Electronic Execution for Companies Reintroduced
The relief previously provided to companies to execute documents electronically expired on 21 March 2021. However, the Treasury Laws Amendment (2021 Measures No. 1) Act 2021 (Cth) (Act) came into effect on and from 14 August 2021, and has reintroduced the ability to have online meetings, electronic notices and electronic executions under section 127 of the Corporations Act 2001 (Cth) (Corporations Act). The Government has also indicated a willingness to consult on permanent amendments later this year.
- Electronic signing and split execution are available to companies until 31 March 2022.
- Companies can send meeting-related documents by electronic means.
- Fully virtual company meetings can occur, as well as hybrid meetings.
- Possibility for the amendment to be made permanent.
Signing by Secretary Director or Witness
The Act amends section 127 of the Corporations Act so that documents can be signed electronically by secretaries, directors, or witnesses. In addition, companies now have the flexibility to use a combination of execution methods. For example, for a company, one director may sign electronically, and another director may choose to sign traditionally with a wet signature.
Under the Act, the following apply:
- a person may sign a copy of a document, or a counterpart, that is in physical or electronic form, provided that the copy or counterpart includes the entire contents of the document. The person is not required to physically print or sign every page.
- the copy or counterpart of the document does not require the signature of another person signing the document or any material in the document to identify another person signing the document.
- where a document is executed under company seal, the copy or counterpart signed does not need to include the seal. In other words, the witness is not required to execute the same document as the document to which the seal was affixed.
- when signing an electronic copy, a method must be used to identify the person and indicate the person’s intention to sign the copy or counterpart, for example, using DocuSign or using a stylus to sign a PDF document and an email confirming the document was sent back to the company.
Electronic Witnessing of the Fixing of a Company Seal
Where documents are executed by fixing a company seal, the witnessing requirements under s 127(2) will be satisfied where a witness:
- observes the fixing of the seal by electronic means – this can be satisfied by videoconferencing. However, this cannot be satisfied by watching a pre-recorded video;
- signs a document or a copy of the document either physically or electronically; and
- annotates the document with a statement that the person observed the fixing of the seal by electronic means.
Application to Deeds
The new methods for execution also apply to deeds. There is no requirement for companies to follow the common law process for signing, sealing and delivering a deed.
Virtual Company Meetings
The Act allows for companies to conduct fully virtual company meetings or hybrid meetings. At a meeting, everyone attending, whether it be by physical or electronic means, will be taken to be present. If a meeting is fully virtual, the location of the meeting will be taken to be held at the registered office of the company. Further, members must be given the opportunity to speak, comment or ask questions at the meeting, regardless of whether the meeting is held virtually or otherwise.
Sending Meeting-Related Documents Electronically
Companies can now electronically sign and issue meeting-related documents. This can be done through email or by providing details to allow members to read or download the notice.
The Act also allows for company minutes to be recorded and stored electronically, and must be made available for inspection at the same place a hard copy of the minutes would be kept.
For further information or for any questions, please do not hesitate to contact us.
Craig Higginbotham and Isobel Bathgate
2 September 2021