In brief 6 min read
In May, the Federal Treasurer used emergency powers to temporarily modify the Corporations Act 2001 (Cth) to facilitate the holding of public company shareholder meetings virtually, without any attendees required to be physically present.
As superannuation trustees are well aware, last year Member Outcomes introduced into the Superannuation Industry (Supervision) Act 1993 (Cth) requirements for annual members' meetings. While some trustees have held their inaugural member meetings, many others are yet to be called.
We take a look at the SIS Act requirements, ASIC statements, and the implications for holding members' meeting in the current environment.
Superannuation trustees should:
- consider the platforms available to facilitate electronic participation in members' meetings and the asking of questions;
- prepare for, and facilitate, the attendance of the chair, directors, actuary and auditor at the meeting, while managing messaging to members to participate electronically rather than attend in person (assuming social distancing measures will remain in place for some time); and
- consider the meeting in the context of broader communications strategies relating to COVID-19, the types of questions members are likely to ask in the current environment, and which questions are best taken on notice and answered within one month after the meeting.
No. In its recent Q&As, ASIC indicated it does not propose to provide relief from annual member meeting requirements for superannuation funds.
The Q&A states that 'most' trustees have until 31 December 2020 to provide members with notice of an annual members’ meeting1, and that, for these trustees, the meetings can be held as late as March 2021. ASIC proceeds to say that, by this time, the current challenges with holding a physical meeting may not persist. Perhaps ASIC knows something about the progress of a vaccine that we don't. In the event we are socially distancing into 2021, Member Outcomes had (somewhat) greater foresight than its Corporations Act counterpart, contemplating that members' meetings can be facilitated electronically – although, as we detail below, there are still issues.
The SIS Act doesn't contain a standalone provision permitting the conducting of virtual members' meetings. A passing reference is made in the notice of meeting content requirements that, if a members’ meeting is to be held by electronic means, details of how the meeting can be attended electronically are to be provided in the notice.
It appears so, based on a literal reading of s29P(3). The time and location of the members’ meeting must also be stated in the notice of meeting (remember, these are offence provisions). In the current environment, this places trustees in the somewhat awkward position of issuing a notice of meeting to members, stating where the physical location of the meeting will be (attended by the trustee board, actuary and auditor (see below)), while encouraging members not to attend and instead participate via electronic means. By contrast, the Treasurer's temporary determination for public companies facilitates the holding of meetings entirely by virtual means. The Explanatory Memorandum to Member Outcomes suggests more flexibility was intended, including to allow annual member meetings to be held entirely by electronic means. On the requirement that a location be provided in the notice of meeting, making clear that the meeting will be held solely by electronic means and providing website or platform access details, we would expect, be considered sufficient to tick off the technical content requirements of the notice.
The SIS Act isn't clear on this point. All members must be given notice of the meeting, and the notice must state the location and time of the meeting. That said, so long as members are given a reasonable opportunity to ask questions (which can be by electronic means, provided details are set out in the notice of meeting), a trustee may form the view that a member may be turned away from the physical meeting in circumstances where members were given a notice of meeting facilitating access to an electronic platform by which members can view the meeting and ask questions.
Yes. Absent ASIC providing further relief, for a corporate RSE licensee, the SIS Act says the meeting must be attended by the chair, a sufficient number of directors to form a quorum under the governing rules of the fund, and any non-director responsible officers, the actuary and the auditor. Again, these are offence provisions. The only exception available is where those persons have a 'reasonable excuse'.
Regardless of how the meeting is facilitated, the SIS Act requires that members be given a reasonable opportunity to ask questions. It does not stipulate that the meeting must provide members with the opportunity to speak (this is in contrast to the Treasurer's temporary determination for public companies, which refers to the requirement to facilitate, by virtual means, any requirements to speak at the meeting). ASIC, in its Q&As, says it expects trustees to hold members’ meetings in a manner that enables member participation and discussion. Further, the trustee, its officers, and the fund's auditor and actuary are under a legal obligation to answer questions asked of those persons at the meeting.
This raises a few considerations:
- Providing a technological platform that allows members to submit typed questions (as opposed to utilising a phone line and audio) would seem to us to satisfy the SIS Act requirements (although we note ASIC's views above on 'facilitating discussion').
- Members may ask particularly detailed questions about the impact of COVID-19 on their account balances, asset allocation and the fund's valuation policies, so trustees should be prepared. A question can be taken on notice if it is not reasonably practicable for it to be answered at the time, but the question must be answered within one month of the meeting.
Trustees can elect not to answer a question at all; however, the circumstances are limited – ie if the question is irrelevant to the fund, if answering the question would breach the governing rules of the fund or applicable law, or if answering would cause detriment to members as a whole. There are also limited circumstances where the trustee and actuary can decline to answer a question.
Yes. The SIS Act requires that minutes of the members’ meeting be prepared, and that those minutes include the answers provided in response to questions asked at the meeting (whether those answers are provided at the meeting or within the one-month period afterwards). The minutes must also be made available to all members, on the fund's website. This heightens the stakes. Trustees, and others, must be prepared to answer questions on the spot, in a form they will be comfortable with being disclosed in written form on the fund's website. Alternatively, the respondent will need to promptly form the view it is not reasonably practicable to answer the question and provide a formal response within one month.
The SIS Act does not provide for withdrawal of a notice of meeting. As such, trustees should plan ahead.
When Member Outcomes was introduced, the first annual members' meetings were required to be held for the entity's year of income beginning on or after 8 April 2019. Therefore, for a fund with a 30 June 2020 year end, it must give a notice of meeting no later than six months after the end of the income year (31 December 2020) (section 29P(3)(d)(i)); hold the meeting within three months after the notice is given (s29P(4)); and, otherwise, the notice must be provided no earlier than 21 days before the date of the meeting (s29P(3)(d)(i)).