Corporations law embraces technology
The electronic signing of documents by companies and the conduct of shareholders’ meetings via electronic means is now enshrined in Australian law. Previously, there was uncertainty regarding the validity of actions taken via electronic means, which restricted the use of technology.
The Corporations Amendment (Meetings and Documents) Bill 2021 (Cth) (Bill) received royal assent and commenced operation on 22 February 2022. This Bill is welcomed as companies can now utilise technology to hold meetings and to execute, sign and share company and meeting related documents.
However, companies are still bound by their Constitutions and Shareholders Agreements, which may call for wet signatures and physical meetings. If so, these documents should be updated to remove any such limitation.
Key points of the Bill
- Exercising a company’s powers under section 126 of the Corporations Act (Act) can now be done electronically;
- Execution of documents by a company under section 127 of the Act, can now be done electronically;
- Meetings and resolutions of a company can now be convened and signed electronically;
- A sole director company without a secretary can now sign electronically;
- A person can sign a document in different capacities, but those capacities must be expressly identified;
- Members with at least 5% of votes can request to have an independent person appointed to observe and/or prepare a report on a poll conducted at a meeting of members;
- Votes on member resolutions for unlisted companies may be decided on a show of hands unless a poll is demanded;
- Members must be notified to receive documents electronically and can elect to receive documents electronically; and
- Members can be notified of meetings electronically and notices are taken to be received on the business day after sent.
Implications
The changes introduced by the Bill apply to documents sent and meetings held on or after 1 April 2022 and the Bill applies to documents executed on or after 23 February 2022.
We also note again that companies are still bound by their Constitutions and Shareholders Agreements, which may need to be amended to utilise the provisions in the Bill.
