In response to the Coronavirus, the Corporations (Coronavirus Economic Response) Determination (No. 1) 2020 (the Determination) came into effect on 6 May 2020 and will remain applicable until 6 November 2020. The provisions of the Determination will allow the companies to meet their obligations under the Corporations Act 2001 (the Act), the Corporations Regulations 2001 (Cth), the Insolvency Practice Rules (Corporations) 2016 (Cth) and the Corporations (Passport) Rules 2018 (Cth), by modifying the operation of the Act with respect to company meetings and the execution of documents by companies.
The modifications are to facilitate continuation of business whilst mitigating the economic impact of the coronavirus.
The Determination specifically allows:
- meetings to be held using the assistance of technology; and
- company documents including notice of meetings be given using technology.
The new provisions of the determination will allow the use of technology in respect of:
- giving opportunity to shareholders to participate, speak and put questions to the Board members without being physically;
- providing notices of meeting via email including details as to how to attend and participate in the meeting virtually;
- allowing participants to vote virtually. Votes must be taken on a poll instead of a show of hands. Where practicable, the votes must be recorded in advance of the meeting;
- allowing for the appointment of a proxy;
- achieving a quorum with shareholders online.
Electronic Execution of Company Documents
The new provisions also modify the operation of section 127(1) of the Corporations Act 2001 which deals with the execution of a document by a company without using a common seal, in relation to companies, directors of companies, company secretaries, and persons having dealings with companies. The new provisions outline that:
- directors and secretaries of companies are allowed to sign agreements on separate paper or electronic copies;
- companies can execute a document without the use of a common seal;
- signing a copy or counterpart of the document that is in a physical form is allowed;
- the copy, counterpart or electronic communication must include the entire contents of the document, but need not include the signature of another person signing the document nor any material included in the document;
- the person is to use a method to identify the person in the electronic communication and to indicate the person’s intention in respect of the contents of the documents;
- execution or otherwise indication of acceptance that satisfies the requirements of the Electronic Transactions Act 1999;
- allowing the operation of section 129(5) of the Act such that assumptions of due execution may be made when such methods are used.
The Explanatory Statement relating to the Determination gives some examples of the means by which company officers might ‘sign’ a document electronically:
- pasting a copy of a signature into a document;
- signing a PDF on a tablet, smart phone or laptop using a stylus or finger;
- cloud-based signature platforms like DocuSign.
The Determination states that the effect of the modified provisions is that anything done in accordance with the modified operation of the provisions of the Determination is as valid and effective for all purposes as if it had been done in accordance with those provisions in their unmodified operation.