Electronic execution of company documents is now available for businesses.
On 5 May 2020, the Treasurer, Josh Frydenberg made a determination to modify the Corporations Act 2001 (Cth) (Act) and the Corporations Regulations 2001 (Regulations), the Insolvency Practice Rules and the Passport Rules in light of the impact of COVID-19 on businesses and the Australian economy.
Briefly, the determination effect provisions around meetings and the execution of company documents.
A full copy of the determination is here.
The determination allows for:
- Meetings may now be held using one or more technology to allow individuals to participate without being physically present;
- If a vote needs to be conducted in real-time it must be via a poll and not a show of hands;
- A quorum can be achieved with participants attending online;
- Attendees to speak using the technology;
- A poxy to be appointed using the technology; and
- A notice for the meeting may be provided using technology, the notice must include all the relevant information including how a person can participate and vote.
If no email addresses are provided to those who are entitled to attend the meeting, then a letter or postcard must be issued with all the relevant information such as including the URL to the notice.
If a notice has already been issued prior to the changes taking effect, then a new notice will need to be issued outlining the new arrangement and any relevant information. The new notice will need to be issued 7 days before the scheduled meeting.
Executing company documents
The determination modified s127 of the Act allowing for agreements and deeds to be electronically signed by company officers.
Briefly, the determination allows for a company to execute a document (including in electronic form) without a common seal if 2 directors, a director and a company secretary, or the sole director/company secretary of a proprietary company either:
- Signs a copy or counterpart of the document in physical form; or
- Use a method that identifies the person in the electronic communication and indicates the person’s intention about the content of the document.
The explanatory statement gave examples of the ways which company officers may execute documents electronically, and they include:
- Pasting a copy of a signature in a document;
- Signing a PDF on a tablet, smartphone or laptop using a stylus or finger; or
- Cloud-based signature platforms.
This will temporarily allow companies to execute documents through multiple counterparts. However, any documents executed must be complete and full, it will not be sufficient for the company officers to just sign the execution page.
When will the amendments come into effect?
The determination came into effect on 6 May 2020 and will be in effect until 6 November 2020.
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