Virtual company meetings, counterpart and electronic executions for corporate business is now permitted under new treasurer determination

On 5 May 2020, Treasurer Josh Frydenberg made a determination as a result of the ongoing COVID 19 saga that modifies the formal and traditional procedures for a company to:-

1. Execute documents by its officeholders; and
2. Hold its Annual General Meeting (“AGM”) and other meetings to deal with company business.

The determination is available online at

https://www.legislation.gov.au/Details/F2020L00553 and will be effective for six (6) months.

The explanatory statement is available online at

https://www.legislation.gov.au/Details/F2020L00553/Explanatory%20Statement/Text.

 Execution of Documents

Section 127 of the Corporations Act 2001 (Cth) (“Act”) traditionally requires documents to be executed in an original form by two (2) or more officeholders (or a sole director/secretary for single officeholder entities) who sign the same document, without a common seal.

The determination modifies this section of the Act and now permits company officeholders to execute documents by:-

1. Signing a copy or counterpart of the document in physical form;
2. Using electronic communication which reliably identifies the person and indicates the person’s intention about the contents of the document; or
3. Using a combination of these methods (eg one officeholder signs and scans a document to the other, who then prints and places an original signature on it).

The entire document must be included in the physical or electronic communication.

Methods of electronic communication are wide and varied, and are referenced back to the requirements in the Electronic Transactions Act 1999 (Qld). The Explanatory Memorandum gives examples such as pasting a copy of a signature into a document, execution on an electronic device using a stylus or finger and using signature based software such as DocuSign.

A person is entitled to rely on the due execution statutory assumptions set out in section 129(5) of the Act when a document is executed in this fashion.

Online / virtual company meetings

Provided the company constitution is complied with, the determination will now permit:-

1. Notices of meetings (AGM’s, general or creditors meetings etc) to be given via email, with instructions explaining how to participate in a virtual setting.
2. Meetings to be held (and quorums convened) remotely or as virtual meetings without the need for physical presence, whilst public health restrictions remain in place.
3. Attendees’ to speak (ask questions) and proxies to be appointed through the use of technology.
4. Votes to be decided by a poll and each person entitled to be given the opportunity to vote in real time or ahead of the meeting (if practical).

It should also be noted that in response, the Australian Securities and Investment Commission (ASIC) has supported the holding of virtual meetings and on 13 May 2020, adopted a ‘no-action’ position, effectively allowing entities with financial years ending between 31 December and 7 July to postpone their AGM’s by up to seven (7) months. There are very strict eligibility requirements surrounding ASIC’s position, that can be reviewed in detail here [1].

If you require any further information as to the Treasurer’s direction and its impact on your own company dealings, please do not hesitate to contact Marino Law to speak to one of our experienced commercial lawyers today.

[1] It is beyond the scope to explore such topics in this article and professional advice should be sought before any reliance is placed on such matters.