Why is this Act important?
The Treasury Laws Amendment (2021 Measures No. 1) Act 2021 (Cth) (Act) allows companies, from 14 August 2021, to (once again) use electronic means, until 31 March 2022, to execute documents, hold meetings, provide notices relating to meetings and keep minutes, ensuring continuity of operations during the period of restrictions imposed by Government as a result of the COVID-19 pandemic (the Pandemic).
What does the Act do?
Under the Corporations Act 2001 (Cth) (Corporations Act) company documents must be executed by all parties physically signing the same hard copy document, and constraints are imposed on companies using alternative technologies to conduct meetings under the Corporations Act.
With the arrival of the Pandemic last year, the Government introduced various determinations (Determinations), most recently the Corporations (Coronavirus Economic Response) Determination (No. 3) 2020 (Cth), which allowed for companies to electronically execute documents and hold meetings virtually. The latest Determination expired on 21 March 2021 and companies have since had to rely on pre COVID-19 provisions of the Corporations Act requiring documents to be executed with ‘wet ink’. Given the difficulties with holding physical meetings during the Pandemic, the Australian Securities and Investments Commission adopted a ‘no-action’ stance from March 2021 to facilitate virtual meetings, despite the expiry of this Determination. Given the latest Pandemic restrictions, the Government has now introduced this Act which expands upon the recent Determinations and provides temporary amendments to once again facilitate electronic execution of documents and virtual meetings.
1. Execution of documents
The Act allows documents executed by a company under section 127 of the Corporations Act (either with our without a common seal), including documents executed as a deed, to be signed by electronic means. Specifically (amongst other things):
- a secretary, director or witness may sign a company document electronically (or by wet ink);
- a copy or counterpart of a document may be signed;
- the signature of any other person on the document is not required on the copy or counterpart;
- the copy or counterpart must contain the same content as the original document;
- identification of the person and of their intention to sign the document must be evidenced by a platform such as DocuSign.
As to the electronic witnessing of a fixing of a seal:
- this is permitted by using electronic means to observe the person fixing the seal to the document in real time;
- the physical or electronic signing of the document or a copy or counterpart is permitted; and
- the document must be annotated with a statement that the witness has observed the fixing of a seal by electronic means.
2. Virtual meetings
The Act also establishes rules for meetings of shareholders of companies (including AGMs), directors of companies and members of registered schemes to be held virtually, including for the electronic dissemination of meeting material. Relevantly (amongst other things):
- companies may hold meetings virtually, at a designated location, or by designating a combination of locations using virtual means to connect them;
- where all participants use electronic means to attend, the time and place of the meeting will be that of the registered office; and, where a hybrid method of attendance applies, the time and location will be that of the location where participants are physically in attendance;
- participants attending virtually must be given sufficient information to attend the meeting including dial in details or a link to the relevant website, the date and time of the meeting;
- hybrid meetings must identify all locations and the main location;
- members as a whole must be given a reasonable opportunity to participate, including the ability to speak and verbally ask questions;
- quorum is determined by counting all those in attendance either physically or electronically;
- at a virtual or hybrid meeting of shareholders, votes are taken on a poll rather than a show of hands (unless otherwise determined by the company’s constitution) and shareholders must be given the opportunity to vote (and may be given the opportunity to vote in advance of the meeting);
- documents tabled at a meeting must be provided in advance of the meeting, or at the meeting, by screen sharing or providing the documents in hard copy;
- documents relating to meetings may be given or signed using electronic means (whether the meeting is held by electronic means or otherwise) including meeting notices, notices of resolutions, proxy appointments, minute books to company members, and resolutions made without meetings;
- members may opt in to receiving hard copies of documents relating to a meeting, or a resolution to be considered without a meeting;
- documents to be signed at meetings may be signed electronically as above.
Is this Act here to stay?
The Government proposes permanent reforms of a similar nature to those above will apply following expiry of the temporary powers, to enable companies to continue to electronically sign company documents and send meeting related materials via electronic means.
What do you need to do?
Ensure the requirements of the Act are complied with when using electronic means of execution of documents in accordance with section 127 of the Corporations Act, or conducting virtual meetings of shareholders of companies (including AGMs), directors of companies and members of registered schemes.
How can we help?
Our team of construction and infrastructure lawyers have significant expertise to assist you to understand your specific obligations under the Act when using electronic means to execute documents and for virtual meetings.
This article was written by Theo Kalyvas, Partner, Julie Charles, Senior Associate and George Yiannis, Solicitor.