Electronic Signing and Execution
Throughout the last two years, companies have been permitted to sign company documents that are signed by directors or agents electronically. There has long been a concern that this measure was only temporary through COVID-19, but the change has now been made permanent.
This includes for companies that have a sole director and no company secretary. This means that as the world continues to be virtual in so many ways, companies can now keep up, and no longer need to struggle to force meetings in person in order to sign routine documents.
These measures were first introduced on 14 August 2021 under the Treasury Laws Amendment (2021 Measures No. 1) Act 2021, which put in place these measures until 31 March 2022. Now, the change has been made permanent, meaning that companies can prepare for these protocols into the future.
Documents can be signed in a flexible and technology-neutral way, as long as the method of signing identifies the person and indicates the person’s intention to sign the document and the information in the document. Two people do not have to sign the same form of the document, or the same page, or use the same method, as long as it is clear who has signed the document.
This will make executing documents substantially easier and more convenient for companies, but it is still important to ensure that the procedure for signing and executing documents is aligned with the new requirements.
The same rules apply to agents, who can now execute a document on behalf of a company (including a deed) electronically or in any other way on behalf of a company under section 126 of the Corporations Act 2001 (Cth) (“Corporations Act”).
Meetings – Virtual, in person or both
Changes to how meetings can be held have also been made permanent.
Companies may now hold a meeting at one or more physical locations, or a hybrid of virtual and physical attendees, or a fully virtual meeting if the company constitution permits or requires it.
Virtual or hybrid meetings must continue to be reasonable in time and place for members to attend, and must continue to allow members to ask questions or make comments (as they previously have been allowed to in person). There must be a reasonable opportunity for members to attend and participate, regardless of whether it is an in-person, hybrid or virtual meeting.
Any voting on resolutions must be conducted by a poll. This rule must be complied with, even if there is a contrary clause in the company’s constitution. Any shareholder over 5% holding of a listed company or registered scheme may request that an independent person is appointed to oversee the poll and provide a report on the outcome.
The requirement for voting by polls allows companies to ensure that the results of these votes are accurate, and gives confidence that one share is equal to one vote, rather than a show of hands which may not be as accurate.
All the materials and documents related to meetings can also now be provided electronically, or in hard copy, at the election of members. All documents related to meetings, including notices and proposals fall under this rule.
This allows companies to be more flexible in the way that they approach documents for meetings, but it does not impose any new or extra requirements on companies in terms of providing those documents to members.
- Company documents can now be signed electronically, including by an agent or by a company with a sole director
- Not everyone who signs a document has to sign the same form of the document, or the same page of the document
- Documents that relate to a meeting can be signed and sent electronically or by hard copy
- Company meetings can now be held in person, virtually (where the constitution permits it) or a “hybrid” meeting, where some members are virtually present and others are physically present.
The rules relating to meetings commence on 1 April 2022, the day after the temporary measures expire. The amendments relating to execution of documents are already in force.
More information about the new rules are available via the Explanatory Memorandum.
Hicksons Lawyers’ commercial team has extensive expertise in this area and is available to help with any questions you may have.
Post by Hicksons' Partner, John Kell and Solicitor, Daniel Coppel.