'Mired in the 19th century': Governance Institute calls for COVID-19 changes to Corporations Act to be made permanent
Changes during the COVID-19 pandemic that allowed organisations to hold virtual AGMs and execute documents electronically should be made permanent, Governance Institute of Australia has said.
Prior to recent modifications to the Corporations Act, many companies were struggling to organise their shareholder meetings in accordance with the law as well as the COVID-19 distancing requirements. Many were also scrambling to execute hard-copy legal documents.
However, these measures enabling companies to hold virtual AGMs and execute documents electronically are due to expire on 6 November 2020.
With around 970 listed companies normally holding their AGM after this expiry date, businesses are looking for certainty, CEO of Governance Institute, Megan Motto said.
'When COVID-19 struck, we saw so many organisations struggling to operate under laws that do not contemplate the use of technology,' Ms Motto said.
'These recent changes are important, pragmatic and sensible — but they need to be made permanent.'
Governance Institute has made these recommendations as part of a submission to the Senate Select Committee on the use of technology by business during the COVID-19 crisis.
'These changes should form the basis for more permanent reforms that apply after the pandemic restrictions are lifted as they address longstanding issues that impact the ability of companies to operate effectively and efficiently,' Ms Motto said.
'The Government should make the most of this valuable reform opportunity to ensure Australia’s corporate regulatory infrastructure is certain, coherent and fit-for-purpose.'
Governance Institute recommends the Corporations Act be permanently amended to bring about the following reforms:
- Provide companies with the option to use technology to hold virtual or hybrid meetings.
- Allow companies to digitally engage with their shareholders by providing that shareholders who fail to opt in to receive their notices of meeting by mail or email are deemed to receive them if the company makes them universally available on their website.
- Enable companies to execute documents electronically.
'The Corporations Act is currently stuck in the 19th century when the world operated in hard copy,' Ms Motto said.
'We have seen some updates over the years but key provisions of the legislation still do not allow for the use of technology and will serve to hold back business, and Australia’s post-pandemic recovery.'
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Media contact: Hannah Edwards, firstname.lastname@example.org
About Governance Institute of Australia
A national membership association, advocating for a community of 40,000 governance and risk management professionals from the listed, unlisted and not-for-profit sectors. Our mission is to drive better governance in all organisations, which will in turn create a stronger, better society.