Cth Draft Bill for Using Technology to Hold Meetings and Sign and Send Documents
Tuesday 20 July 2021 @ 2.16 p.m. | Legal Research
On 25 June 2021, the Federal Treasury released the Treasury Laws Amendment (Measures for Consultation) Bill 2021: Use of technology for meetings and related amendments (Cth) (‘the Draft Bill’) for stakeholder consultation. The consultation period officially closed on 16 July 2021.
Purpose of the Draft Bill
The main purpose of the Draft Bill is to make permanent the temporary measures that were enacted during the COVID-19 pandemic. These measures enabled corporate compliance with certain requirements under the Corporations Act 2001 (Cth) (‘the Corporations Act’), regarding meetings and execution of documents.
Initially, the Government issued two determinations to provide temporary relief to enable corporations to hold virtual meetings and execute documents electronically. These determinations expired on 21 March 2021. However, the Treasury Laws Amendment (2021 Measures No. 1) Bill 2021 (Cth) subsequently received assent, which allowed companies to hold virtual meetings and electronically sign documents until 15 September 2021. The Government announced its intentions to make these changes permanent on 17 February 2021.
If passed, the Draft Bill would amend the Corporations Act and allow for electronic execution of documents, virtual and hybrid meetings, and electronic signing of meeting-related documents. The Draft Bill also seeks to include a provision that would require the new amendments to be reviewed within two years.
Executing Documents Electronically
Schedule 1 of the Draft Bill proposes a permanent statutory mechanism for corporations to execute documents electronically.
The Draft Bill seeks to allow allow for the following changes:
- The director, secretary or witness may sign the document electronically (or a copy or counterpart of the document) provided that the copy includes the entire contents of the document, a method of identification is used to signify an intention to sign, and the method is appropriately reliable in the given circumstances.
- The fixing of the seal can be witnessed electronically using videoconferencing or other technology. The witness would be required to sign the document, or a copy or counterpart of the document and include an annotation stating they had observed the fixing of the seal electronically.
- Each person required to execute the document may sign a separate copy or counterpart of the document. This will allow for split execution, where directors of the same company may sign different documents and there is no requirement that all signatures exist on one document.
- For proprietary companies with a sole director and no company secretary, documents can be validly executed by the director signing the document or the director witnessing the fixing of the seal.
Hybrid and Virtual Meetings
According to the Exposure Draft Explanatory Materials ('the Explanatory Materials'), the Draft Bill also intends to:
“make permanent changes to give companies and registered schemes greater flexibility to use technology to hold meetings”.
The Draft Bill seeks to allow companies to hold three different types of meetings:
- Physical meetings
- Hybrid meetings
- Wholly virtual meetings
The Explanatory Materials comments that the Draft Bill recognises that:
“the meeting rules apply to a broad range of companies, from small not-for-profit companies to large listed companies, and allows each company to select the format for the meeting that is most appropriate for that company”.
Additionally, the Draft Bill does not prescribe the use of particular technologies, formats or methods of conducting voting or polling. This is intended to allow for greater future flexibility for the use of new and emerging technologies.
The Draft Bill also proposes that regardless of the format of the meeting, members entitled to attend the meeting, as a whole, must be afforded a reasonable opportunity to participate in the meeting. The Draft Bill details the proposed required threshold requirements to satisfy this obligation which depends on the type of meeting. The Explanatory Materials further elaborates:
"The reasonableness of the time for a physical or hybrid meeting is determined by having regard to the place at which the meeting is held. A wholly virtual meeting is held at a reasonable time if that time would have been reasonable at any physical venue where it would have been reasonable to hold the meeting. "
Meeting Related Documents
If passed, the Draft Bill would also allow any document that relates to a meeting to be given and signed electronically. Some examples of such documents include a notice of meeting, a notice of a resolution, documents relating to proxy, minute books and questions for auditors and the corresponding responses.
However, the proposed amendments under the Draft Bill specifies that a document can only be given electronically if:
- it is reasonable to expect that the document would be readily accessible so as to be useable for subsequent reference at the time that the document is given; and
- the individual receiving the document has not opted to receive the documents in hard copy.
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Sources:
[Draft] Treasury Laws Amendment (Measures for Consultation) Bill 2021: Use of technology for meetings and related amendments (Cth) and explanatory materials available on TimeBase’s LawOne service.
