At the beginning of May, the Federal Treasurer issued a determination which modifies the operation of the Corporations Act 2001 (Cth) with respect to company meetings and the execution of documents by companies.
In order to mitigate the impact of COVID-19 on Australian companies, the Corporations (Coronavirus Economic Response) Determination (No. 1) 2020 ('the Determination') came into effect on 6 May 2020, and applies on a temporary basis until 6 November 2020.
Execution of Documents
Section 6 of the Determination provides that a company may execute a document without a common seal if each person required to sign the document on behalf of the company either:
- signs a copy or counterpart of the document in physical form; or
- uses electronic communication which reliably identifies the person and indicates the person's intention about the contents of the document.
- The Explanatory Memorandum states that 'In practice, there are a wide variety of means by which officers of a company might sign a document electronically. These include:
- pasting a copy of a signature into a document;
- signing a PDF on a tablet, smartphone or laptop using a stylus or finger;
- cloud-based signature platforms like DocuSign.
The modification means that signatories do not need to sign the same physical document. Instead, a document could be signed and scanned by the first signatory and then printed and signed by the second signatory - or separate electronic signatures could be applied to fully electronic versions of the document.
If these elements are satisfied, then an electronic signature applied under section 127 of the Corporations Act 2001 (Cth) will be effective to execute a document.
It is unclear whether the changes in the Determination also apply to the execution of deeds. Unfortunately, it does not expressly state that deeds may be in electronic form and signed electronically.
Section 5 of the Determination now allows companies to convene and hold general meetings by electronic means, instead of having to have physical ones.
The Determination states that a meeting may be held using one or more technologies that give all persons entitled to attend a reasonable opportunity to participate without being physically present in the same place. If the meeting is held in this way:
- All persons participating in the meeting will be taken to be present at the meeting while participating.
- A requirement to allow those attending the meeting to speak in real time, this must be done using technology that facilitates that opportunity.
- A proxy may also be appointed by using technology specified in the notice of the meeting.
- A show of hands may not be used where a meeting is being facilitated using technology. Votes must be taken by a poll and each person entitled to vote must be given the opportunity to vote in real time and if practical ahead of the meeting.
- The notice of meeting (and any related information) may be provided to those entitled to receive the notice using one or more technologies. A copy of the notice or related documentation can be provided or details of how such material can be obtained can be provided in communication to people entitled to attend.
NB. The notice must:
- explain how members are able to vote and ask questions, and:
- include any other information they need to know to participate in the meeting using technology.
These recent changes under the Determination give greater certainty and assist companies to continue business in the COVID-19 environment.
If you have a query relating to any of the information in this article, or you would like to speak to a member of Holman Webb's Business, Corporate and Commercial team with respect to a matter of your own, please get in touch today.