Making permanent reforms in respect of virtual meetings and electronic document execution
The Government recently released the Treasury Laws Amendment (Measures for Consultation) Bill 2021: Use of technology for meetings and related amendments for consultation ("the Consultation Bill"). The consultation period ended on 16 July 2021. The legislation proposes to incorporate measures originally introduced under The Corporations (Coronavirus Economic Response) Determination (No. 1) 2020 (Cth), allowing companies to enable electronic measures for signing documents and holding meetings during the emergency response period. This support legislation ended in March 2021.
The Consultation Bill proposes to permanently provide companies with the option to hold hybrid meetings should they wish to do so. It is important to note that companies would only have the option to hold entirely virtual meetings, where this is 'expressly permitted or required' in their constitution. Irrespective of how a meeting is conducted, members as a whole must be given a reasonable opportunity to participate.
Any document relating to a meeting is able to be given and signed electronically (for example by email or by providing a link to a website). One important thing to note however, is a document may only be given electronically if the person receiving the document has not opted to receive the document in hard copy format;
Minutes may also be recorded and kept electronically (provided it is reasonable to expect that the information would be readily accessible and useable for subsequent reference).
The Consultation Bill also includes a statutory mechanism for electronic execution by companies, as follows:
The document may be executed by the sole director of a proprietary company that does not have a company secretary;
The fixing of the seal could be witnessed electronically, say for example via videoconferencing;
Signing would also be able to be done electronically provided that certain criteria is satisfied: 1) 'the copy must include the entire contents of the document'; 2) 'a method must be used to identify the person and indicate their intention to sign the document'; and 3) 'the method must be as reliable as appropriate for the purposes for which the document was generated or proven in fact to have indicated the person’s identity and intention';
Counterpart execution would also be allowed - i.e. persons required to sign a document, could sign separate copies of the document. The document would not need to include the signature of any other person;
People dealing with companies are entitled to assume that a document is validly executed if the new rules are followed, which replicates the assumptions in the Corporations Act.
Some points for consideration:
Regardless of whether the constitution was amended before or after the commencement of the reforms, fully virtual meetings are only permitted under the Consultation Bill if the company's constitution permits them. Each company should carefully consider its constitution and make any necessary amendments to accommodate the potential incoming changes. Hopefully some exciting changes to come. Presently, there is no clear timeframe for the Consultation Bill to be passed by Parliament. Watch this space!
The purpose and content of this article is intended to provide a general guide to the subject matter. Should you require specific advice regarding your individual circumstances, please don't hesitate to get in touch with our Commercial Team.