Permanent changes to continuous disclosure laws and extension of temporary measures allowing virtual AGMs and electronic signing of documents
Corporate News - 23 February 2021
The Treasurer has introduced the Treasury Laws Amendment (2021 Measures No 1) Bill 2021 (Amendment Bill) which proposes to make permanent temporary changes to Australia’s continuous disclosure laws (which are set to expire in March 2021). As highlighted in our article last year, the changes modify the circumstances in which non-disclosure gives rise to liability. Under the amendments, companies and their officers will only be liable for civil penalty proceedings where the entity ‘knows or is reckless or negligent’ with respect to whether the information would, if it were generally available, have a material effect on the price or value of the securities.
In addition, the Amendment Bill proposes to amend the Corporations Act 2001 (Cth) (Corporations Act) to make clear that companies and officers will not be liable for misleading and deceptive conduct where the continuous disclosure obligations have been contravened unless the requisite “fault” element is also proven. The Treasurer has stated that ‘these changes strike the right balance between ensuring shareholders and the market are appropriately informed while also allowing companies to more confidently make forecasts of future earnings or provide guidance updates without facing the undue risk of class actions’.
As a reminder, listed entities must still comply with the obligation under ASX Listing Rule 3.1 to immediately disclose information that a reasonable person would expect to have a material effect on the price or value of the entity’s securities.
Virtual AGMs and electronic signature
The Amendment Bill also proposes to extend the ability to hold virtual AGMs, electronically distribute meeting materials and sign documents electronically to 15 September 2021. Interestingly, the Treasurer has announced that after 15 September 2021, member meetings will need to be conducted in-person and there will be no official change to the Corporations Act. The Federal Government will then conduct an opt-in pilot for 12 months for companies to hold hybrid AGMs. This will enable a proper assessment of the shareholder benefits of virtual meetings.
In terms of electronic signing and sending of documents however, the Federal Government has indicated that permanent legislative changes will be made to permit this beginning on 16 September 2021.
Please contact us at our Perth office on +61 89321 4000 or our Melbourne office on +61 39111 9400 if you require any further advice on any of the issues raised in this article.