Legislative Concessions for Conducting Meetings
On 13 August, 2021 the Commonwealth Treasury Laws Amendment (2021 Measures No.1) Act 2021 received assent. It gives directors across Australia will have greater freedoms in conducting business during the pandemic. The Bill amends the Corporations Act so that:
- companies will be able to execute company documents electronically;
- company meetings (including AGMs) will be able to be held virtually by electronic means;
- companies may send notices of meetings to shareholders through electronic communications or by providing sufficient information to allow the recipient to access the notice electronically
It must be noted however, that these changes will only be in effect until 31 March 2022.
As ASIC’s ‘no-action’ position concerning the holding of virtual general meetings was to end on 31 October 2021 this reform is timely so as to give companies guidance on the lawful procedures for the holding of virtual or hybrid general meetings.
The Act amends the Corporations Act 2001 (Cth) to allow for the holding of meetings using virtual meeting technology provided that all members are given a reasonable opportunity to participate. This includes being able to speak and vote. ASIC has also been given permanent powers to allow virtual meetings to take place in exceptional circumstances that are beyond the control of the entity. This is likely to be pertinent after the provisions of the Act cease on 1 April 2022.
It must be ensured that all members who wish to participate in the meeting are given the required information to allow them to participate. For virtual participants, this would include a link to the meeting and the time at which it will take place. It must also be held at a reasonable time at the place where the meeting is taken to be held. The place that the meeting is generally taken to be held is the main physical location if it is a hybrid meeting, or the registered office of the company it is a wholly virtual meeting.
In relation to general meetings, the notice of meeting and proxy forms can be given to members electronically. Information which allows the members to access these documents electronically can also be provided to members via electronic communication. Proxy forms are able to be signed electronically if there is a method in place to ensure the identity of the signatory, their intention to sign the document is shown and the entire contents of the document are provided in the signed document.
In addition, ASIC has adopted a ‘no-action’ position for public companies that do not hold their AGMs within 5 months after the end of financial years which end up to 7 July 2021, but do so up to 7 months after the end of that financial year. This extends to not-for-profit entities that operate through companies limited by guarantee. These entities are considered ‘public companies’ and fall under the provisions released by ASIC.
Company execution of documents
Government has reintroduced temporary measures allowing companies to electronically execute documents up until 1 April 2022. By that time, permanent measures for electronic execution are expected to be in place.
The measures which apply to the execution of documents and deeds provide the following:
- Signature on a physical copy or counterpart: a document is taken to have been signed by a person if:
- the person signs a copy or counterpart of the document that is in a physical form; and
- the copy or counterpart includes the entire contents of the document.
- Signature on an electronic copy or counterpart: A document is taken to have been signed by a person if:
- a method is used to identify the person and to indicate their intention to sign a copy or counterpart of the document; and
- the copy or counterpart includes the entire contents of the document; and
- the method used was:
- as reliable as appropriate, given the purpose of the document; or
- proven in fact to have fulfilled the functions described in (a).
The measures have also re-introduced provisions to allow directors of the same company to sign physically separate (but identical) documents. The provisions provide that a copy or counterpart of a document does not need to include:
- the signature of another person signing the document; or
- any material included in the document to identify another person signing the document or to indicate another person’s intention in respect of the contents of the document.
The measures are in force until 1 April 2022. By that time, the Government has indicated that permanent reforms should be in place for electronic execution.