Back in August 2021, Mahoneys brought you an article on the impending amendments to the Corporations Act 2001 (Cth) (Act),which would allow companies to use technology to sign documents, hold meetings and send meeting material. The full article can be read here.
Since then, those amendments have been passed. The Corporations Amendment (Meetings and Documents) Act 2022 (Cth) (Amending Legislation) received royal assent on 22 February 2022 making the use of technology under the Act permanent. The changes apply to meetings held, and documents sent, on or after 1 April 2022. For electronic signing of documents, they apply to all documents signed on or after 22 February 2022.
The long-awaited amendments are widely welcomed, making the use of technology under the Act a thing of certainty and unity across Australia. Companies and directors will no longer have to rely on piecemeal and temporary legislation to sign documents using electronic means.
Technology to Hold Meetings
Under the Act, a company (and registered scheme) can hold a meeting virtually (or a hybrid meeting) if it is consented to by all the directors provided that, where a meeting is entirely virtual, virtual meetings are permitted under the company’s constitution.
Given these amendments will take effect on 1 April 2022, it is important to review, and update where necessary, the company constitution before April 2022 to ensure meetings can be held using technology.
The Amending Legislation amends section 127 of the Act by allowing a document or deed to be signed electronically provided that:
- a method is used to identify the person and indicate that person’s’ intention to sign a copy or counterpart of the document;
- the copy or counterpart includes the entire contents of the document; and
- the method used was either:
- as reliable as appropriate for the purpose for which the document was generated or communicated in the circumstances; or
- roven to have fulfilled the functions in (a) by itself or together with further evidence.
These amendments are a timely reminder that where signing in counterparts, the entire documents needs to be sent along with the signing panel. It is not sufficient to send the signing page in isolation to the other party for countersigning.
Under the new section 126, an agent of a company can sign, vary, ratify or discharge a contract (including a deed) electronically without the need for the company seal or for their signature to be witnessed. The agent does not have to be appointed by a deed to sign on a company’s behalf provided the agent has express or implied authority to do so.
The amendments also clear up a point of ambiguity in section 127, confirming that a company with a sole director and no secretary can execute documents under this section.
Technology to send documents
Under section 110D of the Act, a document can be sent electronically provided that, at the time the document is sent, it is reasonable to expect that the document would be readily accessible to be useable for subsequent reference.
The recipient may notify the sender (in writing or otherwise) of a preference to be sent the document in physical or electronic form. Regardless of any election, provided section 110D of the Act (and any timing requirements) has been met, the sender will have been deemed to have sent the documents.
However, if an election is made to be sent a document in a particular manner (i.e. in physical form or by electronic means), a failure to comply with that election may result in the sender contravening the Act (see particularly section 110F which can attract up to 30 penalty units). Such a contravention will not affect the validity of any act, transaction, agreement, instrument, resolution or other thing.
What these changes mean for you
These amendments only relate to the use of technology under the Act and as such do not apply to persons executing documents electronically in their individual capacity.
It is important to consider the following:
- the ability to hold meetings and sent documents using electronic means will take effect from 1 April 2022;
- signing documents electronically applies to documents signed on or after 22 February 2022;
- if an election has been made to be sent a document in physical or electronic form, whether the election has been followed;
- whether the company’s constitution allows for the use of technology to hold meetings (if not the constitution needs to be updated); and
- whether the company’s shareholder agreements are consistent with its constitution in relation to the use of technology.
The commercial team at Mahoneys can assist with reviewing, and amending if necessary, the company constitution and shareholder agreements to utilise technology. We can also assist with answering any queries relating to these amendments so that your company can take full advantage of the use of technology to increase efficiency and reduce costs.
 Treasury Laws Amendment (Measures for Consultation) Bill 2021: Use of technology for meetings and related amendments.