flexibility for companies preparing for their upcoming AGMs while restrictions on gathering and movement persist.
In addition, the Explanatory Statement to the Instrument confirms ASIC is satisfied that it would be unreasonable to expect public companies with balance dates between 21 February 2021 and 7 July 2021, and public companies limited by guarantee with balance dates between 24 January 2021 and 7 July 2021, to hold their AGM within the time required under the Corporations Act. The ongoing restrictions are beyond the control of public companies and hence the need for flexibility.
Director Duties
In announcing the Instrument, ASIC reminded directors of the need to comply with their directors’ duties in deciding whether it is appropriate to rely on the extension. The comment appeared to serve as a caution against using the extension to simply delay meeting the company’s responsibilities to shareholders.
Directors should consider whether relying on the delay is in the best interest of shareholders as a whole, whether there are viable alternatives to delaying the meeting and whether directors are using due care and diligence in making the decision to delay the meeting.
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