Electronic Execution and Virtual Meetings: Here to Stay
Directors of Australian corporations have been anxiously awaiting new draft legislation, the Treasury Laws Amendment (Measures for Consultation) Bill 2021: Use of technology for meetings and related amendments. This legislation will permanently amend the Corporations Act 2001 to permit electronic execution of company documents and usage of technology to hold virtual company meetings and record meetings. However, this draft legislation is not expected to be passed until later this year. Directors instead faced the lapse of the Corporations (Coronavirus Economic Response Determination (No. 3) 2020 in March 2021, which had temporarily permitted such use of technology. They have since had to revert to the pre-COVID practice of physically executing documents.
Employment of Technology
In this blog, we explain that changes to section 127 of the Corporations Act 2001 are required in order for companies to lawfully electronically execute documents. The Treasury Laws Amendment (2021 Measures No. 1) Bill 2021, passed on 10 August 2021, temporarily amends this section of the Corporations Act. It thus provisionally expands permissions for electronic execution of documents and use of technology in company meetings. The amendments are similiar to the temporary 2020 measures which ended in March. Many Directors of Australian companies are not only familiar with those amendments, but have expressed a desire to make those amendments permanent.
Electronic execution of company documents is permitted, provided that a copy of the entire document is made available, and the electronic method reliably identifies both the person and their intention to sign the document. Many electronic signature platforms will be able to meet these requirements. Directors of Australian companies can now also hold meetings and AGMs virtually, as long as the membership are afforded a reasonable ability to participate in the meeting. This includes opportunities for members to engage in real-time the meeting, as well as providing sufficient advance notice and information to allow the opportunity for members to plan to participate. Meeting notes and minutes are now also able to be electronically recorded and distributed.
The Treasury Laws Amendment (2021 Measures No. 1) Bill 2021 seeks to fill the gap between the lapsing of the Corporations (Coronavirus Economic Response Determination (No. 3) 2020 and the passing of the Treasury Laws Amendment (Measures for Consultation) Bill 2021: Use of technology for meetings and related amendments. As the latter Bill is not expected to be passed until later in 2021, a provision permitting Australian companies the flexibility to operate virtually and remotely is welcome. Directors are now able to rely on electronic signatures and can host virtual meetings.
These welcome amendments also require thoughtful and careful engagement of technological platforms. If you are a director of a company or are considering directorship and have questions about meeting your obligations, including those surrounding electronic signatures or virtual meetings, speak with one of our experienced business lawyers by calling us at (02) 4929 7002, emailing us or completing an enquiry form.