After months of uncertainty, the Federal Government has reinstated laws allowing company directors and secretaries to sign documents electronically and for companies to hold virtual meetings.
On Tuesday, the Federal Parliament passed the Treasury Laws Amendment (2021 Measures No. 1) Act 2021 providing temporary relief and much needed certainty around the use of technology to sign documents and convene meetings.
What is the effect of the changes?
The Act reinstates and expands on measures made under the Corporations (Coronavirus Economic Response) Determination (No. 3) 2020 (Cth) (Determination No 3) which expired on 21 March 2021. Specifically, the Act:
- permits directors and secretaries of companies to sign documents under section 127 of the Corporations Act on separate paper or electronic copies or counterparts;
- allows company officers to witness the fixing of a company's common seal electronically; and
- enables companies to convene meetings online instead of face to face.
Does the Act abolish the paper rule?
The Act does not expressly abolish the common law rule that required deeds to be written on paper, parchment or vellum. However, where the proper law of a deed is NSW, Victoria or Queensland law, then the combined effect of the current statutory position in those jurisdictions and the Act is that a deed is able validly to be executed and formed electronically. The position is less clear in other jurisdictions and there are potential gaps.
Further reform
The changes are temporary and will cease to apply on and after 1 April 2022. However, the Government has pledged to introduce permanent reform.
In addition to the reforms outlined above, Parliament also passed the Treasury Laws Amendment (COVID-19 Economic Response No. 2) Act 2021 this week. Schedule 4 of that Act amends Schedule 5 of the Coronavirus Economic Response Package Omnibus (Measures No. 2) Act 2020 giving the Treasurer new power to make a determination modifying an act or legislative instrument relating to matters such as the giving of information, signatures, witnessing signatures and the attestation of documents. A determination can be made retrospective which could potentially be used by the Government to fill the gap between the lapsing of Determination No 3 and the passing of this latest reform. However, any such determination made under this mechanism (including the power to make further determinations) will cease to operate at the end of 31 December 2022.
Further guidance in relation to online meetings will be provided separately.