As we set out in our previous Commercial Matters Blog, which can be found here, the Treasury Laws Amendment (2021 Measures No.1) Act 2021 (Cth) (the Act) received Royal Assent on 13 August 2021 and took effect on and from 14 August 2021. The Act also provides welcome amendments to the Corporations Act 2001 (Cth) (the Corporations Act) to bring technology and corporate compliance together again. We know that the Act allows for company documents to be validly executed under section 127 of the Corporations Act by electronic means, but the Act goes further in respect of company meetings. However, the relief is currently temporary, and the measures are set to expire on 31 March 2022.
Summary of the changes
The following key amendments to the Corporations Act are set out in Schedule 1 of the Act:
- directors and shareholders meetings can be held by electronic means;
- documents relating to a meeting can be signed electronically; and
- minutes for meetings of shareholders can be taken, provided to members and stored electronically.
Directors and shareholders meetings
On 5 May 2020, the Treasurer introduced the Corporations Coronavirus (Economic Response Response) Determination (No.1) 2020 (Cth) for a period of 6 months to 5 November 2020. This was later extended to 21 March 2021 by the Corporations (Coronavirus Economic Response) Determination (No. 3) 2020 (Cth). The Determinations allowed corporate meetings to be held virtually. However, after 21 March 2021, meetings were again required to be held at a physical location. Technology was only permitted to be used to connect people from other locations.
The amendments set out in the Act now allow meetings of directors, shareholders and members of registered schemes to be held:
- virtually by using virtual meeting technology (e.g. Zoom);
- physically by inviting persons to attend a location;
- physically by inviting persons to attend different locations and using virtual meeting technology to connect the different locations; and
- using a combination of the above methods.
For a virtual meeting, the place of the virtual meeting is taken to be the address of the registered office and the time of the meeting is taken to be the time at the registered office. Documents may be tabled by providing it to the attendees in advance or by making them accessible during the meeting (e.g. by screen sharing).
Other requirements of conducting virtual meetings include ensuring that:
- the notice of meeting includes information to allow persons to attend the meeting (i.e. link/dial in details and date and time of the meeting) and details of any physical location(s) (if any);
- ‘the members as a whole’ have a reasonable opportunity to participate in the meeting;
- participants entitled to vote must be given the opportunity to vote; and
- members have an opportunity to speak and ask questions verbally.
At a virtual meeting of shareholders, votes will be taken on a poll rather than a show of hands unless the constitution provides otherwise.
Documents relating to meetings
Documents relating to meetings include the following:
- documents that include requests (e.g. putting forward a member’s resolution for consideration);
- notices of meetings;
- notices or records of resolutions;
- notices of a statement in relation to a meeting or a matter to be considered at a meeting;
- documents relating to a proxy;
- questions for auditors and responses; and
- minute books,
(Meeting Documents).
The amendments in the Act now allow the following:
- Meeting Documents can be given by electronic means (i.e. providing the document electronically by, for example, sending an email, or by using electronic or traditional means to provide details to access the Meeting Document) provided that for members, the persons did not opt-in to receiving hard copies;
- Meeting Documents can be signed electronically provided that the method used to sign the document is reliable and has identified the signatory;
- information may be recorded by electronic means in a minute book; and
- the minute book may be kept electronically if a reliable method is used to maintain the integrity of the information and is open for inspection at the same place where a hard copy would have been required to be stored (e.g. registered office or principal place of business).
These new rules (not including the rules regarding to the method of voting and the time and place of meetings) are mandatory rules rather than replaceable rules. This means that a company cannot change the rules in its constitution.
What does this mean for companies?
The COVID-19 lockdowns have presented practical challenges associated with executing documents and holding meetings. The Act introduces welcome amendments, which will streamline the document execution process and allow companies to hold meetings virtually. While the changes are set to expire on 31 March 2022, the Government has alluded to the introduction of permanent measures.
How can we help?
If you have questions or require assistance with the execution of documents or virtual meetings, please do not hesitate to contact a member the Coleman Greig’s Commercial Advice Team who would be more than happy to assist you.
This material is provided by Coleman Greig Lawyers as general information only in summary form on legal topics current at the time of first publication. The contents do not constitute legal advice and should not be relied upon as such. Formal legal advice should be sought in particular matters.
