Among the many negatives that COVID-19 has brought to the business environment, there shines a few examples of progress and positive change. No doubt you will have by now read articles about (and experienced for yourself) the benefits of working from home, and the positive impact this can have on flexible work arrangements, lifestyle and productivity. Similarly, the requirements for company meetings and document execution have now become more flexible to adapt to the new norm of working remotely and conducting meetings via zoom.
Recent amendments to the Corporations Act 2001 (Cth) (the Act) reflect this flexibility and changing business landscape. The Corporations (Coronavirus Economic Response) Determination (No. 1) 2020 (the Determination) came into force on 6 May 2020 and alters the requirements of meetings and document signing for companies. These new requirements will remain in place until 5 November 2020.
So what has changed?
Business continues, and the need for meetings such as Annual General Meetings and creditor meetings does not change. As a result of the Determination, these meetings may now occur without the need for a physical face to face meeting. If a meeting is required under the Act, the meeting may now be held using one or more technologies, such as Zoom, Skype or FaceTime, provided it gives all persons entitled to attend a reasonable opportunity to participate. Where a meeting is held using technology:
(a) Participants will be able to vote using a poll, however they will not be able to vote by a show of hands;
(b) If practical, voting is to be undertaken and recorded in advance of the meeting; and
(c) Proxies may be appointed using technologies specified in the notice of the meeting.
Notices of meetings and any other information to be provided with the notice and at the meeting may be provided by one or more technologies. This means that proxies, meeting documents and notices can all be handled online and in soft copy prior to the meeting.
2. Executing company documents
A company can now execute a document without using a common seal if each person required to sign on the company’s behalf either:
(a) Signs a physical copy or counterpart of the document – this means each director may sign a separate hard copy of the same document, rather than all directors signing the same original document; or
(b) Signs an electronic document using a method that:
(i) identifies the person and their intention in respect of the document’s contents; and
(ii) is considered reliable in light of all the relevant circumstances.
This change, allowing the electronic execution and counterpart execution of documents, provides companies with further flexibility during a time where face to face meetings have become quite rare. Documents may now be executed using electronic signatures on PDFs, via platforms such as DocuSign and Citrix RightSignature and with the assistance of technology that can reliably identify the signor, such as voice communication.
The increased flexibility provided by the changes to meetings and document execution is an example of how the business landscape is adapting to the current environment. This provides more options for companies to maintain, as far as is possible, their usual business operations.
What will occur in the future beyond COVID-19?
At this stage, the new requirements only remain in place for 6 months, with their operation ceasing on 5 November 2020. After that time, unless the Determination is extended or other legislation is passed, companies will need to comply with the Act which may mean reverting back to face to face meetings and original hard copy documents being signed by company directors. Time will tell whether these changes to the Corporations Act to incorporate technology will become a more permanent part of our business landscape.
If you need assistance staying on top of the changing laws and regulations or ensuring that your corporate governance is in line with the latest requirements, our knowledgeable Corporate & Commercial team are here to assist.