This Alert relates to our previous Alert, Update on electronic signatures.
The permanent use of electronic execution of documents has pleasingly been approved, following the passing of the Corporations Amendment (Meetings and Documents) Bill 2021 (Bill) on 10 February 2022. This Bill has effectively made permanent several temporary measures introduced previously under COVID-19 measures, including the execution of documents electronically under section 127 of the Corporations Act.
On 10 February 2021, the Bill passed both Houses of Parliament and, following royal assent, will become permanent in the Corporations Act 2001 (Cth) (Corporations Act). Previous temporary changes to the Corporations Act introduced on 14 August 2021 under the Treasury Laws Amendment (2021 Measures No.1) Act 2021 (the Treasury Act) enabled companies to electronically execute documents and perform various tasks, such as holding meetings using electronic methods. These measures were set to expire on 31 March 2022. Some changes introduced by the Bill add to or amend those introduced in the Treasury Act as well as other provisions of the Corporations Act.
Summary of changes
Below is a summary of the key permanent changes:
- Certain documents (including deeds) and meeting related documents can be validly executed in a ‘technology neutral manner’, meaning ‘wet ink’ signatures are no longer required.
- Sections 126 and 127 have been amended to include that documents will be able to be validly executed by companies in a ‘technology neutral manner’, with the assumptions under section 129 able to be relied on. Common law formalities for execution of deeds are not required for execution under these sections.
- Amendments to section 127 of the Corporations Act allow proprietary companies with a sole director – and no company secretary – to use the statutory document execution mechanisms (which is currently not the case).
- The use of ‘split executions’ is now a permanently valid method of execution. For example, company officers will be able to sign two separate versions of a document, rather than both needing to sign the same physical copy (as was often required to ensure compliance with section 127 of the Act).
- Amendments to section 126 of the Corporations Act permanently enable agents to make, vary, ratify or discharge contracts and execute documents (including deeds) on behalf of companies. There is no requirement for the agent to be appointed by deed.People can rely on the assumptions under section 129(3) that an agent is duly appointed and has authority to execute documents on behalf of the company.
- Meetings can now be held in a hybrid format, however wholly virtual meetings can only be held if it is expressly permitted to do so under a company’s or registered scheme’s constitution (sections 249R and 252P).
- Documents lodged with ASIC or the Registrar can be signed electronically (ie. in accordance with the Bill). If a document is required or permitted to be signed under the Corporations Act and has been signed in accordance with this Bill, then the relevant authority cannot refuse to receive or register the document on the basis is has not been validly executed.
The Bill incorporates some shareholder safeguards, including the requirement for an independent review in two years to ensure the new framework is operating as intended, and for virtual-only Annual General Meetings to only be permissible if at least 75% of shareholders agree to a constitutional amendment. Regardless of the format in which the meeting is held, the Bill makes clear that 'members as a whole' must be given a 'reasonable opportunity to participate' (section 249S).
Timing
The Bill was given Royal Assent on 22 February 2022, and so these change are now in full effect.
How we can help
Please contact Rohan Harris, Andrew Parlour, Rory Maguire, or Jacqueline Vuong from our Corporate and Commercial team, or, Rosemary Southgate, Mark McKinley or Melanie Young from our Property and Development team, should you require further advice in relation to corporate advisory or governance matters.
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