The Treasury Laws Amendment (2021 Measures No. 1) Bill 2021 finally passed both Houses last night (10 August), enabling companies to sign and execute documents, hold meetings, provide notices relating to meetings and keep minutes using electronic means or other alternative technologies until the end of March next year.
Last year, as a result of the COVID-19 pandemic and its movement restrictions, temporary reforms were brought in to allow companies to execute business digitally. This relief was initially introduced in May 2020, using a temporary instrument making power, which was inserted into the Corporations Act as part of the government’s response to the coronavirus crisis and was subsequently extended.
The reforms allowed the electronic execution of company documents so that documents executed without a company seal could be signed electronically and the signatories do not need to sign the same copy.
Documents executed with a seal were also allowed to be executed electronically.
The change enabled many lenders to accept digital signatures on home loan documents.
The rules also enabled meetings of directors, shareholders of companies and members of registered schemes to facilitate the use of electronic technology so that meetings could be held virtually (provided that the members as a whole have a reasonable opportunity to participate). They also allowed documents relating to the meetings to be provided and signed electronically and minutes to be kept electronically.
The rules expired on 21 March 2021.
Following widespread calls for these to be reintroduced (and extended to business loans too), and following debate in both houses, the rules have now been extended until 31 March 2022, with government saying it will look to bring in permanent reforms later this year.
Noting the passage of the bill, federal Treasurer Josh Frydenberg said he reforms were part of the Morrison government’s “plan to secure Australia’s recovery”.
“These temporary relief measures will allow companies to hold virtual meetings and use electronic communications to send meeting materials and execute documents until 31 March 2022.
“This relief ensures that companies can meet their obligations as they continue to deal with the uncertainty of the COVID-19 pandemic. In particular, the renewed relief will give much-needed certainty to listed and unlisted companies that are expected to hold an annual general meeting later this year and early next year,” he said.
Mr Frydenberg continued: “To provide additional flexibility, the legislation also gives ASIC permanent powers to provide individual or class order relief in relation to meetings and sending documents. ASIC will be able to provide this relief in circumstances beyond companies’ control, such as those caused by the COVID-19 pandemic.”
“With the extension of this temporary relief, the government will now seek to introduce permanent reforms later this year to give companies the flexibility to use technology to hold meetings, such as hybrid meetings, and sign and send documents.
“The government is committed to ensuring that businesses can comply with their regulatory requirements while dealing with the COVID-19 pandemic and that regulatory settings going forward support Australia’s economic recovery.”
The move has been welcomed by digital signature providers, with Dan Bognar, DocuSign vice president and general manager, Asia Pacific and Japan, stating: “DocuSign congratulates the government on passing new legislation that again allows companies to use electronic signatures for executing company documents under the Corporations Act.
“This legislation provides organisations and the legal community across Australia with continued confidence that they can use electronic technologies, such as DocuSign eSignature, to achieve significant efficiencies and cost savings.”
[Related: CBA rolls out digital signatures]
Annie Kane is the editor of The Adviser and Mortgage Business.
As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts.