COVID-19 virtual company meetings and electronic execution of documents
2020 has been a year that has required rapid adaptation, both in the law and otherwise. In particular, the COVID-19 pandemic has provided challenges for companies to execute documents and for officers, shareholders, or members of a registered scheme to meet face-to-face for meetings.
Currently, the Electronic Transactions Act 1999 (ETA) allows the use of electronic transactions, however, it does not apply to the Corporations Act 2001 (Corporations Act). The restrictions on movement caused by the pandemic required the Treasurer to make certain temporary changes to allow meetings to be held and documents to be signed by electronic means.
The temporary modifications were put in place via the Corporations (Coronavirus Economic Response) Determination (No. 3) 2020 (Determination). The Determination was used to allow meetings to be held using technology to allow persons to participate without being physically present in the same place. The Determination also provides that execution of company documents is allowed via an electronic communication within the meaning of the ETA.
On 19 October 2020, the Australian Government opened up a consultation to make permanent, and expand upon, the changes in the Determination. The Corporations Amendment (Virtual Meetings and Electronic Communications) Bill 2020 (Bill) was proposed to amend the Corporations Act. The Bill’s Explanatory
Materials provides that Schedule 1 of the proposed Bill allows electronic means or alternative technologies to be used to:
- execute company documents;
- hold meetings of directors of a company, meetings of shareholders of a company (including Annual General Meetings) and meetings of members of a registered scheme;
- execute documents relating to meetings;
- record, keep and provide minutes; and
- provide notice of a meeting and give other documents relating to meetings to the prospective attendees.
Where the current law, absent the Determination, requires a company document to be executed with all persons physically signing the same hard copy, company documents under the proposed Bill may be executed using electronic means. The current law, absent the Determination, also requires that company meetings are to be held at a physical location.
Public consultation on the exposure draft legislation and explanatory material closed on 6 November 2020.
The content of this article is intended to provide a general guide to the subject matter. Specific advice should be sought about your specific circumstances.