Background
The Corporations Amendment (Meetings and Documents) Bill 2021 (Cth) (Amendment Bill) was introduced to Parliament on 20 October 2021. The aim of the Amendment Bill is to modernise the Corporations Act 2001 (Cth) (Act) by permanently allowing companies to use technology to meet regulatory requirements under the Act.
The Amendment Bill will permit companies and registered schemes to:
- hold virtual meetings;
- distribute meeting related documentation in electronic form; and
- validly execute documents electronically.
The reforms introduced by the Amendment Bill are intended to build on the recently renewed temporary relief which is set to expire on 1 April 2022 and which allows virtual meetings and electronic execution of documents.
Key Features of the Amendment Bill
If passed in its current form, the Amendment Bill would permit companies and registered schemes to:
- hold meetings in person, as a hybrid, or virtually if expressly permitted by the company’s constitution, provided that members are given a reasonable opportunity to participate in the meeting;
- send documents in hardcopy or electronically to enable companies and registered schemes to meet their obligations and provide members with the flexibility to receive those documents in their preferred format, whether hardcopy or electronic; and
- validly execute documents, including deeds, in technology neutral and flexible formats, including execution by company agents.
It is important to remember that if documents are executed by companies under section 127 of the Corporations Act using technology, certain formalities need to be satisfied. Please refer to our previous article on the temporary relief measures for more information.
Differences between the Amendment Bill and current temporary relief
There are some key differences between the Amendment Bill and the current temporary relief measures. Importantly, the Amendment Bill will:
- amend section 127 of the Act so that proprietary companies with a sole director and no company secretary can now sign with the benefit of the statutory assumptions under section 129. These assumptions basically allow third parties to assume that the documents have been properly signed; and
- amend section 126 of the Act, so that company agents can not only make, vary, ratify or discharge contracts, but also deeds.
What happens if the Amendment Bill is passed?
As mentioned, the Amendment Bill builds on the temporary relief implemented by the government in response to the COVID-19 pandemic which is due to expire on 31 March 2022. The Amendment Bill is proposed to apply to documents executed on or after the day the Amendment Bill receives royal assent.
Members of companies and registered schemes can therefore expect a swift transition from the current temporary measures to a more permanent framework. It would therefore be prudent for companies and registered schemes to consider the impacts that the Amendment Bill may have on the facilitation of member’s meeting and execution of documents.
The ‘future proofing’ of constitutions, adoption of new technologies and adherence with new governance requirements are all crucial issues to consider.
If you would like advice or assistance in relation to regulatory compliance, Corporate Law or any other Commercial matters, please contact our accredited business law specialists and Partners Justin Thornton on jthornton@marsdens.net.au and Rahul Lachman on rlachman@marsdens.net.au or otherwise by calling them on (02) 4626 5077.
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.
