Can not-for-profit 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. These amendments apply to not-for-profit companies but do not apply to Companies that are charities registered by the Australian Charities and Not-for Profits Commission (“ACNC charities”).

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

The changes also apply to the holding of directors’ 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.

General meetings – the previous position for not-for-profit Companies

Before these amendments, under the Corporations Act:

  • a meeting of a Company’s members had to be held at a reasonable time and place[1] and at two or more venues using any technology that gives the members as a whole a reasonable opportunity to participate[2] which meant that a general meeting had to have at least one physical location and could not be held wholly virtually;
  • documents relating to members’ meetings had to be posted to members unless the member had agreed to the document being sent via email or fax and other specific requirements were met, and some documents could only be sent by post;
  • documents relating to a meeting, such as minutes, generally had to be signed in hard copy; and
  • generally, minutes had to be kept in hard copy.

General meetings – the new position for not-for-profit Companies

The amendments to the Corporations Act apply to “Chapter 2G meetings”, that is, meetings of a Company’s members and meetings of a Company’s directors (including meetings of a committee of directors). Under the amendments:

  • Companies now have the option to hold a Chapter 2G meeting wholly virtually, or at one or more physical locations, or using a combination of those methods (a “hybrid meeting”);
  • there are new rules for:
    • working out the place where the Chapter 2G meeting is taken to be held;
    • the content of the notice of meeting;
    • the giving of proxies electronically;
    • how persons entitled to attend the meeting are to be given a reasonable opportunity to participate (including to exercise a right to speak) and the opportunity to vote; and
    • how documents tabled at the meeting are made available to the persons entitled to attend;
  • the meeting must be held at a time that is reasonable at the place where the meeting is taken to be held;
  • the default method of voting at a virtual or hybrid meeting is voting by poll (rather than a show of hands) unless the Company’s constitution provides otherwise;
  • documents relating to meetings and resolutions may be signed and given electronically, subject to conditions that:
    • the document is readily accessible and useable for future reference; and
    • a person may elect to opt out of receiving electronic notices (other than documents relating to directors’ meetings) and must be informed of this right; and
  • technologies that can be used to provide a document electronically include email, SMS, apps and other technologies yet to come.

Director’s meetings – the new position for not-for-profit Companies

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[3].

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.

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] Section 249R

[2] Section 249S

[3] 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.