Temporary Legislative Changes: What does this mean for your company?

On 14 August 2021, on the back of COVID-19 lockdowns across the country, the government has passed temporary legislative amendments under the Treasury Laws Amendment (2021 Measures No. 1) Bill 2021 (Cth) that enable companies to meet their regulatory requirements under the Corporations Act 2001 (Cth) (Corporations Act) and the Australian Securities and Investment Commission Act 2001 (Cth) (ASIC Act). These changes will remain in effect until 1 April 2022.

Of particular significance are the changes that allow companies to sign documents electronically and the changes around the use of technology in director and shareholder meetings.

Electronic signing changes

Prior to the recent amendments there had been some uncertainty around whether an agreement or deed could be in an electronic form and signed electronically for the purposes of section 127 of the Corporations Act. The temporary amendment amends this section to provide a mechanism for companies to sign documents electronically. Similar amendments were enacted in 2020 at the beginning of the COVID-19 pandemic, which have recently lapsed.

Broadly speaking, the amendments establish that (under section 127):

  • The fixing of a common seal can be witnessed electronically.
  • A document in physical form may be signed using split execution.
  • A director, secretary or witness may electronically sign a document (or copy or counterpart of the document).
  • A copy or counterpart doesn’t need to include all the signatures.

Director and shareholder meeting changes

To further assist businesses, the amendments also temporarily changed the rules under the Corporations Act around sending notices of, and participation in, director and shareholder meetings. In summary:

  1. companies are now able to send notices of a meeting to shareholders and directors by electronic means, such as email;[1] and
  2. company meetings (including director and shareholder meetings) are now able to be conducted virtually, irrespective of whether this is supported by company’s constitution.[2]

What does this mean moving forward?

As we approach AGM season, these reforms are likely a massive relief for many businesses being impacted by strict COVID-19 lockdowns across Australia. Even irrespective of the pandemic, these amendments will likely be welcomed into Australia’s increasingly technologically reliant business landscape.

Although these amendments are temporary, the Treasurer has recently confirmed that the government are now seeking to introduce permanent reforms to give companies more flexibility to use technology to hold meetings, such as hybrid meetings, and sign and send documents.[3]   It is also important to note that even if permanent reform still hasn’t been enacted by the time the temporary amendments cease, the amendments provide ASIC with permanent emergency relief power. This should theoretically enable ASIC to ensure similar technological assistance is available to businesses in the interim.

Contact Us

If you have any questions about the recent amendments and what they mean for your company, please do not hesitate to contact the Results Legal team on 1300 757 534 or via email at info@resultslegal.com.au. You may also use our contact form to send us your enquiries.

 

[1] Corporations Act 2001 (Cth) s 249J(4); s 249L(1)(a).

[2] Corporations Act 2001 (Cth) s 253TA; s 253Q; s 249R(1)(c).

[3] Press Release – Treasurer