Treasury has released for consultation an Exposure Draft of the Corporations Amendment (virtual meetings and electronic communications) Bill 2020 which amends the Corporations Act to make permanent the temporary COVID-19 relief, which allows companies to hold meetings virtually, send meeting-related materials electronically and validly execute documents electronically.
If passed, the Bill allows electronic means or alternative technologies to be used to:
• execute company documents;
• hold meetings of directors of a company, meetings of shareholders of a company (including Annual General Meetings) and meetings of members of a registered scheme;
• execute documents relating to meetings;
• record, keep and provide minutes; and
• provide notice of a meeting and give other documents relating to meetings to the prospective attendees.
Company documents executed both with and without a seal may be executed using electronic means. If the document is executed by affixing a company seal, electronic means may be used to witness the fixing of the seal.
The new rules relating to electronic execution and virtual meetings apply as mandatory rules rather than replaceable rules. In other words, a company’s constitution cannot displace or modify the rules.
This ensures that all companies have the power to hold meetings virtually and execute company documents electronically if they elect to do so. The changes do not preclude companies from conducting meetings or executing documents using traditional means.
The mandatory nature of the rules ensures that if the company elects to use electronic communication, it must comply with the mandatory requirements. For example, meetings can only be held virtually if all persons have a reasonable opportunity to participate. This ensures that companies cannot opt out of the consumer protection safeguards by adopting a different rule in their constitution.
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Author: David Jacobson
Principal, Bright Corporate Law
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About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.
