New ASIC guidelines for upcoming AGMs and financial reporting requirements

On 20 March 2020, the Australian Securities and Investment Commission (ASIC) published a media release outlining the relief and other considerations ASIC is providing to entities that are no longer able to hold their annual general meetings (AGM) because of COVID-19 and the Australian Government’s response to it.

ASIC has determined that although they are unable to change the Corporations Act 2001 (Cth) (Act) to specifically allow the following considerations, they have taken a “no action” position on:

• extensions to AGM deadline: ASIC will provide a two month extension on the requirement for entities whose end of financial year falls on 31 December 2019 and that would ordinarily be required to hold their AGM by 31 May 2020 (under s 250N(2) of the Act)
• hybrid/virtual AGMs: where an entity mentioned above decides to meet the 31 May 2020 deadline by holding a virtual AGM, ASIC will take no action on any non-compliance with the provisions of the Act that restrict the holding of a virtual AGM—provided all members are given a reasonable opportunity to participate, including:
  • members being able to ask questions of the auditor and about management, and
  • voting occurring by a poll rather than a show of hands.
• supplementary notices: where an entity has already issued notice of an AGM to be held before 31 May 2020, ASIC will take no action in relation to entities that make a supplementary notice and do not comply with s 248J of the Act, provided their supplementary notice is sent electronically:
  • at least two business days before the meeting is held, and
  • by way of:
    • electronic message (if the member has provided the relevant details)
    • a notice on the entity’s website, and
    • a market announcement if the entity is listed on a market.

This relief has not been extended, at this stage, to entities that have a requirement to hold an AGM under s 250N(1) of the Act, because the entity is in its first 18 months of operation. If your company is subject to this requirement and is likely to be unable to hold an AGM due to COVID-19 and associated Government restrictions, an application can be made to ASIC for specific relief.

ASIC has also noted that it is monitoring the ability of entities to meet financial reporting obligations. ASIC has taken the view that currently there is no indication that entities are unable to meet these obligations. As such, no relief has been provided to entities to extend deadlines for financial reporting at the time of writing.

In addition, ASIC has determined further relief will be granted to entities through the following measures:

• suspension of activities: entities will not have to conduct consultations and regulatory reviews and reports (including ASIC reports on executive remuneration, updating internal dispute resolution guidance and consultation papers on managed discretionary accounts)
• suspension of supervisory work: ASIC will suspend all onsite supervisory work
• notices: when issuing information gathering notices, new guidelines have been issued to staff to ensure they are mindful of the potential disruption that the notice may cause to the company 
• relief/waivers: where warranted relief/waivers will be provided to entities needing to comply with regulatory requirements, and
• remediation: ASIC will continue to work with financial institutions to ensure any outstanding remediation due by these financial institutions is paid to customers.

During this period ASIC will continue its enforcement activities, registry operations and services, receipt of whistleblower notifications, breach and misconduct reports and general contact points.