Will virtual meetings and electronic execution of company documents finally become a permanent fixture under the Corporations Act?
In this recent insight, we provided an update that ASIC had adopted a ‘no action policy’ in relation to virtual meetings and electronic execution of company documents. This no action policy was an interim measure to provide more certainty while the Treasury Laws Amendment (2021 Measured No. 1 Bill), which would allow for virtual meetings and electronic execution of company documents, awaits debate in the Senate, which is due to take place in early August 2021.
Now, the Federal Government has released a draft of the Treasury Laws Amendment (Measures for Consultation) Bill 2021: Use of technology for meetings and related amendments (Bill). The Bill would allow for meetings and the distribution of meeting materials to be facilitated by the use of technology, and for the electronic execution of company documents.
The Bill is set to further alleviate any uncertainty surrounding the temporary relief provided for in 2020 by making the above changes permanent by enshrining them in the Corporations Act 2001 (Cth) (Corporations Act).
We have set out below the key takeaways from the Bill, and what this could mean going forward.
Holding Meetings
Under the Bill, companies will be permitted to hold hybrid meetings. Further, if expressly permitted or required in a company’s constitution, companies will have the option to hold wholly virtual meetings.
The Bill makes mention that members must be afforded a reasonable opportunity to participate, which will be determined by (among other things):
whether the technology used is reasonable.
the meeting is held at a reasonable time and place.
whether members can speak (either orally, or in writing).
whether members were given reasonable access to documents tabled in the meeting.
The Bill also allows for meeting minutes to be recorded and kept electronically, but only if it is reasonable to expect that the information would be readily accessible so as to be usable for subsequent reference.
Distributing Meeting Documents
The Bill proposes to enable the electronic distribution of meeting related documents such as notices of meeting and proxy forms, but only where:
it is reasonable to expect the document will be readily accessible so as to be useable for subsequent reference at the time the document is given; and
the individual receiving the document has not opted to receive the documents in hard copy.
This means that meeting documents can be provided electronically via email or by providing the recipient with sufficient means to be able to view or download the document electronically (for example, a link which allows the recipient to view and download the document).
Companies should be careful to notify members that they can opt out of this electronic distribution and can still receive hard copy meeting documents.
Electronic Execution
The effect of the Bill is to make the ability for documents to be executed electronically permanent by amending the Corporations Act accordingly.
The proposed amendments in the Bill would allow a person to execute a document electronically, but only if the following 3 conditions are met:
the person is able to view the entire contents of the document, and not just the execution page;
there is a method for identifying the person and its intention to sign the document; and
the method used to identify the person and its intention to sign the document is as reliable as appropriate for the purposes for which the document was generated.
The Bill would also make permanent the following:
the ability for split execution of documents, meaning separate copies of one document can be signed by different officeholders of the same company;
the ability for a sole director to execute a document where there is no company secretary; and
the ability for the fixing of the company seal to be witnessed electronically.
You can read the full draft of the Bill here.
If you have any queries about the Bill, get in touch with our team.
Important
The contents of this publication should not be relied upon as legal advice, but instead as commentary and general information. Specific legal advice about your circumstances should always be sought separately before taking any action based on this publication.
