The Treasury Laws Amendment (2021 Measures No. 1) Bill 2021 (“the Bill”) was passed by Federal Parliament on 10 August 2021 and became effective from 14 August 2021. The Bill amends section 127 of the Corporations Act 2001 (Cth) (“Corporations Act”) to facilitate the electronic processes and execution of documents and allow businesses to carry on “as usual” as much as possible whilst navigating the challenges of COVID-19. The changes made will remain in effect until 31 March 2022, providing a sense of stability.
Australian Institute of Company Directors CEO and Managing Director Angus Armour has welcomed the changes, saying;
‘This reform provides greater certainty for companies to make disclosures to the market, without the apprehension of speculative class actions challenging this disclosure with the benefit of hindsight, and that is in everyone’s interest. We are hopeful that over time these changes will also help to rebalance skyrocketing insurance premiums’.
Apart from amending the Corporations Act to allow companies to execute company documents electronically, the Bill also allows company meetings (including general meetings) to be held virtually, by electronic means. Finally, companies may send notices of meetings through electronic communications or by providing sufficient information to allow electronic access to the notice.
Electronic execution of documents
We have written previous articles on how legal documents such as a Will or an Affidavit can be witnessed electronically and the witnessing of the fixing of seals can be performed electronically via audio-visual link. However, in signing or witnessing the document electronically, it must be stated within the document that the fixing of the seal has been observed by electronic means.
Documents can also be executed using separate copies, providing that the copy includes all the original document’s contents and the signing method must identify the signee, record their intention to sign and must be reliable for the circumstances of the signing, for each of the signatories.
Notices to Shareholders
Whilst previously the default position was to send hard copies of notices of meetings (and shareholders can still elect to receive physical copies), it is now sufficient to provide them electronically via email or by sending an electronic address from which the material may be downloaded.
The Bill introduced new emergency powers of relief that allow the Australian Securities and Investment Commission (ASIC) to grant companies temporary relief from certain Corporations Act requirements. Notably, ASIC can now make a determination to extend the timeframe for public companies to hold an AGM on a class basis where extraordinary circumstances (such as COVID-19) would make it unreasonable for such meetings to be held.
The changes also allow companies or registered schemes to hold virtual meetings, even if their company constitution does not allow it, where ASIC considers it would be unreasonable to expect them to conduct in-person meetings. Importantly, such relief cannot be in place for more than 12 months after it commenced.
Whilst these reforms are great news for the 2021 fiscal year AGM, if companies wish to continue using virtual mediums to conduct shareholder meetings, it is prudent to update the company constitution to reflect this. Further, companies will still need to be cognisant of their obligations to allow shareholders to speak and ask questions orally as well as in writing within the virtual AGM format. Therefore, the platforms used by companies will need to offer a two-way audio exchange such as video conferencing platform Zoom.
How Etheringtons Solicitors can help
A solicitor at Etheringtons Solicitors can provide clarification of the relevant law in relation to your individual circumstances. Furthermore, Etheringtons Solicitors can assist with a variety of Business and Company Law matters. If you need further advice or assistance understanding your company’s obligations, please contact one of our experienced solicitors on (02) 9963 9800 or via our contact form.