When can a physical meeting become a virtual meeting

The proceedings related to an extraordinary general meeting (EGM) called by Keybridge Capital Limited (Keybridge), in its capacity as a shareholder of WAM Active Limited (WAM Active), pursuant to s 249F of the Corporations Act 2001 (Cth) (the Corporations Act).  The EGM was convened as a physical meeting.  However, the directors of WAM Active issued a notice changing the venue of the meeting called by Keybridge from a meeting to occur at a physical location, to a wholly virtual meeting.  Due to the drafting included in WAM Active's constitution, the Court found that this change of venue was valid regardless of the fact that the EGM was convened by Keybridge as shareholder.

Facts

• On 14 February 2022, Keybridge convened a meeting of WAM Active under s 249F of the Corporations Act (the Keybridge Notice). 
• The Keybridge Notice gave notice that a general meeting of WAM Active would be held via a physical meeting (the Melbourne Meeting) to approve the appointment of six individuals (the Keybridge Nominees) as directors of WAM Active (the Keybridge Resolutions).
• On 15 February 2022, WAM Active’s board decided to change the venue of the Melbourne Meeting to an online venue, so as to allow (in the board’s view) as many members as possible to attend, participate and vote in the meeting.  Further, COVID-19 restrictions were still in place in Victoria and WAM Active’s board were concerned about the health and safety of shareholders and staff attending any in-person meeting - in particular, that the venue of the Melbourne Meeting could not safely hold the number of shareholders who may have attended the Melbourne Meeting.
• Keybridge notified WAM Active that Keybridge would proceed with the Melbourne Meeting in its physical location and would not participate in the virtual meeting.  
• WAM Active proceeded with the virtual meeting.  The Keybridge Resolutions were not passed.

The Court was asked to consider:

• whether the directors of WAM Active had the power to change the venue of the s 249F meeting called by Keybridge so that it took place wholly virtually; and
• if they did, whether they effectively exercised that power. 

The power to change a shareholder convened meeting to a wholly virtual meeting

At the relevant time, temporary pandemic-related measures permitted companies to hold wholly virtual meetings.  The general meeting called by Keybridge, to be held on 17 March 2022, was to be held during a time in which the Corporations Act permitted companies to hold wholly virtual meetings.

Justice Button found that it was open to the board of WAM Active to change the venue of the meeting from the physical location, to a wholly online meeting primarily because article 5.1(c) of the WAM Active constitution provided that the directors could postpone, cancel or “change the venue” for a general meeting.  Her honour found that there was no basis for construing the word “venue” to limit it to a physical location, so as to preclude the directors from changing a meeting at a physical venue to a wholly online meeting. 

Construed objectively, article 5.1(c) authorised the directors to change the time and place at which general meetings initially convened by any of the means stated in article 5.1(a) were held - that included general meetings called by a member pursuant to section 249F.

Whether the power to change the venue of the general meeting was validly exercised

Keybridge claimed that the board’s failure to change the meeting to a hybrid meeting — characterised as a “half-way house” — supported its contention that the board had not exercised its powers for proper purposes and that there was an improper use of the power to change the venue of the meeting, which rendered the change, and therefore the resolutions passed at that meeting, ineffective.

Justice Button found that the directors’ exercise of the power to change the venue of the s 249F meeting to a wholly virtual meeting did not operate to “frustrate the right conferred by s 249F”.  The change of venue in no way undermined the statutory right of a shareholder in Keybridge’s position to call a general meeting and, in fact, enhanced shareholder participation in the meeting. 

Author: Miriam Kleiner, Partner.