Virtual meetings and e-signing set to become permanent

The Federal Government has introduced permanent changes to the Corporations Act 2001 (Cth) (Act) allowing companies to use technology to meet regulatory requirements under the legislation, a long-awaited and welcomed change for both companies and their shareholders.

The proposed changes will allow companies to:

• hold virtual and hybrid meetings
• distribute meeting-related documentation in electronic form
• validly execute documents electronically (including deeds).

The reforms build on temporary amendments to the Act which were introduced in response to the COVID-19 pandemic and are due to expire on 31 March 2022. The move to permanence follows two rounds of consultation on earlier exposure drafts.

What are the key reforms?

The details are set out in the Corporations Amendment (Meetings and Documents) Bill 2021 (Bill), introduced into Parliament on 20 October 2021.

If passed in its current form, the Bill would permit companies and registered schemes to:

• hold meetings in person, as a hybrid, or virtually if expressly permitted by the company’s constitution, provided that members are given a reasonable opportunity to participate in the meeting
• send documents in hardcopy or electronically to enable companies and registered schemes to meet their obligations, and provide members with the flexibility to receive those documents in their preferred format, whether hardcopy or electronic
• validly execute documents, including deeds, in technology neutral and flexible formats, including execution by company agents.

There are some key differences between the Bill and the current temporary measures. Importantly, the Bill will:

• amend section 127 of the Act, so that proprietary companies with a sole director and no company secretary can now sign with the benefit of the statutory assumptions under section 129. These assumptions allow others to assume that documents have been properly signed
• amend section 126 of the Act, so that company agents can not only make, vary, ratify or discharge contracts, but also deeds.

The reforms will apply to actions taken after the current temporary relief measures expire on 31 March 2022. 

What does this mean for companies and shareholders?

Amidst the ongoing uncertainty of the COVID-19 pandemic, the proposed reforms ensure that companies have the necessary flexibility to continue to meet their obligations under the Act and will be warmly welcomed as a positive step in modernising how companies can engage with their members and manage their everyday business.

Until these changes come into play, companies and shareholders should continue to rely on the temporary relief measures implemented until 31 March 2022 and ensure they are prepared for the changes if and when they are passed in the coming months.

Authors: Georgia Milne & Shenaye Ralphs

Disclaimer
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.

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