Background
The Federal Treasurer has made a Determination that temporarily allows for virtual company meetings, electronic notices of meetings and the electronic signing of documents during the COVID-19 pandemic.
The Determination commenced on 6 May 2020, and will continue until it is automatically repealed on 5 November 2020.
Key Takeaways
- General meetings of companies, including Annual General Meeting’s, can now be held as virtual meetings. The changes override any rules in a company’s constitution (or other arrangement) to the contrary.
- Directors, secretaries and any people who have dealings with companies may now use electronic signing and split execution when executing company documents under s 127(1) of the Corporations Act.
- The statutory presumptions in the Corporations Act which relate to execution of documents will continue to apply.
Meetings
The Determination provides that meetings may be held virtually, using ‘one or more technologies’ so that members are not required to be physically present at the same place.
The following applies in respect of virtual meetings:
- persons participating in the meeting are taken to be present at the meeting for the purposes of the relevant quorum requirement and all other requirements;
- a vote taken at such meeting must be taken on a poll and not by a show of hands;
- persons must be given the opportunity to speak (e.g. by asking questions); and
- proxies may be appointed for virtual meetings.
Notice of Meetings
Notices of meetings must include information about how those entitled to attend can participate in the meeting, including voting, speaking and appointing proxies.
A company may send notices by email, or deliver notices electronically, even where email is not a member’s nominated method for notice.
Companies may also meet the notice requirements by letter or postcard with information on where notice and other meeting materials can be accessed and downloaded online.
If a company has already sent out a notice of meeting before these changes were introduced, the company must issue another notice at least seven days before the meeting date that complies with the requirements above.
Execution of Documents
Pursuant to the Determination, a company is now permitted to execute a document electronically. In signing electronically, sections 9(1)(a) and 9(1)(b) of the Electronic Transactions Act have been adopted, meaning that the method used for electronic signing must:
- identify the person executing;
- indicate their intention to be bound; and
- be appropriate for the purpose for which the company is executing the document.
The Determination also makes it clear that ‘split execution’ will be authorised under s 127(1) of the Corporations Act. Directors and/or secretaries will be permitted to each sign their own copy, counterpart or electronic version of the document.
The only requirement is that the counterpart that is signed contains the entire agreement rather than just the execution page.
It must be noted that the application of the above changes to the execution of deeds is unclear at this stage.
If you would like advice or assistance in relation to the above 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.
