Can charitable companies hold virtual meetings?

Changes have recently been legislated to allow companies registered under the Corporations Act 2001 (Cth) (“Companies”) to hold wholly virtual general meetings of members but these amendments do not apply to Companies that are charities registered by the Australian Charities and Not-for Profits Commission (“ACNC charitable companies”).

The changes also apply to the holding of directors’ meetings and those changes do apply to ACNC charitable companies.

We examine these amendments and consider:

• whether and how ACNC charitable companies with various legal structures could adopt similar measures for holding members’ meetings; and
• what changes ACNC charitable companies may need to make to their constitutions consistent with the new provisions for holding directors’ meetings.

This article focusses on the application of the changes to charitable companies. For information about the application of the changes to not-for-profit companies that are not ACNC registered charities please see out article ‘Can not-for-profit companies hold virtual meetings?’

What are the changes?

The Treasury Laws Amendment (2021 Measures No. 1) Bill 2021 was passed by both Houses of the Australian Parliament on 10 August 2021. The Bill amended the Corporations Actto allow (among other things) Companies to hold general meetings, provide notices relating to general meetings and keep minutes of general meetings, using electronic means or other alternative technologies, until 31 March 2022. The amendments replace temporary measures put in in the early stage of the COVID-19 pandemic.

The Government proposes that permanent reforms will be in place by 31 March 2022.

The relevant changes are made by amendments to Chapter 2G of the Corporations Act which relates to meetings of directors and members of companies, including the addition of a new Part 2G.5. This means that, to the extent the amendments relate to general meetings of members, they fall into the provisions that are “turned off” for ACNC charitable companies[1].

The position for ACNC charitable companies

While the previous and new provisions do not apply to ACNC charitable companies, most ACNC charitable companies have rules providing for the holding of general meetings, or an annual general meeting, of members and many may have meeting provisions similar to those in the Corporations Act, particularly if their constitution is based on the ACNC’s “Template constitution for a charitable purpose company limited by guarantee” (“ACNC template”). For example:

• Venues for general meetings
  
  Rule 25 of the ACNC template provides that the company may hold a general meeting at two or more venues using any technology that gives the members as a whole a reasonable opportunity to participate, including to hear and be heard. This rule means that the meeting must have at least one physical location.
  
  ACNC charities may wish to consider whether the ability to hold wholly virtual general meetings could be of practical assistance and if so, whether changes to their constitution is needed to allow, or better facilitate, such meetings.

• Notice of general meetings
  
  The previous requirement for Companies to send certain notices to members by post arises because the Electronic Transactions Act 1999 (Cth) (“ETA”) (which permits things which Commonwealth legislation requires to be done in writing (such as notices) to be done electronically) does not apply to things required to be done under the Corporations Act. However, the limitations of the Corporations Act do not apply to ACNC charitable companies in relation to general meetings so how ACNC charitable companies are permitted to send notices to members in relation to general meetings is solely governed by their constitution.
  
  The notice provision in rule 62.1 of the ACNC template is similar to the previous position for giving notices under the Corporations Act (ie, the member is not required to provide the Company with an address for electronic communications) so in effect, must opt-in to electronic communication of notices and other documents.
  
  ACNC charitable companies may wish to consider whether notice provisions that require members to opt-out of electronic notices (rather than opt-in) could be of practical assistance and if so, whether changes to their constitution are needed to allow this.

• Minutes of general meetings
  
  The issues previously facing Companies that are not ACNC charities regarding having to sign and keep minutes in hard copy arose because the ETA does not apply to Corporations Act requirements. In relation to minutes of general meetings and members’ written resolutions, this is not an issue for ACNC charities that are Companies.
  
  Rules in the constitutions of ACNC charities that are Companies which require minutes (or any other documents) relating to general meetings and members’ written resolutions to be “signed” and kept (such as rules 57.4 and 57.5 of the ACNC template) could be complied with using electronic signing and electronic records unless the rules specifically require otherwise (such as by defining “writing” to mean a physical document and/or “signing” to mean a physical signature).
  
  ACNC charities that are Companies may wish to consider whether the ability to sign and/or keep minutes (and other documents) of general meetings and members’ written resolutions electronically could be of practical assistance and if so, whether changes to their constitution are needed to allow, or better facilitate, this.

Director’s meetings - the new position for all Companies including ACNC charities

Before these amendments, under the Corporations Act, directors’ meetings could be called or held wholly virtually but any technology used to call or hold a meeting had to be consented to by all directors and a director could withdraw that consent[2].

Under the amendments, the provisions outlined above for general meetings also apply to directors’ meetings. This means that individual directors are no longer required to consent to the technology being used for a meeting. The decision of the board as a whole as to the technology to be used for their meetings binds all directors, provided the technology meets the legislative requirements outlined above.

Rule 62.1 of the ACNC template regarding using technology for directors’ meetings is similar to the previous position under the Corporations Act. ACNC charities that are Companies may wish to consider whether a provision allowing the board as a whole to determine the technology to be used for board meetings, without the need for each individual director’s consent, could be of practical assistance and if so, whether changes to their constitution are needed to allow this.

The position for ACNC charities that are not Companies

The amendments do not apply to ACNC charities that are not companies registered under the Corporations Act, such as incorporated associations, unincorporated associations and bodies corporate established under other Commonwealth, State or Territory legislation. Those types of ACNC charities will need to consider the requirements of their governing legislation and, to the extent they are not restricted from doing so, they may wish to consider making changes to their governing rules (if needed) to facilitate holding wholly virtual meetings and/or giving communications electronically.

Some States have already passed temporary or permanent amendments to their legislation governing incorporated associations, to permit holding virtual meetings and/or giving notices electronically. For example, the Associations Incorporation Act 1981 (Qld) was amended in 2021 to permit a Queensland incorporated association to hold general meetings and permit members to take part in those meetings, by using any technology that reasonably allows members to hear and take part in discussions as they happen (eg, teleconferencing). Previously, the use of technology for general meetings had to be expressly permitted by the association’s rules. A similar provision for holding committee meetings by technology has been in place in Queensland since 2007. Queensland associations therefore may already be able to hold virtual general meetings and committee meetings provided their rules do not expressly prohibit or limit the ability to do so.

What’s to come?

The amendments will expire on 31 March 2022. The Explanatory Memorandum states that the Government proposes to pass reforms that will continue to allow Companies to send meeting related materials electronically, which will be in place when the amendments expire. Interestingly, the Explanatory Memorandum does not expressly state that the provisions for virtual meetings will be continued after the sunset date. However, even if those reforms are not extended in some form after 31 March 2022, ACNC charities that are Companies could adopt, or continue to have, provisions in their constitution to permit virtual general meetings.

[1] Under item 9 of section 111L(1) of the Corporations Act.

[2] Section 248D (now repealed)

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The material distributed is general information only. The information supplied is not and is not intended to be, legal or other professional advice, nor should it be relied upon as such. You should seek legal or professional advice in relation to your specific situation.