Virtual meetings and electronic signatures may be here to stay!
The Treasury has released an exposure draft bill "Treasury Laws Amendment (Measures for Consultation) Bill 2021: Use of technology for meetings and related amendments" (the Draft Bill) to permanently amend the Corporations Act 2001 (Cth) (the Act).
At the onset of the COVID-19 pandemic last year, the government temporarily amended the Act to allow organisations to hold virtual AGMs, as well as allowing for companies to execute documents electronically.
The temporary amendments expired on 21 March 2021, after which ASIC implemented a 'no action' position for those companies that hold virtual meetings until 31 October 2021.
The Draft Bill is in the consultation period until 16 July 2021, during which interested parties can comment.
The purpose of the Draft Bill is to create a permanent statutory mechanism to enable the:
use of technology to hold virtual company meetings (including wholly virtual AGMs);
electronic execution of company documents; and
sending of meeting-related materials electronically.
Electronic signing of company documents
Under the Draft Bill, company officers will be able to sign documents on behalf of a company electronically if:
the electronic document includes the entire contents of the document;
the person signing can be identified; and
the person's intention to sign can be identified.
Counterpart signing will also be allowed, and the counterpart does not need to include the signature of another person - that is, split execution under section 127 of the Act will be allowed.
The Draft Bill also permits the affixing of the company seal to be witnessed electronically by stating on the document that the witness observed the fixing of the seal electronically.
Virtual meetings
The Draft Bill will allow for companies to hold virtual meetings or hybrid meetings at one or more physical locations using technology. However, a company's constitution must expressly permit virtual meetings.
Company meetings will still be required to give members a reasonable opportunity to participate. This includes holding the meeting at a reasonable time and place, using reasonable technology and giving members the opportunity to speak or ask questions.
Documents relating to meetings will be able to be electronically signed and distributed, regardless of whether the meeting is a virtual, physical or hybrid meeting.
However, even after the legislation is passed, a company will only be permitted to hold a wholly virtual meeting if its constitution allows them.
How can we help?
Parliament expects to vote on the Draft Bill in August 2021. Now is the time for companies to review, and where necessary, update their constitutions to ensure that virtual meetings are expressly permitted. Companies needing to update their constitution will need to do so by passing a special resolution of shareholders. If a company wishes to hold a virtual meeting to pass that special resolution, it will need to convene that meeting before the new legislation is passed and while the ASIC waiver is still on foot for it to be effective.
If you require any advice or assistance regarding the review or amendment of your company constitution, please contact our Commercial Team.
The material in this article was correct at the time of publication and has been prepared for information purposes only. It should not be taken to be specific advice or be used in decision-making. All readers are advised to undertake their own research or to seek professional advice to keep abreast of any reforms and developments in the law. Brown Wright Stein Lawyers excludes all liability relating to relying on the information and ideas contained in this article.