The pen is not mightier than the sword…or Zoom

The Bill inserts a new Division 1 of Part 1.2AA into the Corporations Act that allows certain documents to be signed in a flexible and technology-neutral way, including:

• documents (including deeds) to be signed by or on behalf of a company under Corporations Act, ss126, 127; and
• documents relating to certain meetings or resolutions.

A person is taken to have signed a document in accordance with Division 1 if:

• the method of signing identifies the person and indicates their intention in respect of the information recorded in the document; and
• the method used was either as reliable as appropriate for the purpose for which the information was recorded, or proven in fact to have fulfilled the functions described in the dot point above.

The Bill takes a technology neutral approach, does not mandate the use of any particular type of technology, and facilitates the use of other technologies that may be developed in the future.

Electronic signing under s 127 is permitted, however the TLA1 Act does not include the provisions in the new Div 1 of Part 1.2AA regarding technology neutral signing.

Split execution of documents is permitted.

The document a person signs need not include the other signatory’s signatures and each signatory may execute the document using different methods, eg one director signs physically while the other signs electronically.

For companies with a common seal, the fixing of the common seal may be witnessed in a technology-neutral way, provided that:

• the person observes the fixing of the seal by electronic means;
• the person signs the document; and

a method is used to indicate that the person observed the fixing of the seal to the document.

The authorisation in s 126, Corporations Act, for agents is extended to allow agents to execute documents (including deeds) on behalf of companies.

Agents need not be appointed by deed to execute a deed, and an agent’s execution of a deed need not be witnessed. This displaces the common law rule requiring a company’s agent to be appointed by deed to execute a deed on behalf of the company.

No, an agent’s authorisation under s 126 is limited to the agent making, varying, ratifying or discharging a contract on behalf of a company.

The common law requiring a company’s agent to be appointed by deed to execute a deed on behalf of the company applies.

The Bill expressly clarifies that:

• it does not limit how a person may sign a document (including a deed). For example, documents can still be signed in wet-ink under s 127, and a company’s constitution may set out ways in which a document (including a deed) may be executed or signed in addition to the mechanisms set out in ss 126 and 127;
• it allows a person to sign in different capacities. If provided for in the document, a person may sign the document in one or more capacities by only signing the document once;
• consistent with ss 126 and 127 of the current law, a document or deed need not be delivered to be validly executed as a deed. This is the case even where the common law requires that a document or deed is delivered in order to be validly executed. Where a document is executed by signature, the signature need not be witnessed, or made on paper or parchment of vellum to be valid; and

the assumptions in s 129 of the Corporations Act apply to the new mechanisms for executing documents.

Companies (including companies registered as charities), registered schemes, and disclosing entities, can hold physical meetings or use virtual meeting technology to hold hybrid meetings, but can only hold wholly virtual meetings if expressly required or permitted by the constitution.

Members as a whole must have a reasonable opportunity to participate in meetings, which includes requirements to hold meetings at a reasonable time and place, use reasonable technology to connect more than one physical venue, and allow members to ask questions and make comments orally or in writing.

Note: Despite the limitation on wholly virtual meetings, ASIC may invoke its “emergency” powers to facilitate wholly virtual meetings if circumstances require it.

Virtual meeting technology can be used to hold company and scheme members’ meetings and directors’ meetings (together, Chapter 2G meetings), regardless of what the constitution provides, until 31 March 2022.

This is underpinned by essentially the same “reasonable opportunity to participate” requirement , with other accessibility requirements forming distinct rights conferred on members.

Companies, registered schemes and disclosing entities can provide any person (ie directors, members, auditors, among others):

• meeting-related documents (including minute books) or resolutions to be considered without a meeting;
• annual financial reports; or
• notifications to members of election rights in relation to receiving documents,

in one of the 5 ways set out below, butexcluding documents to be sent to ASIC or the Registrar (ie the ATO).

Notes:

• Meeting-related documents can be signed electronically: see Electronic signing of documents above.

Regulation-making powers have been inserted to allow the Corporations Act to be modified to capture other types of entities.

Until 31 March 2022, Chapter 2G meeting documents or resolutions to be considered without a meeting can be communicated to members electronically for virtual, hybrid or physical meetings, provided that:

• it is reasonable to expect that the document would be readily accessible so as to be useable for subsequent reference; and

if the recipient is a company or scheme member, the recipient has not opted to receive hard copy meeting documents.

Members of companies, registered schemes and disclosing entities can elect to receive:

• meeting-related documents, electronically or in hard copy, or not to receive annual reports or prescribed documents at all; and
• documents in a particular format on an ad hoc basis.

Companies have 30 days to comply with a new member election to receive documents in hard copy.

Members of companies and registered schemes can elect to receive Chapter 2G documents in hard copy only, and not to receive annual reports.

Requires companies to provide hard copies within 10 business days.

A member or group of members of a company or registered scheme with at least 5% of the voting power can request to have an independent person appointed to observe and/or prepare a report on the outcome of a poll conducted at a members' meeting.

The observer may be the auditor or registry service provider, unless the resolution relates to them.