Amendments to Corporations Act in Response to COVID-19
On Tuesday 5 May 2020, the Treasurer announced changes to the Corporations Act 2001 and Corporations Regulations 2001 by the introduction of the Corporations (Coronavirus Economic Response) Determination (No. 1) 2020 (the Determination) which seeks to guide compulsory company operations in light of COVID-19 restrictions. The Determination, which includes allowing compulsory company meetings to be held online and company officers to electronically execute documents, came into effect from 6 May 2020 for six months.
Under Part 2 of the Determination, companies may now use online technologies to –
- hold any meetings, including an Annual General Meeting (AGM);
- allow for a quorum to be achieved;
- meet attendance requirements;
- conduct voting by a poll; and
- allow for proxy appointment and voting.
Despite shifting to electronic meetings, the opportunity to speak or ask questions must be provided to attendees. For example, ASX listed energy company Santos Limited recently held their AGM by utilising technological means and, to adapt to this new method, required proxy votes to be sent in prior to the AGM. Santos also requested that questions be asked in advance via email but also allowed real-time questioning during the AGM via a forum.
Execution of Documents
Under the Determination, an authorised company officer may execute documents without the use of a common seal if they sign a copy or counterpart of the physical document or if they comply with the electronic communication method. This also means that authorised company officers may sign different copies of documents even where a signature would ordinarily be required to appear on the same original document or page – in instances such as this, multiple electronically signed pages would be treated as counterparts.
The electronic signing method requires that the company officer communicate their authority to sign, provide evidence of their identity and authority, and expressly agree to the digital execution of such documents via email or other electronic communication method. Electronically executed documents have the effect of valid execution as though a company seal were applied to the physical document.
Essentially, as the Treasurer stated in his press release, by allowing companies to conduct digital meetings and electronic execution of documents, the Determination applies a “flexible and nimble approach to our regulatory frameworks that we will need to take forward into the recovery phase”.
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