On 25 June 2021, the Australian Government released the Treasury Laws Amendment (Measures for Consultation) Bill 2021: Use of technology for meetings and related amendments (Bill) for consultation.
The Bill proposes to permanently allow companies to distribute and execute documents electronically, and to give companies the option to hold hybrid meetings (i.e., with some attendees appearing in person and others via the use of technology such as videoconferencing).
Key changes – electronic execution
In short, the Bill proposes to enable electronic execution of company documents, which:
- provides a statutory mechanism for companies to execute documents electronically;
- allows “split execution” of documents. Split execution occurs when the officers of a company sign separate counterparts (duplicates) of a document, rather than signing the same document. Therefore, persons required to sign a document, could sign separate copies of the document;
- permits a document to be executed by the sole director of a proprietary company that does not have a company secretary, and allow third parties to make a statutory assumption about the valid execution of the document by the company in those circumstances.
Key changes – electronic meetings
The Bill also proposes to provide greater flexibility to use technology to hold hybrid meetings:
- provided that all meetings, regardless of how they are held, give members a reasonable opportunity to participate, such as using reasonable technology to conduct a virtual meeting;
- allowing documents relating to meetings to be signed and given using electronic means, regardless of whether the meeting is a virtual, physical or hybrid meeting; and
- allowing a member or group of members, with more than 5 per cent of the voting power, to require a listed company or registered scheme to appoint an independent person to observe or report on a poll.
These proposed amendments would see a permanent implementation of the temporary measures originally introduced during the COVID-19 pandemic. These temporary measures expired on 21 March 2021.
For further information about the expiry of the temporary measures, please see Page Seager’s previous update here.
It is unclear if and when the draft Bill will be passed by Parliament. We will provide an update when further information is available.
What you need to do
As the proposed amendments are not yet in effect, it is important that your company:
- ensures that all documents are validly executed pursuant to the requirements of s 127 of the Corporations Act as it now stands;
- holds meetings in person unless the company’s constitution expressly permits virtual or hybrid meetings; and
- considers how it intends to hold its AGMs in future. The proposed changes only permit fully virtual meetings if the company’s constitution permits them. Your company may wish to amend its constitution to allow virtual meetings.
If you have any queries or would like further information about this article, please contact:
M: 0418 578 701
T: (03) 6235 5161
T: (03) 6235 5147
Published: 28 July 2021