What has changed?
The Corporations Amendment (Meetings and Documents) Act 2021 (the Act) has made changes to the Corporations Act 2001 (Cth) (the Corporations Act) providing greater certainty and flexibility to companies by (amongst other changes):
- allowing companies to use technology to execute documents electronically, including corporate agreements and deeds; and
- allowing companies to hold physical and hybrid meetings, and if expressly permitted by a company’s constitution, wholly virtual meetings.
Such changes have modernised the provisions of the Corporations Act and flow from temporary measures introduced over the past two (2) years to deal with the difficulties experienced by companies in signing documents and holding meetings during the COVID-19 pandemic.
Execution of documents
The Act permits company signatories to sign documents and deeds under s126 and s127 of the Corporations Act in electronic form using electronic means.
The amendment takes a technology neutral approach by not mandating the use of any particular type of technology. Practically, this means that documents can be signed on online platforms, such as DocuSign.
For a company director or secretary and any witness to sign a document:
- a method must be used to identify the person and their intention in respect of the information in the document; and
- the method must be proven in fact or reliable as appropriate for the purposes for which the information was recorded.
The changes made by the Act also displaces the common law rule that a deed must be delivered and be on parchment, paper or vellum.
The Act also set out that a company with a sole director and no company secretary can sign under s127, amending the previous law that only allowed a sole director who was also a company secretary to sign under s127.
Furthermore, changes to s126 of the Corporations Act permit authorised agents under s126 to execute deeds on behalf of a company, displacing the common law rule which requires an agent acting on behalf of a company to be appointed by deed, in order for them to execute a deed on behalf of the company.
The measures above are in force from 23 February 2022.
The Act sets out that companies may hold a meeting:
- at one (1) or more physical locations;
- at one (1) or more physical locations and using technology to allow persons to attend virtually; or
- using technology to allow members to attend virtually if this is expressly permitted or required by a company constitution.
The change is not prescriptive about how a meeting should be conducted and does not mandate a particular format for a meeting or a particular way in which a show of hands or a vote on a poll is to be conducted. However, the members of the company as a whole must be given a reasonable opportunity to participate.
While many companies have taken the opportunity to provide for hybrid and virtual meetings in their constitution, it is now necessary for companies to ensure virtual meetings are expressly permitted by its constitution.
The above changes take effect from 1 April 2022.
Considerations for companies moving forward
The Act reduces the uncertainty regarding the use of technology when executing documents and conducting virtual meetings, which is a welcome change for companies.
However, it is important that companies now ensure that the requirements of the Corporations Act are complied with when using electronic means for the execution of documents or conducting virtual meetings.
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The contents of this publication are for reference purposes only. This publication does not constitute legal advice and should not be relied upon as legal advice. Specific legal advice should always be sought separately before taking any action based on this publication.