In 2020, the Government introduced temporary amendments to the Corporations Act to allow companies to conduct business and meet their compliance obligations using virtual meetings and electronic signing. These relief measures expired on 21 March 2021, meaning the law has now reverted to its pre-COVID state. Legislative reforms seeking to extend the relief have been delayed to August 2021, with the Treasury Laws Amendment (2021 Measures No 1) Bill 2021 (Cth) (Bill) being sent back to the Senate Economics Legislation Committee (Committee).
In this article, we set out a brief overview of these legislative changes, followed by a look into the effects of the delay in consideration of the Bill in practice.
What does the Bill propose?
The delayed Bill seeks to amend the Corporations Act 2001 (Cth) by temporarily permitting companies to hold meetings of directors, shareholders and others using virtual means, as well as to take and execute minutes, give and sign notices of meetings and execute documents electronically. These changes also permit split execution by companies and would expire on 16 September 2021 (by which time the Government hopes to have permanent changes in place).
You can read more about the Bill and the proposal for permanent changes in our previous article here. Related changes to continuous disclosure obligations are discussed separately in our article here.
Delays in the Senate
On 12 March 2021, the Committee tabled its report on the provisions of the Bill and recommended that it be passed without amendment, noting concerns raised in a number of submissions about the imminent expiry of temporary coronavirus measures.
Nevertheless, on 16 March 2021, the Senate resolved to send the Bill back to Committee for report by 30 June 2021 and adjourned debate on the Bill until August 2021. In doing so, the Senate noted that despite having extended the Committee's reporting deadline to 30 June 2021, the Committee nevertheless tabled its report on 12 March 2021, which meant many interested parties had been unable to make submissions in time.
What does this mean for companies?
The expiry of the temporary coronavirus measures and delays in substitute relief mean the law will revert to its pre-COVID relief state and leave many companies uncertain about how to manage their business and compliance in the intervening period.
When it comes to the conduct of meetings, the Australian Securities and Investments Commission (ASIC) has provided some positive news, announcing that it will adopt a temporary "no-action" position in relation to the conduct of virtual meetings. This means the regulator will not pursue any actions against companies who continue to convene meetings using technology, send notices electronically. ASIC will also allow public companies an additional two months to hold their annual general meetings.
The same relief was not offered in relation to electronic signatures, although this may change as government and industry bodies continue to seek a solution. As it stands, split execution (signing different copies) and electronic execution of documents by companies will no longer be expressly permitted. The use of such methods has been a grey area for many years, with differing opinions on the extent to which these forms of execution are permitted by the Corporations Act. Hopefully, August 2021 will bring certainty, but until then, the safest approach remains the old fashioned one - two ink signatures on the same page.
This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.