The Corporations Amendment (Meetings and Documents) Bill 2021 (Bill) passed through both houses of the Commonwealth parliament on 10 February 2022.
These permanent changes to shareholder meetings will take effect from 1 April 2022.
The Bill will allow companies and registered schemes to:
- hold virtual meetings;
- distribute meeting‑related materials; and
- validly execute documents electronically.
The reforms on the Bill build on the current temporary relief which expires on 31 March 2022.
It is an important time to review your constitution as the reforms will allow:
- meetings to be held physically, as a hybrid or, if expressly permitted by the entity’s constitution, virtually on the proviso that members are given reasonable opportunity to participate in the meeting;
- companies and registered schemes to send documents in hardcopy or softcopy and give members the flexibility to receive documents in their preferred format; and
- documents including deeds to be validly executed in technology-neutral and flexible manners, including by company agents.
Signing and executing
The Bill does not limit the manner in which a document can be signed whether electronic or the traditional ink signature.
Specifically the Bill sets out rules for how:
- documents signed by or on behalf of a company under sections 126 and 127 of the Corporations Act 2001 (Cth) (Act);
- documents signed under the Act which relate to certain meetings or resolutions; and
- any document specified in the Corporations Regulations 2001 (Regulations)
For sole director companies the Bill amends section 127 of the Act to apply to companies with a sole director with no company secretary.
Documents will be deemed to be validly executed by sole directors with no company secretaries if the sole director signs the document or the sole director witnesses the fixing of a company seal to a document.
A positive step is that a person can assume that a document has been duly executed by a company if:
- the document appears to have been signed in accordance with section 127(1); or
- the company’s common seal appears to have been fixed to the document in accordance with section 127(2); and
- the fixing of the common seal appears to have been witnessed in accordance with that section and section 127(2A).
The new Bill applies to any meeting documents that a company, responsible entity or disclosing entity is required or permitted provide or send to a person under the Act.
Note: it does not apply to documents which are sent to ASIC or the Registrar.
A document may be provided either by:
- sending it in the physical form
- using electronic means such as an email
- providing in physical or electronic form adequate details to allow them to view or download the document electronically , such as providing a link to a website
One of the most welcomed initiatives is that the Bill makes permanent changes to clarify that companies and registered schemes can use technology to hold meetings.
This applies to charities and not-for-profit organisations can use technology to hold meetings.
Companies can hold meetings of their shareholders at:
- one or more physical locations;
- A hybrid model being one or more physical locations and using technology to allow persons to attend virtually; or
- A totally virtual meeting using technology to allow members to attend virtually as long as it is permitted in the constitution
The Bill requires that shareholders and members must be given a reasonable opportunity to attend the meeting no matter how the meeting is conducted.
Provision has also been made for shareholders with at least 5% of the voting power can call for an independent person observe and report on a poll such as the company auditor or as service provider.
How can FC Lawyers help?
FC Lawyers has an experienced business and corporate team that acts for charities, not-for-profits and small to medium sized corporations in a range of industries and professions.
Our team can assist with the implementation of these new requirements. It is a perfect time to consider your current constitution and bring it up to date as well.
Contact our team today if you have any questions regarding shareholder meetings or any legal matters.
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