AGM season 2023: reminders and considerations
As companies once again make preparations for the upcoming AGM season, we have provided below a list of key items to be considered in the planning process (including in respect of preparing the AGM notice). We also touch on shareholder activism with environmental, social or governance (ESG) objectives being a key trend companies should be aware of and consider in the context of their planning.
Review and timing
- A company’s AGM must be held within five months of the end of its financial year (so by 30 November for companies with a 30 June financial year end). The proposed date for the AGM needs to be determined well in advance to allow for proper planning, and it is important to check the company constitution to ensure any other timing requirements are adhered to.
- ASX has recently released Compliance Update no. 06/23 reminding listed entities that draft notices of an AGM containing Listing Rule resolutions must be submitted to ASX for review before they are sent to members, and that ASX may take five business days to advise whether it objects to a draft notice (and may extend that deadline if it requires further time to review the document). Further, if any waivers from any Listing Rules are required in connection with the notice of AGM, ASX has flagged that additional time to review should be accounted for, as the five-business-day period does not include the time needed to obtain a waiver. As such, if you are considering applying for a waiver, make sure you have allowed plenty of time (which can range between approximately 10 – 20 business days after lodging the waiver application with ASX).
Announce the date of the AGM and closing date for director nominations for listed entities
- A listed entity must announce the date of its AGM and the closing date for director nominations via ASX at least five business days before the closing date for receipt of nominations for the election of directors. This can be done by giving ASX a ‘corporate calendar’ setting out these dates, as well as any other key dates the company wishes to include.
- Announcement of the date of the AGM should be made when the time and plan for the AGM is finalised. This announcement is separate (and prior) to the release of the full notice of the AGM, so can be easy to overlook.
- Companies wishing to hold an entirely virtual meeting may only do so if this is permitted by their constitution (or if specific ASIC relief is obtained).
- If you do not currently have such an ability under your constitution, it may be worth considering using the AGM as an opportunity to amend your constitution to allow for this.
- Members must be provided with a ‘reasonable opportunity to participate’ in the AGM. This means holding the AGM at a reasonable time and if held utilising technology, that technology must be reasonable and allow for members to make comments or ask questions, both verbally and written.
Check for any required resolutions, and renew capacity
In addition to the usual AGM resolutions (remuneration report and director rotations and elections), remember that:
- if a strike was received against the remuneration report at last year’s AGM (ie 25% or more voted ‘no’), you need to be prepared for a spill resolution in the event that a second strike is received;
- if it has been three years since your proportional takeover provisions were renewed, consider if these should be renewed again;
- if amendments have been made to the terms of the entity’s employee equity plans (including due to the implementation of the employee share scheme provisions in the Corporations Act and subsequent ASIC legislative instruments in late 2022) or it has been three years since your employee equity plan(s) were renewed, these should be renewed again;
- for listed entities, if you have issued equity securities during the past 12 months, these should be considered for ratification to preserve placement capacity under Listing Rules 7.1 and 7.1A; and
- for listed entities with a market capitalisation of less than $300 million or who are not in the S&P/ASX300 Index, you should consider seeking approval under Listing Rule 7.1A for an additional 10% placement capacity.
Confirm who can vote
- It is important to appropriately determine who can vote on each resolution proposed at the AGM. Mandatory voting exclusions will apply to some resolutions (ie in relation to management remuneration) so make sure you identify which resolutions these will apply to, and implement steps to ensure the voting exclusions are complied with.
- All Listing Rule resolutions must be decided by a poll rather than a show of hands and it is considered proper governance for all resolutions of listed entities to be decided by poll to ensure that there is a properly managed voting process with appropriate record keeping.
- Members with 5% of the votes that may be cast at the meeting may request that the company appoint an independent person to observe the taking of the poll and prepare a report on the conduct of the poll. In addition, members with 5% of the vote that may be cast at the meeting may appoint an independent person to scrutinise the outcome of the poll and prepare a report. Your legal advisors and share registry should be your first points of contact if you receive such a request.
Delivery of AGM notices
Companies and registered schemes can send notices of meeting to members:
- in a physical form;
- through physical notice or an electronic notice that allows for electronic access to the document;
- by sending the document itself electronically; or
- in respect of annual financial reports only, making it available on a website.
Members are entitled to make an election as to their preferred means of receipt, either on a standing basis or through ad hoc requests relating to particular documents. Companies will need to be particularly mindful of these elections, and make provision for members to indicate their preferences.
Lastly, be prepared for shareholder activism in relation to ESG objectives.
We have seen that members increasingly view corporate attention to ESG criteria as being closely linked with business resilience, competitive strength, and financial performance. As such, companies should be prepared for difficult questions from their members on their approach to ESG.
Boards of listed entities should be establishing oversight of ESG matters as a priority, and should be cognisant of practices of industry peers and the expectations of investors and stakeholders. Entities should review their ESG-related disclosure practices, and ensure they are up to date with ASIC’s guidance on the topic. Watch our video on ESG trends to watch for more information.
Hall & Wilcox has extensive experience advising listed and unlisted entities on all aspects of their AGMs, including virtual and hybrid meetings. If you require any assistance with the holding of your AGM, please contact us.
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