Special rules for during the pandemic

A major advantage of the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (CATSI Act) is that it was designed as a special measure intended to provide the Registrar with flexibility in administering it so that corporations can maintain the best possible governance. 

Below we’ve outlined how the Registrar is using his unique powers and the flexibility of the legislation to help corporations manage the threats and impacts of COVID-19, through a set of special rules. See also the page on extensions for annual reporting and AGMs.

Ideas? If you have ideas about other measures or actions the Registrar can take to assist corporations, please let us know.

The risks associated with the COVID-19 pandemic will require many corporations to adopt innovative practices in relation to general meetings and directors’ meetings. Restrictions on large gatherings and travel, and members’ concerns about attending meetings will affect a corporation’s ability to meet and make decisions.

The Registrar has developed a set of special rules designed to help corporations respond appropriately to the COVID-19 pandemic. The special rules allow a corporation to:

  • postpone or cancel a meeting after it's been called
  • more easily pass resolutions without meeting
  • meet virtually.

A corporation can request the Registrar exercise his power under the CATSI Act to change their rule book to include the special rules, without needing to pass a special resolution for this purpose. These rules include an end date, which can be reviewed by the Registrar in due course.

To ensure the special rules are consistent with the CATSI Act, the Registrar has made complementary determinations under section 225-15 exempting corporations that adopt the special rules from certain provisions in Chapter 5 of the CATSI Act.

>> Get a copy of the special rules for COVID-19 [Word doc] last revised 21 September 2021

Do you need the special rules?

The special rules may not be needed. Many corporation rule books already allow the corporation to use technology (phones and video conferencing) to hold a meeting in multiple places. The Registrar encourages corporations to use these if possible. Check what your rule book says.

Other corporations may have rule books that are not adequate and workable in the context of the risks associated with the spread of COVID-19. The rules that may be problematic for corporations in the current context relate to the conduct of both general meetings and directors’ meetings. These risks also affect the ability of corporations to make appropriate changes to their rule books.

What do the special rules cover?

The problematic rules include:

Place rules

  • rules that require meetings to be held in a particular place or places.

A related problem is the requirement in section 201-60 that a ’general meeting must be held at a reasonable time and place’. This may limit the ability of corporations to conduct meetings entirely on electronic platforms. The Registrar has the power under section 225-15 to exempt corporations from the potentially strict requirement of section 201-60.

Similarly, the provision in section 201-65 for general meetings to be held at two or more ‘venues’ could be interpreted to mean two or more physical places. This may also require an exemption under section 225-15.

Attendance rules and voting rules

  • rules that limit a member or director’s ability to attend meetings by electronic conferencing facilities including telephone, video, and social media platforms.
  • rules that require voting by a show of hands may be challenging to corporations conducting meetings on electronic platforms.

The Registrar’s special rules intend to allow corporations maximum flexibility to hold meetings using any suitable technology, including social media platforms, online platforms, mobile platforms or other applications.

Postponement and cancellation rules

  • rules that do not allow meetings to be postponed or cancelled once they’re called.

The CATSI Act is silent on the power of corporations to postpone or cancel general meetings and directors’ meetings. The common law provides that, generally, meetings may only be postponed or cancelled if the constitution of the body corporate provides for it. There is uncertainty as to whether the law permits postponements or cancellations in exceptional circumstances such as the COVID-19 pandemic.

The Registrar’s special rules intend to allow corporations to postpone or cancel meetings after notice is given where appropriate to do so.

Circulating resolution rules

  • rules that circulating resolutions (those made without a general meeting or directors’ meeting) must be signed by all members or directors, as the case may be.

These rules, which reflect the requirements of the CATSI Act, reduce the potential utility of circulating resolutions in the context of the COVID-19 pandemic in which more decisions may have to be made by way of circulating resolutions. An exemption under section 225-15 to some inconsistent requirements of the CATSI Act may be necessary to ensure the rule book changes are effective.

The Registrar’s special rules intend to allow corporations to seek relevant members’ or directors’ endorsement of resolutions so they may continue conducting business if in-person meetings are not feasible. This may include using text, social media or other applications to vote, where an electronic record is created, including reasonable verification of identity, and retained as part of the corporation’s records (eg including screenshots of text messages or social media).

Directors’ meetings rules

  • rules that require directors’ meeting to be held at particular times, or within particular timeframes.

Under section 212-1, a corporation’s rule book must specify how often directors’ meetings are to be held. There will be instances where directors’ meetings cannot be held by any means due to circumstances relating to the pandemic.

The Registrar’s special rules intend to allow directors’ meetings to be held less frequently if they cannot be conducted using technology.

Native title meetings (registered native title bodies corporate)

It is important to note that the special rules for COVID-19 do not apply to meetings with common law holders for the purpose of consultations under the Native Title (Prescribed Body Corporate) Regulations 1999 (NT Regulations). RNTBCs should consult their native title representative body or native title service provider to ensure they continue to meet the requirements of the NT Regulations. 

Requesting the Registrar change your corporation’s rule book

Corporations that would like to adopt the special rules for COVID-19 need to request the Registrar use his powers to amend the rule book to apply the special rules. 

The request needs to:

  • include evidence that the majority of the directors agree to adopting the special rules for COVID-19. This may be in the form of a signed statement from a director. 
  • say what measures the corporation will implement to ensure transparency during this period. This could include distribution of directors’ reports and AFS and processes for members to ask questions of directors where both the question and response can be accessed by other members.

>> Example wording of statement from directors to adopt the special rules [Word doc]

If you have already adopted the special rules and are seeking to extend the arrangement then you’ll need to request the registrar exercise his power to change rule 4 to a revised end date. The registrar will consider how long you’ve had the special rules in place, covid restrictions relevant to your corporation’s governance practice and whether the situation makes it too difficult for members to have a say.

If you think adjusting your rules for the long term is right for your corporation then we encourage you to revise your rules and put them to your members for decision.

Don’t think the special rules will help your corporation?

If your corporation concludes that the special rules for COVID-19 would not be effective in allowing the corporation to carry out meetings and make decisions, and there is no other practical way to undertake the business of the corporation, then you may apply for an exemption or extension of time. 

In your application please describe the measures your corporation plans to implement to maintain transparency during this period. For example, distributing directors’ reports and audited financial statements, and processes for members to ask questions of directors in a way that both the question and response can be accessed by other members.