Important Corporations Act changes allow for virtual meetings and electronic execution
The Corporations (Coronavirus Economic Response) Determination (No. 1) 2020 (Determination) came into effect on 6 May 2020. The temporary changes, in force until 6 November 2020, are designed to overcome the impact of COVID-19 by allowing virtual AGMs and electronic execution. In a snapshot, companies can:
- convene, give notice of and conduct meetings virtually; and
- electronically execute documents using a physical or e-signature.
The changes allow companies to hold meetings (including AGMs) entirely online. Companies holding virtual meetings must ensure that they provide attendees with an opportunity to speak, vote and otherwise participate in the meeting. This means that there is no requirement for physical attendance to achieve a quorum. Further, the Determination requires votes to be taken by a poll rather than a show of hands and if practical, votes should be recorded ahead of the meeting. Companies can use technology to enable these new arrangements.
Companies are entitled to send notice of a meeting electronically. The notice can be attached to an email or sent via a link where members can view and download the notice. For members without email, the company can send a letter to the member containing the URL to the notice. The notice should specify any new arrangements regarding speaking, voting and general participation. If notice had already been given prior to these changes taking effect, a fresh notice outlining the new arrangements must be given at least seven days before the meeting.
The Determination enables documents to be executed electronically under section 127 of the Corporations Act meaning that signatories no longer need to sign the same physical document. The Explanatory Statement clarifies that this change provides several options:
- signatories can physically sign different copies of the document (split execution);
- signatory one can print, sign and scan the document and send that document to signatory two who does the same (modified split execution); or
- signatories can apply their e-signature to electronic versions of the document (electronic execution).
In practice, signatories can sign a document using a stylus or a platform such as DocuSign.
We welcome these changes on virtual AGMs and electronic execution which provide legal certainty and assist companies to carry on business in the COVID-19 environment.
Please contact a member of the Lander & Rogers team to discuss how these changes affect your company.
Authors: Jennifer Goh, Lawyer and Shira Appelboom, Graduate
Our team is actively monitoring and considering the implications of legal and regulatory developments in response to the COVID-19 pandemic. You can find our COVID-19 collection here.
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