In an interim report tabled this month, the Senate Select Committee on Financial Technology and Regulatory Technology (Committee) recommended that recent temporary reforms to the Corporations Act 2001 (Cth) (Act), allowing companies to convene virtual meetings and sign documents electronically, be made permanent.
In September 2019, the Senate established the Committee to consider and report on, among other things, current regulatory technology practices and opportunities to strengthen compliance but reduce costs. Originally scheduled to report in October 2020, COVID-19 and rapid introduction of restrictions on public movement and gatherings prompted the Treasurer to act pre-emptively. May 2020 saw the exercise of emergency powers to modify the Act (which we discussed here), allowing companies to satisfy certain legal and compliance obligations virtually, in circumstances where public health restrictions may otherwise have inhibited them.
The rapid changes brought on by the pandemic allowed the Committee to consider the practical impact of these developments, together with other technological enablements (telehealth, ePrescriptions) and prompted them to recommend the following:
- that the Act be amended to allow companies to decide the best format for holding their annual general meetings (AGM) and other prescribed meetings, while ensuring the needs of shareholders are taken into account (Rec 1). It was noted that companies are best placed to determine the best format for the meetings and that virtual meetings appeared to have increased AGM attendance numbers over April and May 2020
- that the Act and other relevant legislation and regulations be amended in order to allow for electronic signature and execution of legal documents (Rec 3). It was noted that the level of security provided by “wet ink” signatures could now be replicated electronically, while also providing significant savings in time and cost.
While the recommendations are interim only and remain subject to the final report, the Committee's views echo industry sentiment. With the Treasurer's temporary relief measures set to be extended until March 2021 and the Committee's final report now due in April 2021, it may be that companies see relief – in the form of permanent amendments – sooner than expected.
The full text of the interim report can be accessed here.
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