Temporary measures
Corporations (Coronavirus Economic Response) Determination (No 1) 2020 does two things.
- It temporarily removes any legal uncertainty concerning the validity of virtual (online only meetings) by ensuring companies are able to give notice of, convene and conduct meetings by electronic means.
- It temporarily allows company officers to sign a document electronically (ie the changes enable the entire process of executing a document to be carried out electronically).
Announcing the changes, Treasurer Josh Frydenberg said that they provide 'certainty to companies and boards about how they can meet their legal obligations over the next six months'.
Timing
The changes have been put in place because of the COVID-19 restrictions and are now in force. The changes will cease to operate on 6 November 2020.
Virtual AGMs
Section 5 of the instrument allows entities that are required or permitted to hold meetings (including AGMs) to do so remotely as online only meetings.
The changes:
- clarify that there is no requirement for physical attendance for purposes such as achieving a quorum
- enable notices to be sent to all those entitled to attend using one or more technologies (including where recipients have not provided an email address)
- allow those attending the meeting to speak using technology
- allow a proxy to be appointed using technology
- require that votes be taken by a poll (not be show of hands) and that each person entitled to do is given the opportunity to vote in real time and if practical, ahead of the meeting.
Conditions – notice requirements
- Where email addresses have not been provided by people entitled to attend the meeting, entities are still required to issue a letter or postcard setting out where the person can view relevant information online and download it.
- In addition, the notice of meeting must include information about how persons entitled to attend and participate in the meeting can do so (including by proxy), how participants can vote and ask questions and any other information they need to know to participate using technology.
Where a notice has already been issued: If notice of the meeting has already been issued, a supplementary notice must be issued at least seven days before the meeting with information about how to participate electronically.
Electronic execution
Section 6 modifies section 127 of the Corporations Act to enable the entire process of executing a document to be carried out electronically.
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 will be effective to execute a document.'
Announcing the change, Treasurer Josh Frydenberg said that 'previously, in a number of cases, signatories were required to sign the same physical document. This will ensure that documents are able to be properly executed at a time when ordinary business operations have been disrupted'.
[Sources: Treasurer Josh Frydenberg media release 05/04/2020; Corporations (Coronavirus Economic Response) Determination (No. 1) 2020]
