The Federal Government has now passed the Treasury Laws Amendment (2021 Measures No. 1) Act 2021 (Amending Act) which amends the Corporations Act 2001 (Cth) (Corporations Act) to allow for technologically-assisted meetings and the long-awaited electronic execution of company documents.
These changes became effective on 14 August 2021.
As noted in our previous article, the Amending Act has been drafted in response to the expiry of reforms under Corporations (Coronavirus Economic Response) Determination (No. 3) 2020 (Determination) which expired on 21 March 2021. The expiry of these reforms resulted in electronic execution of company documents (a popular move amongst company directors and advisors) being unavailable following expiry of the Determination. The Amending Act has addressed that anomaly.
The Amending Act amends the Corporations Act to allow:
The Amending Act also amends the Corporations Act to:
Amending Act’s reforms only temporary
The above changes will only remain in effect until 31 March 2022 (section 1679F). This means that, unless the changes are extended or are made permanent, companies will no longer be able to electronically sign documents or hold virtual meetings after that date. Company officers will need to be aware of this date and be prepared to return to physically signing documents, witnessing company documents, and holding in person meetings unless further changes are made.
ASIC’s ‘no action’ position on virtual meetings
It is also likely ASIC’s ‘no action’ position to virtual meetings will be amended. ASIC previously issued a media release stating a ‘no action’ position would be taken concerning virtual meetings after the expiry of the Determination on 21 March 2021. As the Amending Act provides guidance on how virtual meetings are to be conducted, ASIC is now likely to enforce these new provisions of the Corporations Act if virtual meetings are held.
No ASIC ‘no action’ on electronic signature
ASIC has not issued a ‘no action’ position with regard to electronically signed company documents, commenting that this is primarily an issue between private parties.
While it is arguable that a party to a contract might challenge the validity of the contract based on an argument that it was deficiently executed by a company pursuant to the Corporations Act, there are likely to be grounds on which the contract can be upheld (for example, on the basis of mutual promises passing between the parties, or a promissory estoppel). Nevertheless, we would recommend that companies review key contracts that were executed before the Amending Act came into force, to verify they have been correctly executed.
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Antoine Pace, Partner
Raisa Blanco, Senior Associate
Eric Chen, Lawyer