The adage ‘necessity is the mother of invention’ has proven to be especially relevant throughout the COVID-19 pandemic. Companies have seen normal ways of working rendered impossible, necessitating the implementation of new innovative solutions to continue vital business activities.

One such vital activity is a General Meeting – be it the Annual General Meeting (AGM) or an Extraordinary General Meeting (EGM). The health and safety of securityholders, staff and other stakeholders is a top priority, and it is therefore imperative companies are prepared to engage with securityholders in a virtual world.

Virtual and hybrid General Meetings

The Australian Securities & Investments Commission (ASIC) considers virtual technology a valuable tool in addressing the challenges presented by the social distancing restrictions enforced as a result of the COVID-19 pandemic while ensuring continued investor engagement at General Meetings. As the social distancing and lockdown measures in place across Australia vary drastically on a state-by-state basis, ASIC has encouraged companies and responsible entities to hold General Meetings in one of the following ways:

  • A virtual meeting, whereby all members participate using online facilities; or
  • A hybrid meeting, in which, circumstances permitting, a small physical meeting is linked with online facilities allowing remote participation.

Regardless of whether a virtual or hybrid meeting is held, attendees must be provided with the opportunity to participate.

Temporary modifications to the Corporations Act 2001 (Cth)

On 6 May 2020, temporary modifications to the Corporations Act 2001 (Cth) (Corporations Act) under the Corporations (Coronavirus Economic Response) Determination (No. 1) 2020 (Determination) came into effect. Designed to further facilitate virtual and hybrid meetings, the Determination provides that:

  • Persons participating in a meeting remotely are taken for all purposes (for example, a quorum requirement) to be present;
  • Virtual technology may be used to provide participants a reasonable opportunity to speak at the meeting; and
  • Notices of Meeting and other information to be provided with notice of a meeting may be provided using one or more technologies  (for example an electronic communication) or by providing details of an online location where it can be viewed and downloaded.

On 31 July 2020, the Government announced the current arrangements under the Determination would be extended so they expire on 21 March 2021.


30 March 2020 EGM a virtual success

Cromwell arranged for Link Market Services (a subsidiary of Link Group) to use their proprietary hybrid and virtual meeting technology, at the ARA Asset Management (ARA) requisitioned EGM of Cromwell securityholders on 30 March 2020.

The EGM saw 364 attendees join online. The technology is invaluable given the widespread and varying social distancing measures in place, as well as the move towards a more fully virtual approach by the market.

EGM result demonstrates significant number of securityholders exercising their right to vote

The EGM represented ARA’s second attempt to get Dr Gary Weiss elected to the Cromwell Board, four months after the first attempt failed at the November 2019 AGM. A significant number of Cromwell securityholders exercised their right to vote, whether by proxy before the EGM or by voting on the day.

In excess of 95% of the proxies received before the EGM were against Dr Weiss’s election. On the day, the resolution was decided on a poll and was defeated 59.09% to 40.91%.


The shift to hybrid meetings was already underway

Prior to the COVID-19 pandemic,  some companies across Australia had begun to utilise technological capabilities to hold hybrid AGMs. Highlighting this trend towards virtual meeting technology, the number of hybrid AGMs facilitated by Link Group in 2019 rose by 22%.

It is clear virtual and hybrid meetings serve a greater purpose than acting as a temporary solution throughout the COVID-19 pandemic and look like they are here to stay. This is particularly pertinent given the benefits when compared to a traditional General Meeting include reduced meeting costs, increased securityholder participation, greater accessibility for less mobile and remote securityholders, while also being environmentally friendly.

The importance of securityholders exercising their right to vote

In ‘Your vote counts’, which first appeared in Insight 29, it was outlined that when you own securities in a listed company, you are putting your trust in the Board and management of that company to look after the future growth and income of your investment. As one of the owners of the company, you have the chance to vote on resolutions put forward at your company’s General Meeting.

Even as COVID-19 dictates changes to the method in which General Meetings are conducted, the sentiment regarding why you should vote remains the same.

‘Mum and Dad’ investors sit on the sidelines

Link Group’s most recent AGM Snapshot of the 2019 season showed that for ASX200 companies, the percentage of securityholders lodging a vote at the AGM was 5.60%. However, the percentage of voting issued capital for the same period was 73.41%, demonstrating larger securityholders such as institutional investors are the ones who typically participate in the voting. What these numbers also suggest is that ‘mum and dad’ securityholders, those same securityholders who have done the hard work to earn the money and research their original investment decisions, don’t often participate in the ongoing decision making of their investments.

Why should you vote?

The ASX Corporate Governance Principles and Recommendations (4th edition) note that ‘Meetings of securityholders are an important forum for two-way communication between a listed entity and its securityholders’. If you opt not to vote at General Meetings, you forgo the opportunity to participate in the decision making for your company.

Further, institutional or wholesale investors may not necessarily have objectives that align with your own reasons for holding a security. If ‘mum and dad’ securityholders and smaller securityholders leave the responsibility of voting to the institutional securityholders (as evidenced by the 5.60% securityholder participation rate), the outcome may not reflect their views.

What to expect

In the lead up to a General Meeting, you will receive a Notice of Meeting which will include the details of the physical meeting, an explanation of the items of business and a formal personalised proxy form with which to vote. If you don’t plan to attend the meeting, you can simply complete the proxy form and return it before the due date.

Most companies will also offer online proxy appointment, which makes it even easier to participate. Look for a link on the Notice of Meeting or call the company directly for more information.

There is no doubt the COVID-19 pandemic has changed the way in which General Meetings are facilitated, but their importance to a company remains unchanged. A General Meeting gives securityholders, as owners, the chance to participate in decision making. Every individual securityholder’s opinion matters and every vote counts.