Update on recent changes to the Corporations Act affecting members’ rights to elect to receive company documents
September 2022 | Insights | Tina Lee, Anne Robinson and Samuel Chu
- Members of companies can elect to receive certain company documents in a particular form e.g. hard copy, electronic or not at all
- Members can make ad-hoc requests to receive documents in physical or electronic form
- A company is obligated to notify members of their rights regarding receipt of documents.
Companies, especially those intending to hold forthcoming General Meetings or Annual General Meetings, should be aware of new provisions in the Corporations Act 2001 (Cth) (Corporations Act) that affect the:
- rights of members of companies to elect to receive certain company documents in a particular form. This could be physically, electronically or (in some cases) not at all; and
- obligations of companies to give notice of members’ rights to elect to receive documents, and to comply with any election made by a member.
These new provisions formed part of the broader package of virtual governance reforms to the Corporations Act that were introduced earlier this year by the Corporations Amendment (Meetings and Documents) Act 2022 (Cth). For more information, please see our previous update on this broader package of virtual governance reforms here. These provisions are not ‘switched off’ for, and thus apply to, charities registered with the Australian Charities and Not-for-profits Commission.
What rights do members have under these new provisions?
A member may elect (Corporations Act s 110E):
- to be sent certain documents in physical form or electronic form (Corporations Act s 110E(2)); or
- for companies that are not registered charities, not to be sent some or all documents relating to a company’s annual financial reporting. At present there are no other documents prescribed by regulations that you can opt out of receiving (Corporations Act ss 110E(4), 110E(5)).
A member also has the right to make ad-hoc requests to receive documents in physical or electronic form (Corporations Act s 110J).
What obligations do companies have under these new provisions?
A company has an obligation to give notice of the rights of members to elect to receive documents in a certain form, to not receive documents, or to make ad hoc requests to receive documents in a certain form. Failing to give this notice is an offence of strict liability, and must be given (Corporations Act s 110K):
- at least once in each financial year directly to members; or
- through being made readily available on a website.
A company must take ‘reasonable steps’ to comply with any election made by a member. Failure to comply with such an election is an offence of strict liability (Corporations Act ss 110F, 110G).
What documents do these new provisions apply to?
Documents these new provisions apply to include (Corporations Act s 110C):
- those documents relating to a meeting of the members of the company (including information about resolutions to be considered by the members);
- annual financial reports (if such reports are prepared in accordance with the company constitution, but NB: obligations for charities to produce such reports have been separately ‘switched off’ under Corporations Act s 111L);
- the notice of members’ rights referred to in Corporations Act s 110K; and
- other documents prescribed by regulations (no such documents are prescribed at present).
Implications of these new provisions for your organisation
Your organisation should take steps to comply with these obligations under the Corporations Act going forward, especially if your organisation holds general meetings or Annual General Meetings.
Please contact Tina Lee or Anne Robinson AM if you have any queries regarding the implications of these obligations for your organisation, or if you would like assistance to comply with these obligations going forward.