The Corporations Amendment (Meetings and Documents) Bill 2021 (the Bill) passed both houses of parliament on 10 February 2022. The Bill will allow companies and registered schemes to hold virtual meetings, distribute meeting‑related materials and validly execute documents electronically. These reforms build on recently renewed temporary relief, which will remain in place until 31 March 2022.
What You Need to Know
The permanent reforms:
- ensure that meetings can be held physically, as a hybrid or, if expressly permitted by the entity’s constitution, virtually, provided that members, as a whole, are given reasonable opportunity to participate in the meeting;
- ensure that companies and registered schemes can meet their obligations to send documents in hardcopy or softcopy and give members the flexibility to receive documents in their preferred format; and
- allow documents including deeds to be validly executed in technology-neutral and flexible manners, including by company agents.
The temporary meeting and electronic communication measures currently in place to assist companies to facilitate meetings through the use of technology will remain in place until 31 March 2022 (refer to BoardRoom’s summary available here).
Commencement
The permanent changes to shareholder meetings will take effect from 1 April 2022 while changes to electronic execution will come into effect after the Bill receives Royal Assent.
Technology Neutral Signing
Technology Neutral Signing is a reference to not mandating the type of technology that must be used for document signing, rather, it refers to the flexibility to use any available technology to sign documents electronically.
Signing
The Bill sets out rules for how:
- documents signed by or on behalf of a company under sections 126 and 127 of the Act;
- documents signed under the Corporations Act 2001 (Cth) (the Act) which relate to certain meetings or resolutions; and
- any document specified in the Corporations Regulations
can be signed in a technology-neutral manner.
The Bill does not limit the ways in which a person may sign a document (including a deed). Similarly, nothing in the Bill prevents a document from being signed in a traditional manner or using traditional practices (i.e., using wet ink and a physical document).
In addition, the Bill confirms a person can sign documents in different capacities. If a person is required or permitted to sign a document in more than one capacity (i.e., as a Director and Company Secretary), then they are treated as a different person in each capacity.
Changes to the function of Agents
The Bill amends s126 of the Act to extend the functionality available to agents. Agents may now execute a document (including a Deed), as well as make, vary, ratify or discharge a contract. The agent need not be appointed by deed. This abrogates the common law rule which requires an agent acting on behalf of a company to be appointed by deed in order for them to execute a deed on behalf of the company.
Sole Director Companies
The Bill amends s127 of the Act to apply to companies with a sole director with no company secretary. Documents are deemed to be validly executed by sole directors with no company secretaries if the sole director signs the document or the sole director witnesses the fixing of a company seal to a document.
Entitlement to make assumptions
A person may now assume that a document has been duly executed by a company if:
- the document appears to have been signed in accordance with subsection 127(1); or
- the company’s common seal appears to have been fixed to the document in accordance with subsection 127(2) and the fixing of the common seal appears to have been witnessed in accordance with that subsection and subsection127(2A).
Giving Documents Electronically
The Bill permanently allows a company, the responsible entity of a registered scheme or a disclosing entity to give meetings-related documents to a person electronically or in physical form.
This new regime applies to any meetings-related document that a company, responsible entity or disclosing entity is required or permitted to give, send or otherwise provide to a person under the Act. It does not apply to documents which are sent to ASIC or the Registrar.
Examples of such documents include (but are not limited to):
- notices of meetings;
- notices of a resolution or a record of a resolution;
- notices of a statement in relation to a meeting or a matter to be considered at a meeting; and
- minute books.
The regime will be revised in 2 years to ensure there are no unintended consequences of the Bill.
How documents may be sent
A document may be provided either by:
- sending the document in physical form;
- giving the document to the person by using electronic means (e.g., sending an email);
- providing the person, in physical or electronic form, with details sufficient to allow them to view or download the document electronically (e.g., by giving them a card or sending them an email with a link to a website); or
- in any other permitted way (e.g., in a way permitted by a more specific provision which deals with how a particular type of document is sent to a person or in a way which is set out in a company’s constitution).
A document can only be given electronically if it is reasonable to expect that the document would be readily accessible in the future as a reference of the document originally provided i.e by email or accessible link.
Annual reports and documents prescribed in the regulations are taken to be sent if they are made readily available on a website. It is expected that companies and registered schemes would satisfy this by publishing the document on their website or a share registry website. This is consistent with the existing rules for sending annual reports to members.
Elections by Members
The Bill will enable members to elect to receive documents electronically or to receive physical copies (or not at all). The Bill introduces a requirement for members to be notified of their right to elect to receive a document electronically or in physical form ‘at least once’ each financial year and for entities to make the notice ‘readily available on a website’ (s110K). Companies will be required to take reasonable steps to provide the member with the document or class of documents in the requested form.
Where members that have notified a company or responsible entity that they wish to receive documents in physical or electronic form, or do not wish to be sent a copy of an annual report, there is no requirement for them to re-make their request.
Hybrid Meetings of Shareholders of a Company or Registered Scheme
How meetings may be held
The Bill makes permanent changes to clarify that companies and registered schemes can use technology to hold meetings. The Bill also makes clear that charities and not for profit organisations can use technology to hold meetings.
Companies may hold meetings of shareholders at:
- one or more physical locations (a physical meeting);
- one or more physical locations and using technology to allow persons to attend virtually (a hybrid meeting); or
- using technology to allow members to attend virtually if this is expressly permitted or required by the constitution (a wholly virtual meeting).
All persons participating in the meeting (virtually or in-person) are taken to be ‘present’ at the meeting and will form part of the quorum. Where a meeting is virtual only, the place of the meeting is deemed to be the Company’s head office.
Reasonable opportunity to participate
The Bill further confirms that regardless of how a meeting is conducted, the members as a whole must be given a reasonable opportunity to participate.
Non-exhaustive elements of the reasonable opportunity to participate include:
- the physical venue for a meeting must be reasonable for all shareholders. Reasonableness is determined with reference to where members reside or where directors are located;
- the meeting must be held at a reasonable time; and
- the technology used must be reasonable. i.e., the technology to allow members to attend the meeting must also allow members to vote.
Requests for Independent Reports on Polls
The Bill allows shareholders with at least 5% of the voting power of a company to call for an independent person to be appointed to observe and/or prepare a report on a poll conducted at a members meeting.
The Explanatory Memorandum indicates the appropriate independent person can either be the Company’s Auditor or Share Registry service provider.
Voting on Substantive Resolutions
The Bill now requires resolutions in the notice of meeting of listed entities to be considered by a ‘Poll’ rather than a ‘Show of Hands’. This brings into law a recommendation by the ASX’s Corporate Governance Council and is expected to be more accurate, reliable and better reflect the voting power of all shareholders.
Contact BoardRoom for more information:
