Acclime’s corporate snapshot – April 2022.

Virtual AGM & electronic communications legislation passed

The federal Corporations Amendment (Meetings and Documents) Bill 2021, which we’ve discussed in previous Snapshots, passed Parliament on 10 February 2022, has received assent and is now law.

The changes enable companies to:

• Hold any combination of physical, hybrid and entirely virtual general meetings (subject to the entity’s constitution)
• Use technology for virtual meetings so members can participate orally and in writing, and execute documents electronically, including corporate agreements, deeds and minutes
• Send documents in hard or soft copy, giving members options for preferred format

These initiatives, long pursued by the Australian Institute of Company Directors (AICD), replace last year’s temporary relief, which had overridden individual constitutional limitations on virtual meetings and provided for e-communication with shareholders. Those measures expired on 30 March 2022.

From 1 April 2022, companies wishing to hold virtual AGMs will need to ensure that their constitutions allow it (with shareholder approval if required) or seek relief from ASIC.

Human rights commission seeks tougher standard on harassment

One of the key recommendations of the Australian Human Rights Commission (AHRC)’s Respect@Work report has now been opened for consultation by the Federal Government.

The AHRC called for a new positive duty under the Sex Discrimination Act 1984 for employers to take reasonable and proportionate measures to prevent workplace sexual harassment. The duty would be accompanied by new AHRC enforcement powers.

The call for a positive duty has been backed by the AICD, which points out that employers are already under a range of obligations regarding harassment prevention, but that such a move would shift the obligation from the employee having to make a complaint, to the employer ensuring the occasion does not arise.

Contentious proxy reforms hit senate wall

Back in December, Treasurer Josh Frydenberg announced new rules concerning proxy advisors.

The Treasury Laws Amendment (Greater Transparency of Proxy Advice) Regulations 2021 were designed to extend Australian Financial Services (AFS) licensing rules to proxy adviser activities, so that advisors would need to be independent of their clients, and the entities they advise about would receive the advice simultaneously with the client.

Proxy advice firms and the Australian Shareholder Association were alarmed by the reforms, while the Australian Business Council and AICD supported them. Ultimately Senator Rex Patrick’s 10 February disallowance motion brought the regulations undone.

You can read Minter Ellison’s analysis here, and the AICD’s here.

Bringing structure to shareholder class actions

Readers will recall that last year saw the imposition of continuous disclosure rules upon shareholder class action litigants.

The federal Senate is now looking at placing a ceiling on the amount of settlement funds that can flow to litigation funders, ensuring that at least 70% of such funds find their way to the litigants themselves. The Law Council of Australia examined the implications of such a measure in a Treasury submission last year.

Three recent, unsuccessful shareholder class actions in Australia – the Iluka, Worley Parsons and Myer cases – have ensured a continued focus on this expanding area of legal practice.

Sources of information: Australian Institute of Company Directors (AICD); Law Council of Australia; Minter Ellison; Lawyers Weekly; William Roberts Lawyers; Herbert Smith Freehills.

Disclaimer: Acclime’s corporate snapshot is only intended to provide a general overview on matters of interest. It is not intended to be comprehensive and is not legal advice. We attempt to ensure that content is current but we do not guarantee its currency. You should seek legal and/or professional advice before acting or relying on any content.