Corporations Act Amendments – Corporations (Coronavirus Economic Response) Determination (No.1) 2020

Corporations Act Amendments –œ Corporations (Coronavirus Economic Response) Determination (No.1) 2020

The Treasurer, Hon. Josh Frydenberg MP, has issued a determination modifying the application of the Corporations Act 2001 (Cth) (‘CA’) in response to the COVID-19 pandemic. The determination amends the prescribed process for executing documents under s127 of the CA, by allowing for the electronic execution of documents by companies and for the split execution of documents by company officers.

The instrument –œ the Corporations (Coronavirus Economic Response) Determination (No.1) 2020 (“instrument”) came into effect on 6 May 2020 and will be in force for a period of 6 months. It prescribes three temporary changes:

1. Companies to execute documents electronically: the instrument allows for directors to sign documents electronically under s127, provided that:
0. A method of signing is used to identify the person in the electronic signature, and to indicate the persons intention to respect the contents of the document (see section 6(3)); and
1. The method used to sign electronically is ‘as reliable as appropriate for the purpose for which the company is executing the document, light of all the circumstances, including any relevant agreement (see section 6(4)(a))’, or ‘is proven in fact to have fulfilled the functions described in paragraph (a), by itself or together with further evidence’.

2. ‘Split execution’ of documents: The instrument permits directors to sign a copy or counterpart of a document by wet-ink or electronically without the need for that copy or counterpart to include the signature of the other company officer signing the document (see section 6(3)). The instrument clarifies that split execution is a valid form of execution for the purpose of s127 for a period of 6 months from the day after it was made (being 6 months from 5 May 2020).

3. Online AGMs and other meetings: Section 5 of the instrument prescribes that ‘a meeting may be held using one or more technologies that give all persons entitled to attend a reasonable opportunity to participate without being physically present in the same place’, going on to prescribe the process which must be undertaken to validly conduct these meetings through online platforms. Restrictions include:

0. The need to minute any persons present, as well as maintain the presence of a quorum to pass any vote;
1. Any vote taken must be done by way of an electronic poll that allows for all attendees to vote (and not a show of hands);
2. A requirement to allow all attendees at a meeting to speak;
3. Allowance of proxy attendance through electronic means advised in any notice of meeting;
4. The ability to provide electronic meeting notices, which may include information on the contents of the notice and other information, as well as details of how participants can attend the meeting.

‘Hybrid’ meetings may also be conducted, meaning a small physical meeting may take place while other participants are afforded the opportunity to attend remotely.

Further information relating to the use of electronic technologies for meetings is available from ASIC, here.