Update - Can charitable companies hold virtual meetings?

As foreshadowed in our article ‘Can charitable companies can hold virtual meetings? [NFPi], the Federal Government has put in place reforms to continue to allow companies registered under the Corporations Act 2001 (Cth) (“Companies”) to hold wholly virtual general meetings of members on a permanent basis.

Some of the amendments change the position for ACNC charitable companies as regards general meetings of members held on or after 1 April 2022.

The temporary measures described in our previous article applied to ACNC charitable companies in relation to meetings of directors. However, the temporary position ceased on 31 March 2022 and the pre- COVID-19 position is reinstated as regards meetings of directors held on or after 1 April 2022.

Temporary measures put in place for the COVID-19 pandemic under the Treasury Laws Amendment (2021 Measures No. 1) Act 2021 (Cth) (“temporary measures legislation”) were due to expire on 31 March 2022 but the Federal Government had proposed that permanent reforms would be passed before the sunset date.

What are the updated changes?

Our article ‘Can charitable companies can hold virtual meetings?[NFPi] ’ describes the position for ACNC charitable companies under the Corporations Act before the temporary measures legislation commenced and under the temporary measures legislation.

The Corporations Amendment (Meetings and Documents) Act 2021 (Cth) (“Amending Act”) has received Royal Assent. The Amending Act amends the Corporations Act to 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 technologies on a permanent basis. The changes commenced on 1 April 2022.

The Amending Act makes some changes to the temporary measures legislation and repeals the sunsetting provision so the temporary measures, as amended, now apply on a permanent basis.

The legislative structure adopted in the temporary measures legislation has not been followed in the Amending Act. The concept of “Chapter 2G meetings”, which referred to meetings of a Company’s members and meetings of a Company’s directors (including meetings of a committee of directors) that was introduced in new Part 2G.5 under the temporary measures legislation has been discontinued. The previous provisions relating to holding virtual meetings of directors have been reinstated within Part 2G.1 and the permanent provisions relating to virtual members’ meetings have been included within Part 2G.2.

While ACNC charitable companies are generally exempt (under item 9 of section 111L(1)) from complying with the requirements relating to holding general meetings of members under Part 2G.2, some of the new sections in Part 2G.2 are expressly excluded from the exemption.

Part 2G.5 now only contains the provisions relating to the electronic recording and keeping of minute books required to be kept under the Corporations Act that were introduced under the temporary measures legislation. Those provisions have not changed and are permanent from 1 April 2022. For ACNC charitable companies, those provisions do not apply to minutes of members’ meetings and resolutions as these are not required to be kept under the Corporations Act, but they do apply to minutes of directors’ meetings and resolutions.

The provisions relating to sending notices and documents about meetings electronically have been moved from Part 2G.5 to a new Division 2 in Chapter 1 to allow room for future developments. The exemption for ACNC charitable companies does not extend to Division 2 so these provisions apply to ACNC charitable companies in relation to documents sent by the Company relating to meetings and resolutions of members or classes of members.

This article focusses on the application of the permanent changes to the position of ACNC charitable companies. For information about the application of the permanent changes to not-for-profit companies that are not ACNC registered charities please see our article ‘Update – Can not-for-profit companies hold virtual meetings?[NFPii] ’

General meetings - the new permanent position for ACNC charitable companies

·         Holding general meetings

• All Companies have the option to hold a members’ meeting at one or more physical venues or at one or more physical venues using virtual technology (a “hybrid meeting”) regardless of the requirements in the Company’s constitution, but wholly virtual meetings can only be held if this is required or permitted by the Company’s constitution expressly (section 249R).
• A new provision determines where and when a hybrid or wholly virtual meeting is taken to have been held and states that members attending a hybrid or wholly virtual meeting, whether or not at a physical venue, are taken to be present in person for all purposes (section 249RA).
• There is a new obligation requiring a Company that holds a meeting of members to give the members entitled to attend a meeting, as a whole, a reasonable opportunity to participate in the meeting. Before the temporary measures legislation, the equivalent section only related to the use of technology at meetings. Now, it covers all aspects of holding the meeting and, without limiting what else might be reasonably required, there is new detail as to the reasonableness of the choices of venue and time of the meeting, as well as technology, depending on whether the meeting is wholly physical, at one or more venues, or uses virtual technology. Virtual meeting technology must allow members attending the meeting, as a whole, to exercise orally and in writing any rights of those members to ask questions and make comments (section 249S).
• If members who are entitled to attend a members’ meeting do not have, as a whole, a reasonable opportunity to participate in the meeting or a proceeding at the meeting, the meeting or proceeding will only be invalid if so declared by a Court on the grounds that a substantial injustice has been or may be caused which cannot be remedied by any order of the Court (section 1233(3A)).

·         Sending notices of general meetings and other documents

• The new provisions relating to sending of documents apply to any document that is required or permitted under the Corporations Act to be sent by a Company. They cover notices sent by a Company relating to meetings and resolutions of members (and classes of members) and certain other notices, reports and documents.
• The legislation is regrettably unclear in regard to the position of ACNC charitable companies which are exempt from the requirement to hold an annual general meeting or other meetings required under Part 2G.3 (such as a meeting requisitioned by members) but may be required to hold a general meeting for a specific purpose under another part of the Corporations Act such as to change its constitution or name. Is a general meeting that is held only because an ACNC charitable company chooses to do so or because it is required under its constitution (such as an AGM), one that is “permitted under the Corporations Act” and to which the new provisions apply? The legislative intent seems to be that the new electronic document sending provisions apply to ACNC charitable companies because the provisions are intended to be facilitative for Companies (for the same reason that the new virtual meeting provisions are not subject to the exemption for ACNC charitable companies) and it would be a perverse and confusing outcome if the provisions apply to some types of member meetings and not others.
• Under the new provisions, the Company can send notices and documents in physical form or electronic form or make them accessible electronically provided that, at the time the document is sent in electronic form or made accessible electronically, it is reasonable to expect that the document would be readily accessible so as to be useable for subsequent reference. However, these provisions do not limit the ways in which the Company may send a document - a Company’s constitution may set out other ways in which a document may be sent such as by making it readily available on a website (sections 110C and 110D). These provisions apply not only to documents sent to members but to other persons, such as directors and auditors. The effect of these provisions is to give ACNC charitable companies options for sending the specified types of documents to members and others electronically even if its constitution does not provide for notices to be sent by that means.
• Under section 110E, a member may elect to be sent documents in either physical form or electronic form, either in relation to all documents which can be sent electronically or specified classes of those documents, by notifying the Company (whether or not in writing).
• There is a new requirement for public Companies (including ACNC charitable public companies such as CLGs) to either:
• send members, at least once each financial year, a notice about their election rights under section 110E; or
• make such a notice readily available on a website (section 110K).
• A Company that does not take reasonable steps to send a document in a manner that complies with a member’s election may commit an offence of strict liability. However, the failure does not affect the validity of the notice or any act, transaction, agreement, resolution or other thing. A Company must also take reasonable steps (within prescribed parameters) to comply with a member’s ad hoc request to be sent a particular document in a particular form and non-compliance may be an offence of strict liability (sections 110F to 110J). 
• These new provisions pre-suppose that a member has provided both a physical address and an electronic address for communications. There is no requirement in the Corporations Act for a member to provide both types of address. It will be easier for a Company with a website to comply but the new requirement could be an added burden for those that don’t.
• Transitional provisions preserve in force member pre-existing elections about how documents are be sent.

·         Minutes of general meetings

ACNC charitable companies are exempt from the requirement to keep minutes of members’ meetings and resolutions but are required to keep minutes of directors’ and committee meetings and resolutions. The new provisions permitting electronic recording of minutes apply to information “required” to be recorded in a minute book (section 253S). We take this to mean “required under the Corporations Act” so the new provisions do not apply to minutes of members’ meetings and resolutions of ACNC charitable companies.

Matters for consideration by ACNC charitable companies

• ACNC charitable companies 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 are needed to allow, or better facilitate, such meetings.
• ACNC charitable companies that hold hybrid or wholly virtual meetings will need to ensure that the technology is capable of recording the presence of members attending virtually and allowing them to ask questions (orally or in writing) and to vote.
• Given the lack of clarity as to whether the document sending provisions apply to general meetings that an ACNC charitable company is required by its constitution or may wish to hold, ACNC charitable companies may wish to consider whether the notice provisions in their constitution reflect the new provisions and whether to require members who provide an electronic address to elect to opt-out of electronic notices.
• ACNC charitable companies that are public Companies, including CLGs, will need to include in their compliance programme, the giving of an annual notice to members about their election rights or updating their website about those rights.
• ACNC charitable companies may wish to consider whether the ability to sign and/or keep minutes (and other related 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 permanent position for all Companies including ACNC charitable companies
The position as to how notices relating to directors’ meetings or resolutions can be sent has reverted to the position before the adoption of the temporary measures legislation. Section 248D, which was repealed by the temporary measures legislation, has been reinstated and, once again, directors’ meetings can only be called or held using a technology consented to by all directors and a director can withdraw that consent within a reasonable time before the meeting.

Signing documents relating to meetings
The temporary measures legislation included provisions about how Companies could validly sign electronically documents relating to meetings of members or directors. Those measures have been included in the permanent changes and apply to meetings of directors of ACNC charitable companies. For information about those changes, please see our article ‘Update – Electronic executions are in, permanently[NFPiii] ’.

Parliamentary review
This may not be the end of the story for virtual meetings and electronic communications. The new provisions, including those continuing in force under the temporary measures legislation, must be reviewed as soon as practicable after 22 February 2024 and a review report submitted to Parliament.

The position for ACNC charities that are not Companies

The amendments outlined above 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. See our previous article, ‘Can charitable companies hold virtual meetings?[NFPi], as to the position of those charities.

Link NFPi - Can charitable companies hold virtual meetings?

Link NFPii - Can not-for-profit companies hold virtual meetings?

Link NFPiii - Update - Electronic executions are in, permanently

Disclaimer – Reliance on Content
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.