With little fanfare, the highly anticipated Corporations Amendment (Meetings and Documents) Bill 2021 (Bill) was passed by both Houses of Parliament in the final sessions of Parliament before the coming Federal Election. The Bill amends the Corporations Act 2001 (Cth) (Corporations Act) and establishes a permanent mechanism to allow companies and registered schemes to hold hybrid (in person and remote) meetings and to use technology to sign and share company- and meeting-related documents.
As noted in our previous article, the Treasury Laws Amendment (2021 Measures No. 1) Act 2021 (Cth) (Temporary Amending Act) had amended the Corporations Act to allow for technologically-assisted meetings and the long-awaited electronic execution of company documents. These changes are only temporary, and remain in effect until 31 March 2022. The Bill was introduced to make these changes permanent.
The Bill applies to documents sent and meetings held on or after 1 April 2022 and to documents that are executed on or after the day after the Bill receives Royal Assent.
Very pleasingly, the Bill amends the Corporations Act to allow:
All of these changes are most welcome as they broaden the methods of execution available to parties to sign documents under section 127 of the Corporations Act, which in turn allows counterparties to rely on the protections and assumptions around execution afforded under section 129 of the Corporations Act.
The Bill also amends the Corporations Act to allow the electronic distribution of meeting-related documents and resolutions required to be considered by the company members.
Under the Bill, company members may elect to receive documents via their preferred communication method by notifying the company. The recipient of certain documents, such as annual financial reporting by companies, registered schemes and disclosing entities to members, can also elect for those documents not to be sent to them by notifying the company.
It is important to note that this change does not apply to documents that are required to be sent to ASIC.
The Bill also amends the Corporations Act to allow companies and registered schemes to hold meetings of members in hybrid or physical format. Virtual meetings will also be permitted but only in circumstances where this has been expressly provided for by the company’s or registered scheme’s constitution. It is probable that most companies and registered schemes will need to update their constitutions to allow the option of holding virtual meetings as this seems likely to become more commonplace in future.
Finally, the Bill has introduced a new measure allowing members with at least 5% of voting rights to request to have an independent person appointed to observe and/or prepare a report on a poll conducted at a meeting of members. The request must be in writing, identify the poll to which it relates and be made no later than five business days before the day the meeting is held.
Members with at least 5% of voting right may also request the company to appoint an independent person to scrutinise the outcome of a poll at the meeting and to prepare a report on the outcome of the poll. Similarly, the request must be in writing, identify the poll to which it relates and be made no later than five business days after the day the meeting is held.
With the introduction of hybrid meetings, votes on resolutions which are set out in the notice of a meeting of members of a listed company or listed registered scheme must be decided on by poll as opposed to the current ‘show of hands’ method. A listed company’s constitution is not capable of providing any other method.
The introduction and eventual passage of the Bill through Parliament is a welcome development. Had this not occurred, the temporary relief under the Temporary Amending Act would have expired on 31 March 2022, sending company directors and secretaries looking for their pens again when signing documents, and sending the process for companies to sign documents and conduct meetings back to the 20th Century, at least until the coming Federal election was conducted, and Parliament sat again.
The Bill has not yet received Royal Assent, but this is expected shortly, in the ordinary course. Stay tuned, and we will update this article, as soon as this happens.
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Martin Nguyen, Partner
Antoine Pace, Partner
Raisa Blanco, Senior Associate
Sylvia Chung, Lawyer