Reflect on the possibilities of our new (virtual) reality within the framework of the bill amending the bill on companies (meetings and documents)

On the last day of parliamentary sitting in 2021, Bill 2021 (Cth) (bill) amending corporations (meetings and documents) was not adopted. The countdown continues until March 31, 2022, when the temporary measures taken by the Law amending the Treasury laws (Measures n ° 1) of 2021 (Cth) (Law TLA1) on meetings and electronic signature should expire. If passed in 2022, the bill will amend the Companies Act 2001 (Cth) (Corporations Act) to permanently allow businesses and registered systems to use technology to call and hold meetings and distribute meeting-related documents, and sign documents electronically under section 127.

Current state of affairs

Currently, businesses and registered systems looking to use virtual meeting technology and sign documents electronically must rely on the temporary relief measures provided by the Corporations Act. These measures were introduced by the TLA1 law with effect from August 14, 2021 and will expire on March 31, 2022. After the adoption of the TLA1 law, the federal government consulted on two sets of legislative statements before introducing the bill. in Parliament. We discussed the TLA1 law and its history in our previous article.

The Senate is now considering the bill, which would amend the Corporations Act essentially to permanently adopt the same measures on meetings, signing and disclosure of documents that were in the Exposure Draft, which in turn was based on the TLA1 law. However, the bill also reflects comments from the consultation process in order to provide a clearer and more comprehensive framework. The point of contention in Parliament appears to be the possibility for entities to hold fully virtual meetings (discussed below).

Although the bill covers both the meeting and signing provisions of the Corporations Act, this article focuses on the meeting aspects of the bill.

Use technology for meetings

The bill broadly follows the approach taken in TLA1 with regard to meetings, but there are important differences. The key elements of the bill and the deviations from the TLA1 law are summarized below, with the deviations in italics.

  • Ability to hold hybrid and virtual meetings:
    • Invoice:
      • Companies (including companies registered as charities), registered plans, and disclosing entities, can host physical meetings or use virtual meeting technology to host hybrid meetings, but can only hold fully virtual meetings if expressly required or permitted by the constitution. The House of Representatives has proposed that the restriction on fully virtual meetings be reviewed in 30 months, otherwise it ceases to apply with the consequence that constitutional authorization will not be required for fully virtual meetings. In the Senate, the Australian Greens proposed that only unlisted entities be allowed to hold fully virtual meetings with constitutional authorization, with no equivalent right for listed entities.
      • Members as a whole should have a reasonable opportunity to participate in meetings, which includes a requirement to hold meetings at a reasonable time and place, to use reasonable technology to connect more than one physical location and allow members to ask questions and make comments orally or in writing. Note that despite the restriction on fully virtual meetings, ASIC may be able to invoke its “emergency” powers to facilitate fully virtual meetings if the circumstances so require, such as another lockdown.
    • TLA1 law: Virtual meeting technology can be used to organize company and plan member meetings and board meetings (together, “Chapter 2G meetings”), regardless of what the constitution provides, until the 31st. March 2022. This is underpinned by essentially the same “reasonable opportunity to participate” with the other accessibility requirements constituting separate rights granted to members.
  • What meeting documents can be communicated electronically:
    • Invoice: Businesses, registered plans and disclosing entities can provide any person (i.e. directors, members, auditors, among others):
      • meeting documents (including minutes) or resolutions to be considered without a meeting;
      • annual financial reports; Where
      • notification to members of electoral rights regarding receipt of documents,

in one of the five ways described below, but excluding documents to be sent to ASIC or the Registrar. Note that meeting documents can be signed electronically, and rregulatory powers have been inserted to allow the Corporations Act to be amended to include other entities.

  • TLA1 law: Until March 31, 2022, “Chapter 2G meeting documents” or resolutions to be considered without a meeting may be communicated to members electronically for virtual, hybrid or physical meetings, subject to future accessibility / reference and member elections to receive hard copies.
  • Sending meeting documents electronically:
    • Invoice: Subject to elections of members, companies, registered plans and disclosing entities can send the meeting documents referred to above in paper form, electronically, physically with access to information electronically (e.g. physical postcard), electronically with access to information electronically (e.g. card electronic mail), or by posting the information on a website (if the document is an annual report or otherwise permitted by regulations).
    • TLA1 law: Same, but with closer means of communication, until March 31, 2022.
  • Membership elections regarding the format of meeting documents:
    • Invoice: Members of companies, registered plans and disclosing entities may choose to receive:
      • meeting documents, electronically or in hard copy, or not to receive annual reports or prescribed documents at all; and
      • documents in a particular format on an ad hoc basis.

Companies have 30 days to comply with the election of a new member in order to receive paper documents.

  • TLA1 law: Member Firms and Registered Plan Members may elect to receive a hard copy of “Chapter 2G documents” and not to receive annual reports. Companies must provide hard copies within 10 business days.
  • Notify members of the right to be elected:
    • Invoice: Public companies and registered plans should inform members of their right to elect to receive meeting documents at least once a year, in writing or on the company or share register website.
    • TLA1 law: No equivalent.
  • Independent monitoring of polls:
    • Invoice: A member or group of members of a company or a registered plan having at least 5% of the voting rights may request that an independent person be appointed to observe and / or prepare a report on the results of a survey carried out during a members’ meeting. The observer may be the auditor or the registry service provider, unless the resolution concerns them.
    • TLA1 law: No equivalent.
  • Specific resolutions to be decided by survey:
    • Invoice: The votes on the resolutions appearing in the notice of meeting of the members of a listed company or a listed registered body must be decided by ballot. (Note that this is not a replaceable rule and must be followed, even if the statutes of the listed company provide otherwise.)
    • TLA1 law: No equivalent.
  • Exhale or sunset:
    • Invoice: The House of Representatives has proposed a mandatory 30-month review of the restriction on fully virtual meetings, failing which the restriction ceases to apply (see above).
    • TLA1 law: Temporary measures regarding meetings (and electronic signature discussed below) expire on March 31, 2022.

If passed, the provisions will come into force upon receipt of Royal Assent of the bill or on April 1, 2022, whichever is later.

The bill also contains permanent reforms of the electronic signature

This article has focused on the implementation of the reforms foreseen by the bill, but it would be remiss not to address the permanent changes to electronic signature in the Corporations Act. Although the bill does not reproduce the drafting approach adopted under TLA1, it broadly reflects the same measures, but there are substantial differences. Some key points are:

  • documents can be signed and the affixing of common seals can be observed, in a flexible and technologically neutral manner, including for meetings;
  • the entire physical / electronic document no longer needs to be signed under section 127 (i.e. just signing the signature page), and split execution and different signing methods are allowed; and
  • Ownership companies with a single director without a general secretary can also sign under article 127.

If passed, these changes will begin the day after Royal Assent of the bill.

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