In order to reduce the effects of COVID-19 on Australian companies, on 6 May 2020 the Federal Government introduced the Corporations (Coronavirus Economic Response) Determination (No. 1) 2020 (“the Determination”) which amends the legislative requirements for company meetings and the signing of company documents that are not compatible with public health requirements for social distancing. The determination will apply on a temporary basis until 6 November 2020.
KEY TAKE OUTS:
- The Federal Government has made corporate governance a whole lot easier in times of social distancing.
- Company meetings such as Annual General Meetings (AGMs) can be conducted online.
- Notice of company meetings can be provided by electronic transmission such as email.
- Signing company documents can be done electronically.
- The changes will apply until 6 November 2020.
The Determination ensures that companies and entities that are required or wish to hold a meeting including AGMs, may do so using technology rather than face-to-face meetings. The Determination introduces the following changes:
- One or more technologies can be used to enable all persons entitled to attend a reasonable opportunity without being physically present in the same place.
- All persons participating in the meeting will be taken to be present at the meeting so a quorum can be achieved through technology.
- A vote taken at the meeting must be taken on a poll and not on a show of hands to give each person entitled to vote an opportunity to participate in the vote in real time and where practicable by recording their vote in advance of the meeting.
- All persons attending the meeting must be given an opportunity to speak and ask questions.
- A proxy may be appointed using technology.
- Notice of a meeting may be issued through email setting out or attaching notice of a meeting or providing a link to where it can be downloaded.
Electronic Execution of Documents
Under section 127 of the Corporations Act (Cth) 2001 a company may execute a document without using a common seal if the document is signed by two directors or a director and a company secretary. The Determination modifies this provision enables a company to execute a document without a common seal if each person required to sign the document on behalf of the company either:
- Signs a copy or counterpart of the document in physical form; or
- Uses electronic communication which reliability identifies the person and indicates the person’s intention about the contents of the document.
In practice, there are a wide variety of means by which officers of a company might sign a document electronically. These include:
- Pasting a copy of a signature into a document;
- Signing a PDF on a tablet, smartphone or laptop using a stylus or finger; or
- Cloud-based signature platforms like DocuSign.
While the Determination is in effect, signatories do not need to sign the same physical document and instead, a document could be signed and scanned by the first signatory and then printed and signed by the second signatory, or separate electronic signatures could be applied to fully electronic versions of the document. If these elements are satisfied, then an electronic signature applied under section 127 will be effective to execute a document.
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