Governance Institute appeared before the Senate Select Committee on Financial Technology and Regulatory Technology on 30 June 2020 and gave evidence on changes that should be made to the Corporations Act 2001 to bring it into the 21st Century.
We argued that while recent changes introduced by the Federal Government permitting companies to hold virtual general meetings, deliver notices of meetings electronically and execute documents virtually assist companies to address some of the challenges created by COVID-19, they are only temporary, and will expire on 6 November 2020. 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 having regard to the wide use of technology across the business and private sectors.
We recommended that the Government amend the Corporations Act to bring about the following important 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 either mail or email are deemed to have received them if the company makes them universally available on their website
- enable companies to execute documents electronically.
Our evidence was well received by the Senate Select Committee.
In a media release issued after we gave evidence, the chair of the Senate Select Committee, Senator Andrew Bragg commented that ‘Virtual AGM’s, electronic signatures replacing “wet” signatures and letting people execute documents electronically are all no brainers’. The Senator noted that ‘the Corporations Act requirements were stuck in 2001, a time when Australia relied upon dial-up internet, pay phones, physical mail and Harry Potter was the top film. Our evidence also resulted in him commenting ‘there’s a pressing need to amend and modernise the Corporations Act to embrace these changes beyond the pandemic.’
In appearing on Governance Institute’s behalf, CEO, Megan Motto provided some ‘back of the envelope’ figures on the financial and environmental costs and waste incurred each year by companies having to comply with outdated provisions of the Corporations Act that require mailing of notices of meeting.
Despite many campaigns over a number of years, listed companies only hold email addresses for about 50 per cent of their shareholders. We estimated that the printing and mailing costs incurred by the ASX top 20 companies in sending out physical notices of their AGM’s to those who have not provided email addresses equates to somewhere in the vicinity of $13 million per year.
In addition, there is the paper used to produce physical notices of meetings, much of which ends up in landfill. If you calculate an average notice of meeting to be 16 pages long, that translates to 8,000 trees per year for the ASX 20 companies alone which could be saved if companies could communicate with their shareholders electronically.
The Senate Select Committee is due to present its final report by 16 April 2021.
From left to right: Graeme Blackett, Deputy Chair, Legislation Review Committee. Megan Motto, CEO, Governance Institute and Peter Smiles, member, Corporate and Legal Issues Committee giving evidence to the Senate Select Committee on 30 June 2020.
Modernising business communications
Governance Institute also welcomed the Government’s recent announcement that modernising business communications will be included in the Government Deregulation Taskforce. The assistant minister to the Prime Minister and Cabinet, Ben Morton has announced that modernising business communications will be one of the next two priority areas for the Government Deregulation Taskforce which will assist COVID-19 recovery by cutting red tape.
‘Commonwealth and state laws have not kept pace with the way Australians engage with digital communications and add compliance costs, for example by mandating that businesses use certain methods of communicating or storing information preventing them from using electronic delivery or adopting new technologies such as blockchain applications’ he stated.
Governance Institute has long advocated for technology neutral distribution of meeting materials. Our submission to the Deregulation Taskforce can be found here
Adding value to governance in aged care
The aged care sector plays a vital role in our social fabric by caring for some of Australia’s most vulnerable people. More than one million people currently receive aged care services in Australia — by 2050 it is expected that more than three and a half million Australians will be receiving aged care services as the Australian population ages and advances in medical technology increase Australians’ life expectancy.
Governance Institute has revised and relaunched our Adding value to governance in aged care guide to help the embattled sector navigate an increasingly complex set of regulatory and operational challenges.
The guidance is ‘mandatory reading’ for anyone currently on the board of an aged care provider — whether they are new in the role or not — as well as anyone considering taking on a board position.
Changes incorporated in the revised guidance include the latest statistics on the industry showing its growth and likely further increases, a copy of the Aged Care Quality Standards, plus new content on clinical governance.
The relaunched aged care governance guidance covers:
- The unique challenges of governance in a changing aged care sector, including:
- a more competitive environment with less reliable funding from government.
- the user-pays system. As consumers are required to pay more, they will become more demanding as to the type and standard of care they receive.
- many consumers are entering aged care much later in life with increasingly complex health care needs. Consequently, medical and clinical care needs are more complex and acute.
- Issues which a board should consider when inviting a new member onto the board of an aged care provider.
- Issues you should consider before accepting an invitation to join the board of an aged care provider.
- A checklist of information a potential board member should receive or request.
- A look at the stakeholders of an aged care provider, and ways to build relationships.
The guide is freely available to download from our website here and is a valuable inclusion in the board pack for boards of aged care providers.
Paid pandemic leave cost burden should be absorbed by government — not business — 28/07/2020