On 10 August 2021, both houses of Federal Parliament passed the Treasury Laws Amendment (2021 Measures No. 1) Bill 2021. The Bill was given Royal Assent on 13 August 2021 and so the changes made by the Bill will come into effect tomorrow, 14 August 2021.
The Act makes amendments to the Corporations Act to allow companies to execute documents (including deeds) electronically and to hold meetings virtually, provided certain conditions are met.
If you're really keen you can read the text of the Bill here.
A History of Amendments
Throughout 2020 the Federal Treasurer made several determinations which exempted corporations from being required to hold meetings in person and allowed corporations to execute documents (including deeds) electronically while the determination was in effect. Specifically, meetings were allowed to be held ‘using one or more technologies that give all persons entitled to attend a reasonable opportunity to participate without being physically present in the same place.’
The determinations were authorised by s1362A of the Corporations Act 2001, which imposed a 6-month limit on the length of any determination made under that section and required that any determination be made within the 6 months of the section commencing – continuous declarations by the Treasurer were therefore not sustainable.
The last of these determinations was the Corporations (Coronavirus Economic Response) Determination (No. 3) 2020, which expired on 21 March 2021 and, due to the restrictions found in s1362A, was unable to be renewed. At the time of expiration the Treasury Laws Amendment Bill had passed the House of Representatives but had not yet passed the Senate.
The changes put in place by the Bill will allow companies to hold ‘virtual meetings’, where "technology may be used in holding a Chapter 2G meeting, provided the technology gives the persons entitled to attend the meeting, as a whole, a reasonable opportunity to participate without being physically present in the same place."
A ‘Chapter 2G meeting’ includes:
• A meeting of a company’s members;
• A meeting of the directors of a company; and
• A meeting of a registered scheme’s members.
The bill includes various amendments to multiple sections of the Corporations Act to account for the fact that meetings may now be held virtually. This includes requiring members to be provided with sufficient information to allow members to participate by virtual meeting technology, if a virtual meeting is to be held, and making allowance for virtual meeting technology to be utilised to conduct polls.
Any technology used to conduct a meeting must give the persons entitled to attend the meeting a reasonable opportunity to participate – this includes an opportunity to exercise a right to speak and ask questions.
If a meeting is conducted entirely electronically, then the place for the meeting is taken to be the registered office of the company.
Execution of Documents
The Bill also amends section 127 of the Corporations Act to allow companies to electronically execute deeds. New subsection 127(3B) provides that:
“For the purposes of this section, a document is taken to have been signed by a person if:
(a) a method is used to identify the person and to indicate the person’s intention to sign a copy or counterpart of the document; and
(b) the copy or counterpart includes the entire contents of the document; and
(c) the method used was either:
(i) as reliable as appropriate for the purpose for which the document was generated or communicated, in light of all the circumstances, including any relevant agreement; or
(ii) proven in fact to have fulfilled the functions described in paragraph (a), by itself or together with further evidence.”
The new section 127(2A) also allows for the electronic witnessing of documents, where required.
Perhaps most importantly to readers this now allows companies to purchase, sell and lease land by executing electronically - in Victoria, since the Treasurer's determination expired in March, a company has still had to sign documents of that kind using a 'wet-ink' signature (state-based legislation passed in March allowing individuals to sign deeds electronically did not extend to companies).
The new rules ultimately provide welcome certainty for corporations that have been forced to refer to changing declarations and ASIC media releases in order to properly conduct company business.
The changes will cease to have effect on 1 April 2022 - we hope that permanent rules will be put in place at that time to allow continued enjoyment of these new provisions.