Execute right: A guide to electronic storage and execution of documents and meetings
The measures introduced by the Federal Government in May to provide for the electronic storing and execution of corporate documents and holding meetings in response to the COVID-19 pandemic represents a major shift for governance in Australia.
But the speed of the changes, which include allowing for electronic execution of documents and virtual AGMs, has made it challenging at times for organisations to clearly understand the implications for legal and regulatory compliance.
For governance and risk management professionals grappling with the changes, Governance Institute has released a new guide addressing key areas, including the significance for deeds, electronic storage, minutes of electronic meetings, and COVID-19 relief.
The ‘Statement on electronic storage and execution of documents and electronic meetings’ guide also includes a detailed legal opinion on issues related to the electronic storage and execution of documents and electronic meetings under the Corporations Act, tackling many of the questions Governance Institute has received from members during the pandemic.
Key elements outlined in the guide include:
Documents required to be signed under the Corporations Act can be signed electronically if the signatory has authorised the affixing of their electronic signature.
To demonstrate compliance with section 251A (2), which requires minutes of meetings to be signed, the company should retain proof of the authorisation of the individual who signs the minutes to the affixing of their signature.
It may, as a matter of good governance, also be appropriate to ask the directors to pass a resolution noting and agreeing that the minutes will be (or have been) signed electronically.
Electronic meetings of directors and members
The Act allows meetings of both directors and members of a company to be held electronically.
Under section 248D a directors’ meeting may be held using any technology consented to by all the directors. The consent may be a standing one and a director may only withdraw their consent within a reasonable period before the meeting.
Section 249S of the Act provides that a company may hold a meeting of its members at two or more venues using any technology that gives the members a reasonable opportunity to participate.
The location of a meeting held electronically
A meeting may be held in two or more places or venues. The meeting will be held in each place in which an attendee is located.
As a matter of good practice, the minutes of a meeting held in a small number of places would ordinarily record the places at which the meeting was held.
In cases where it is important to know and record in the minutes the place or places where a meeting is held (for example for tax purposes), the minutes should record where the individual participants in a meeting held by telephone or videoconference are physically located.
The guide also outlines differences on a state by state basis relating to execution of deeds introduced to assist with COVID-19. For example, with deeds, New South Wales has existing laws providing for electronic deeds, and in Victoria and Queensland, as part of temporary COVID-19 arrangements, deeds can be created and executed electronically. In other Australian states, it may still be necessary to execute a hard copy of a deed.
With the Corporations Act measures currently time-limited to 21 March 2021, debate continues about whether the changes should be made permanent.
Governance Institute has consistently advocated for the Corporations Act to be brought into line with the modern business environment and to adopt a technology neutral approach.
The COVID–19 response has exposed many of the shortcomings of the current legislative environment, particularly the outdated, paper-based tradition of the Corporations Act.
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