One of the positive things to have come from the various lockdowns over the past 2 years is that some changes to the law that otherwise would have taken years to occur have been accelerated – the law has now caught up with commercial practicalities. By way of example, electronic execution of documents and virtual company meetings have become the norm. While we have all been operating virtually in some capacity (whether it be ourselves, our suppliers, or our customers) Australia has been waiting for our legislation to catch up with the new status-quo.
Thankfully, on 22 February 2022, the Corporations Amendment (Meetings and Documents) Act 2022 (Cth) (the Act) received assent, amending the Corporations Act 2001 (Cth) (Corporations Act). This legislation clarifies and makes permanent the temporary relief measures which had in place 2020. The Act establishes a permanent mechanism which allows for:
- The electronic execution of documents by companies (including deeds);
- Companies and registered schemes to hold hybrid (in person and remote) meetings; and
- The use of technology to sign and share meeting related documents.
So, what’s all the fuss about?
The key changes to the Corporations Act with respect to execution of documents are set out below:
- Electronic methods such as DocuSign and AdobeSign may be used to execute documents (including deeds) by or on behalf of companies. The legislation is “technology neutral” meaning it does not mandate any particular type of technology or electronic signing platform.
- Documents (including deeds) may be signed in accordance with s 126 and s 127 of the Corporations Act by signing either a physical or electronic form of the document or a combination of both in separate counterparts. It is not necessary for a person to sign the same form of document as another person thereby allowing split execution of documents (something that was otherwise uncertain).
- People who deal with companies may rely on the assumptions under s 129 of the Corporations Act when the company electronically executes documents.
- A document can be validly signed by a sole director where no company secretary has been appointed, negating the need for a company secretary to be appointed prior to signing documents.
- A person signing a document in multiple capacities (i.e. a director of more than one company) need only sign once, provided the document states all capacities and permits them to do so.
- Agents can sign documents (including deeds) on behalf of a company under section 126 of the Corporations Act, both in hard copy form and electronic form.
When do the changes commence?
The new law applies from 1 April 2022, with the existing temporary provisions to remain in place until 31 March 2022. The Act applies to documents executed on or after 23 February 2022. The changes apply to documents sent and meetings held on or after 1 April 2022.
What does this mean for you?
While these changes may appear to be a relaxing of execution procedures, it is important to ensure that the requirements of the Act are complied with when executing documents electronically and conducting remote meetings. There are still processes to follow and requirements to meet in order for execution under the new provisions to be valid. It is also important to ensure that company constitutions are updated to reflect these changes.
You can discuss any company related matters with our experienced commercial team on 07 3223 6100 or email redchip@redchip.com.au.
