From online shopping to watching our favourite shows as well as doing your business— there’s nothing that we don’t do online.
Could it be a result of the pandemic? Yes, no, maybe?
Whatever the reason, the future of businesses is dominated by innovative technology, and the Australian government is embracing the change. Case in point, the recently passed bill Corporations Amendment (Meetings and Documents) Bill provides an ease to businesses at large to conduct their online legal activities.
We know that new legal challenges can be hard to understand, and that’s why we are here to educate you on everything there is to know about this bill.
In this post, you’ll learn more about the key changes introduced as a part of the Meetings and Documents Act, how this will impact your business as well as what makes this bill the talk of the town!
What’s changed – Introduction of the Corporation Amendment (Meetings and Documents) Act 2021 (Cth)
The Bill solidifies changes under the Corporations Act 2001 (Cth) (the Corporations Act). It also introduces the long-awaited Corporations Amendment (Meetings and Documents) Act 2022 (Cth) (Meetings and Documents Act).
What are the changes in places, and how can this affect your business? It will allow business owners like yourself to:
- Hold physical, hybrid or wholly virtual meetings if your constitution allows it.
- Use technology for virtual meetings allowing all members, directors and officers of your company to participate orally or in writing.
- Use technology to execute documents electronically (Corporate Agreements and Deeds)
- Send documents in hard or soft copies
- Give your members the flexibility to receive documents in their preferred format
- Sign and distribute meeting-related documents
How does the Meetings and Documents Act affect my company?
How does this affect the way my business operates?
Great question. The Meetings and Documents Act provides greater flexibility and certainty for companies by:
- Allowing companies to hold physical and hybrid meetings
- If your company’s constitution allows, company meetings can happen wholly virtually
- The technology used for virtual meetings will allow for greater collaboration across your business
- Your business can use the technology to execute documents electronically. For example, Corporate Agreements and Deeds
- You will have the option of sending documents in hard or soft copy
- Provides members in your company the flexibility to receive documents in their preferred format
- Sign and distribute meetings-related documents
With over 47.1% of Australian businesses now having an online presence, the Meetings and Documents Act is just another way to support their ongoing business activities.
Even better is that if you require the distribution of your legal documents to happen solely online, Lawpath can support you with our eSignature platform.
You can use an eSignature in many different circumstances, for example, to sign and send formal correspondence, policies and now meeting-related documents.
Key points to consider – What will affect your business
Now that you understand the Meetings and Documents Act let’s dive deeper into the key changes the act has introduced.
1. Removing uncertainty- Technology neutral execution
Have you ever worked on a document electronically but were confused about whether you were allowed to execute it?
The Meetings and Documents Act now removes the ambiguity around this process through Schedule 1 (Division 1 of Part 1.2AA).
This section sets out the requirements and changes to:
- The execution of meeting-related documents
- The execution of company documents such as deeds in a technology-neutral manner
- Amends ss 126 and 127 of the Corporations Act to detail that documents will execute according to Part 1.2AA
- Amends s127 of the Corporations Act so that proprietary companies with a sole director and no company secretary can use the statutory document execution mechanisms
- Amendments to s126 of the Corporations Act will permanently enable agents to:
- Discharge contracts
- Execute documents (including deeds) on behalf of companies
- There is no requirement for the agent to be appointed by deed
Let’s now go through how the Meetings and Documents Act has changed the way documents are now sent. The key things to be aware of are:
- Documents relating to meetings can now be signed and given electronically regardless of the format in which a company meeting is held
- Members will have the option of how they would like to receive their documents from a company. For example, they can choose to accept the document electronically or to acquire physical copies.
- Documents can be shared through a shareholder’s nominated email address.
- If shareholders don’t have a nominated email address and prefer hardcopy mailing, a ‘postcard’ can be sent to these shareholders by hardcopy mailing.
- The Act introduces the requirement for you to notify your members of their right to choose a document electronically or in physical form at least once each financial year- under s 110K.
- You must take reasonable steps to provide members with a document or class of documents in the requested form. However, this is unless the Australian Securities and Investment Commission (ASIC) exercises its powers to have it different (Under s1345 of the Treasury Laws Amendment (2021 Measures No. 1) Act 2021)
3. Electronic meetings – Virtual and hybrid meetings
Let’s all say hello to hybrid meetings!
The new Meetings and Documents Act will now give companies and registered schemes the option of holding meetings in a hybrid format.
Hybrid meetings will mean that companies can now have meetings with both in-person and online components. For example, members can tune in electronically or be physically present if there is a company meeting.
If your company wishes to implement this new change, the changes must be made and permitted under your company’s constitution.
Does this mean that your company has to remove fully online meetings? – No.
You can still facilitate fully online meetings, but this also needs to be permitted by your company’s constitution or schemes constitution.
Suppose you are also a company registered under the Australian Charities and Not-for-profits Commission Act 2012 (Cth), under the new act. In that case, you can also now hold physical, hybrid meetings or wholly virtual meetings if it is allowed under your company’s constitution.
Here is a summary of all the changes relating to hybrid meetings:
- Directors’ meetings can be called and held using technology if it’s received consent by all directors – Section 248D
- You have the option to hold members’ meetings either physically, all virtual meetings (if allowed by your constitution) or in a hybrid manner (physical venues and virtual venues) – Section 249R
- Your company needs first to analyse if your constitution allows for any changes to be permitted to use virtual and electronic technology for meetings.
- Meetings must be held at a reasonable time as well as an appropriate location whether it is physical, hybrid or a virtual environment – Section 249S
- Members can choose to receive annual reports from your company and whether this information is sent via email or hard copy – Section 1687E
Benefits of the changes
There’s no doubt that the Meetings and Documents Act will reduce the uncertainty regarding the use of technology when executing deeds and conducting meetings.
The benefits are endless:
- Companies can use electronic email and signatures
- You will save on printing costs associated with large documents such as annual reports, control transaction disclosure documents, notices of meetings etc.
- Your company’s documents will be saved electronically
- If your company operates across the world, holding company meetings has just become that much easier
- Sending documents in hard or soft copy and giving members the flexibility to receive documents in their preferred format.
All the changes introduced relating to electronic execution commenced on 22 February 2022.
The changes about virtual meetings and distributing meeting materials electronically will begin on 1 April 2022.
If you want to read more about the latest change, have a read of the Corporations Amendment (Meetings and Documents) Act 2022 (Cth).
The Meetings and Documents Act is a highly welcome and long-awaited measure to assist all companies, small or large, across Australia.
It will enable your directors, officers, and shareholders to conduct and participate in general meetings consistent with 21st-century legal technology and modern working methods.
Could there be other legal changes on the horizon? Possibly.
But what you need to focus on right now is how the Meetings and Documents Act will change how your company does business.
To summarise, the fundamental changes were:
- Allows companies to hold physical, hybrid or wholly virtual meetings if their constitution permits it
- Ensures that technology is used for virtual meetings allowing all members, directors and officers of the company to participate orally or in writing.
- Using technology to execute documents electronically. For example, corporate Agreements and Deeds.
- Sending documents in hard or soft copies.
- Giving members the flexibility to receive documents in their preferred format.
- Documents can be signed by the relevant director or company secretary applying for an electronic signature.
And if you want to create your next legal document, Lawpath can provide you with legal documents in line with the new legislative changes. You can get started with as low as $0 (yes, get one free document when you sign up). Get started!