Corporations Amendment (Meetings and Documents) Bill 2021 (Cth): Received Royal Assent and has now commenced

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Authors: Rebecca Williams and Linda Le

The Corporations Amendment (Meetings and Documents) Bill 2021 (Cth) has received Royal Assent and has now commenced.

The Act makes permanent the temporary reform measures that have been in place over the last two years. It lifts the lingering uncertainty about the validity of technology-aided execution and virtual meetings following the temporary relief measures contained in the Treasury Laws Amendment (2021 Measures No 1) Bill 2021 (which we discussed here).

It does this by permanently amending the Corporations Act to:

  • facilitate electronic execution of documents (including deeds);
  • allow for company meetings to be held either at a physical venue or via virtual meeting technology, or a hybrid combination of the two in select circumstances; and
  • enable the electronic distribution of meeting-related documents and other documents.

The changes are outlined in more detail below.

Electronic Execution

Here is a summary of the key provisions relating to electronic execution:

  • A person may sign a document (including a deed) under s126 or s127 of the Corporations Act by signing a physical form of the document by hand or an electronic form of the document using electronic means.
  • A document may be executed as deed regardless of whether the document is in physical or electronic form.
  • The method of signing must:
    • identify the person and indicate the person’s intention in respect of the information recorded in the document; and
    • be as reliable as appropriate for the purpose for which the information was recorded, or proven in fact to have or proven in fact to have indicated the person’s identity and intention to sign.
  • A document executed as a deed under s126 or s127 does not need to be witnessed and does not need to be delivered to be validly executed as a deed.
  • Section 126 is amended to provide that an individual (“agent”) acting with the company’s express or implied authority can execute a document on behalf of the company (including a deed), as well as make, vary, ratify or discharge a contract.
  • Where an agent is executing a document under s126:
    • this power may be exercised without using a common seal;
    • this does not affect the operation of other laws that requires a particular procedure to be complied with in relation to the contract or document (including a deed), other than to the extent that the law is inconsistent with s126;
    • the agent need not be appointed by deed;
    • the agent may execute a document as a deed if the document is expressed to be executed as a deed; and
    • s126 does not limit the ways in which the individual may execute a document (including a deed).
  • It is not necessary for:
    • a person to sign the same form of the document, page of the document, or use the same method to sign the document, as another person; or
    • the document signed by a person to include all the information recorded in the document.
  • A person can sign documents in different capacities and may sign the document in some or all of those capacities by signing the document once.
  • The fixing of a common seal to a document under s127(2) can also be witnessed by electronic means.

In practical terms, the changes to s127 do not substantially alter the position existing under the temporary reforms. There are a few minor improvements but electronic execution under s127 continues to be permitted in more or less the same way it has been for the past few months.

However, the changes to s126 are new. Importantly, the agent does not need to be appointed by deed and witnessing and delivery are not necessary for the deed to be validly executed. This means that the signing process for company agents under s126 is materially simpler than previously.

Another major advantage of the s126 changes is that an attorney or other agent for a company can sign a deed electronically, irrespective of the State or Territory law which governs the deed. This is significant because without these changes, this would only be possible if the deed is governed by the law of New South Wales, Victoria or Queensland (which have, until now, been the only jurisdictions with legislation permitting electronic deeds).

Meetings

The key provisions relating to meetings are as follows:

  • A company can hold a meeting of its members either (1) at a physical venue only, (2) by holdings a wholly virtual (i.e., with no option for physical attendance) subject to the below qualifications; or (2) by holding a hybrid meeting with both a physical presence and a virtual dial-in option.
  • Wholly virtual meetings are only permitted be where this is expressly required or permitted by the company’s constitution.
  • The company must ensure that members as a whole have a reasonable opportunity to participate in the meeting – irrespective of how the meeting is conducted. Where the meeting is held virtually, the technology must be reasonable and permit members to exercise their right to ask questions and make comments, both orally and in writing. Telephone dial-in options will therefore need to be available.
  • Members may elect to receive meeting documents in hard copy or electronically, or not at all. Where an election is made and the sender does not take reasonable steps to abide by this election, they will have committed an offence of strict liability. Members can also made ad hoc requests for documents, despite their overriding election.
  • Members must also be notified of their right to elect to receive a document electronically or in physical form at least once every financial year, or a notice to that effect needs to be readily available on the company’s website.

Where to from here?

The changes effectively make permanent temporary reforms which have been in place over the last two years, making it easier for companies to sign documents electronically and removing uncertainty about the validity of virtual meetings.

The new meetings provisions will apply to all documents sent and meetings held on or after 1 April 2022 (after the temporary measures have expired).

The electronic execution provisions now apply to documents executed on or after 23 February 2022, being the day after the Bill received Royal Assent.

The new provisions will also undergo an independent review within the next two years.

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