- Temporary measures to allow for virtual meetings, electronic signing and distribution of corporate documents by corporations have been permanently enacted.
- Additional changes have been introduced to modernise and update the Corporations Act 2001 (Corporations Act).
In response to the COVID-19 pandemic and the imposition of lockdowns and stay at home orders, the Commonwealth Government previously introduced temporary measures to amend the operation of the Corporations Act to allow for electronic execution of documents and holding of meetings by corporations. These amendments are set to expire on 31 March 2022.
In welcome news, the Commonwealth has now passed the Corporations Amendment (Meetings and Documents) Bill 2021 (Cth) (Bill), which provides a permanent mechanism for companies to use technology to hold meetings, electronically execute documents and issue meeting-related documents. In addition to entrenching the changes introduced by the temporary measures, the Bill has enacted some additional features that modernise the means of conducting company business.
Meetings via technology
The Bill continues the option to hold hybrid meetings – whereby some of the participants attend the meeting in person whilst others attend virtually. However, a key change from the temporary measures is that companies will only be able to hold entirely virtual meetings if permitted to do so under the terms of the company constitution.
It is also worth noting that the platform used for a hybrid or virtual meeting must enable all members to exercise their rights orally and in writing.
Another new feature of the Bill is that members with at least 5% voting power may require an independent person to be appointed to observe and report on the conduct of the poll.
The Bill provides that members can be notified of meetings electronically and that electronic notification is taken to be received on the business day after it is sent.
Electronic execution of documents
The Bill confirms that corporations have the option to validly execute certain documents (including deeds) electronically.
Separately, it is an old general law rule that an agent must be appointed under a deed in order to bind the corporation to a deed. The Bill overrides this position, which means there is no longer a requirement for agents to be authorised by deed.
The Bill expands the scope of the statutory execution method in section 127 of the Corporations Act to enable corporations with a sole director, and no secretary, to execute documents pursuant to that section.
In welcome news for corporations with more than one director, the Bill allows a corporation to execute a document by split execution and confirms that signatories will not be required to use the same form or method of signing as another signatory.
Issue of meeting-related documents
As is the case under the temporary measures, the Bill reaffirms the validity of meeting-related documents being signed and distributed electronically. However, under the Corporations Act, as amended by the Bill, members will be able to elect to receive electronic or physical copies. Corporations are required to notify members of their right to receive documents electronically or physically.
When does the Bill take effect?
The provisions of the Bill relating to the electronic execution of documents commenced on 23 February 2022. The provisions of the Bill relating to meetings via technology and the issue of meeting related documents commence on 1 April 2022.
How can we help
If your constitution does not currently permit virtual meetings, we recommend that you consider updating it to allow the option to hold a virtual meeting after 1 April 2022.
If you have any questions about the proper execution of documents under the updated laws, please do not hesitate to contact us.
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