As of 6 May 2020, the operation of the Corporations Act 2001 (Cth) has been modified to help companies cope with the impact of COVID-19 and now provides for virtual meetings and the execution of documents in counterpart (on paper or electronically).
So, what does this mean for you?
The Corporations (Coronavirus Economic Response) Determination (No. 1) 2020 has temporarily varied the Corporations Act so that:
Virtual Company Meetings including AGMs
You may now hold meetings by using technologies:
- That give all persons entitled to attend a reasonable opportunity to participate without being physically present in the same place.
- That give each person entitled to vote the opportunity to participate in the vote in real time and, where practicable, by recording their vote in advance of the meeting.
- To allow appointment of proxies as specified in a notice of the meeting.
- To electronically communicate a notice of a meeting to those entitled to receive the notice. The Determination provides this handy example:
A company has email addresses for some of its members. Under this paragraph the company could send those members an email setting out or attaching notice of a meeting, and other material relating to the meeting, or providing a link to where the notice and other material can be viewed or downloaded. To the other members the company could send a letter or postcard setting out a URL for viewing or downloading the notice and other material.
- Voting must be done by way of poll and not by show of hands.
- Each person participating are taken to be ‘present’ at the meeting for all purposes, such as to meet quorum requirements.
There are conditions:
- Notice of a meeting provided electronically must give information on how a person can participate in the meeting, including how they can vote, how they can speak and to the extent they are entitled to do so
- If a notice of a meeting was sent prior to 5 May 2020, you may at least 7 days before the meeting is held, serve a fresh notice electronically, provided it meets the conditions above.
Signing of legal agreements
Section of 127 of the Corporations Act deals with the execution of documents by a company. Ordinarily if a company executes without a seal and is signed by either two directors or a director and secretary, then each person would need to sign the same physical document. However, under these changes, a “document” now includes a document in electronic form and the following methods to validly execute a document are permitted:
Each person can sign a counterpart of the document that is in a physical form, so you would end up with two documents, one signed by one director and one signed by the other director or secretary, but together they would form the one signed agreement.
Modified split execution
One person can sign a physical copy of the document then scans and emails (or fax) a PDF signed copy to the other person who then prints it out and signs that PDF or faxed copy.
Each person uses an electronic communication which reliably identifies the person and indicates the person’s intention about the contents of the document. Examples on how a person may sign electronically include:
- Using online signature platforms such DocuSign
- Pasting a copy of a scanned signature into a document
- Signing the PDF copy by using a stylus (or finger!) on a smartphone, tablet or the like
The copy, counterpart or electronic communication must include the entire contents of the document but need not include the signature of another person signing the document nor any material included in the document.
Do these relaxations apply to all documents or if affixing the company seal?
Short answer is no.
At least for now, the execution of documents for property transactions in Queensland (on paper, witnessing etc) remain the same.
These changes do not apply if a company executes a document by affixing the common seal as witnessed by two directors or a director and secretary. Section 127 (2) of the Corporations Act remains unaltered in respect of this.
How long do these relaxations apply?
These relaxations in the rules are temporary and only apply for until 5 November 2020. It is unclear at this stage, that if a notice of a meeting is provided electronically prior to this date for a meeting to take place after this date whether the meeting may still proceed “electronically” or whether a fresh notice would need to be served.
If are unsure of your obligations on how to validly execute a document, please call Active Law at (07) 3160 0000 or email at email@example.com.
Disclaimer – Reliance on Content
The material distributed is general information only. The information supplied is not and is not intended to be, legal or other professional advice, nor should it be relied upon as such. You should seek legal or professional advice in relation to your specific situation.