Modernising the Corporations Act – finally!

Laws that were introduced at the start of the pandemic allowing companies to use technology to execute documents and hold meetings have been made permanent, bringing the Corporations Act into the digital age.

The Corporations Amendment (Meeting and Documents) Bill 2021 (Bill) received Royal Assent on 22 February 2022, enabling:

• the electronic execution of company documents;
• companies, registered schemes and disclosing entities to sign and provide meeting-related documents electronically; and
• companies and registered schemes to use technology to facilitate the holding of meetings (including hybrid meetings).

These changes will enable companies and registered schemes to operate in a more time and cost efficient manner.

The amendments afforded by the Bill come into effect:

• in respect of the signing and execution of documents, on 23 February 2022; and
• in respect of meetings, meetings related documents sent and held on or after 1 April 2022 (being immediately following the expiration on 31 March 2022 of the current temporary measures in place under the Treasury Laws Amendment (2021 Measures No. 1) Act 2021 (Cth)).

Key Amendments

Signing and executing documents

The Bill makes changes to the Corporations Act and sets out the requirements for how company documents and meeting related documents can be validly executed in a technology neutral matter.  It applies to:

• documents (including deeds) signed by or on behalf of a company under sections 126 and 127 of the Corporations Act;
• documents which relate to certain meetings and resolutions; and
• any document specified in the Corporations Regulations 2001 (Cth).

The Bill has the effect of changing the Corporations Act to allow:

• documents to be executed in a technology neutral manner, by signing a physical or electronic form of the document;
• split execution of documents (allowing officers to sign different copies of a document);
• a person to sign documents in more than one capacity and to be treated as a different person in each such capacity they sign. The effect of this is that a director of more than one company may sign once on behalf of all companies if the document requires or permits the person to do so and states the capacities in which the person is signing the document;
• proprietary companies with a sole director and no company secretary to take advantage of the statutory document execution mechanisms with the sole director permitted to sign on behalf of the company under section 127 of the Corporations Act;
• agents to execute documents (including deeds) and to make, vary, ratify or discharge contracts. An agent does not need to be appointed by deed and is also entitled to use the technology neutral methods for signing documents.

Sending documents to members

The Bill also establishes a general regime that covers the electronic communication of meeting related documents (including, but not limited to, notices of meetings, notices of a resolution or a record of a resolution, and minute books) that a company, responsible entity or disclosing entity is required or permitted to give, send or otherwise provide to a person under the Act (but does not apply to documents which are sent to ASIC).

A meeting related document can be provided by:

• sending the document in physical form;
• giving the document to a person by using electronic means;
• providing a person, in physical or electronic form, with details sufficient to allow them to view or download the document electronically; or
• in any other permitted way.

Members may also elect to receive documents in physical form or electronically.  Standing elections must be received more than 30 days prior to the date the company or registered scheme is required / permitted to send the document (for example, a standing election to receive an AGM notice of meeting by a particular method must be received 30 days’ prior to the date the company is to issue the AGM Notice).  Further, public companies must give notice to its members once per year of the member’s right to elect to receive a document in a specified form.

Virtual and hybrid meetings – members and directors

The Bill also permits companies and registered schemes to use technology to hold meetings.  Meetings may be held at:

• one or more physical venues (a physical meeting);
• one or more physical venues and using virtual meeting technology (a hybrid meeting); or
• using technology to allow members to attend virtually provided that it is expressly permitted or required by the company’s constitution (a wholly-virtual meeting).

Members who attend meetings (in any form) are taken to be present in person at the meeting.  The physical and timing requirements stipulated for meetings are:

Members as a whole must be given a reasonable opportunity to participate in meetings and thus:

• in the case of physical and hybrid meetings, the physical venue for the meeting must be reasonable;
• the meeting must be held at a reasonable time; and
• reasonable technology must be used to connect one or more physical venues or to facilitate virtual attendance and must allow members to exercise any pre-existing rights to ask questions, or make comments both orally and in writing.

Further, companies registered as bodies corporate under the Australian Charities and Not-for-Profits Commission Act 2012 (Cth) may hold physical, hybrid or wholly virtual meetings.

Finally, directors’ meetings may be called or held using any technology consented to by all the directors.  Consent may be withdrawn within a reasonable period before the relevant meeting.

Voting – polls at meetings

The Bill also provides that substantive resolutions, being those resolutions set out in the notice of meeting of members of a listed company, must be decided by poll and not a show of hands.  A listed company’s constitution is not capable of providing otherwise.

Finally, a member or group of members with at least 5 per cent of the voting power may request that an independent person be appointed to observe and / or scrutinise and prepare a report on the outcome of the polls at the meeting of the members.

If you would like further advice or assistance please contact a member of our national Corporate & Advisory team.

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