E-Signing & E-Meetings are Here to Stay
Last month, the government updated the Corporations Amendment (Meetings and Documents) Bill 2021 (Cth) to permanently permit companies to hold virtual meetings and electronically sign documents.
The amendment comes after COVID-19 pushed companies online and temporarily allowed e-signing and virtual meetings. While temporary changes to the rules helped companies in the short term, it is now expected that companies across Australia will be able to benefit from new ways of working in the future.
The Australian Treasurer, the Hon Josh Frydenberg MP, estimates that businesses will save around $450 million in red tape each year as a result. We also believe that electronic signing and virtual meetings will save time for businesses by reducing time-consuming protocol.
The E-Signing Process
Thankfully, the new rules largely echo the state of affairs, we have all grown used to in the pandemic. Documents can be signed and executed virtually by directors including deeds. In addition, agents may also sign and execute contracts online.
Did you know? When talking about agents of a company, lawyers mean people with the authority to bind the company. Ordinarily, this means that if you can sign a contract on behalf of your company, you are acting as its agent. Sometimes, however, the law recognises ostensible agents—people who were not given the power to act for a company but may bind it anyway. In other words, all the primary powers of a company under the Corporations Act 2001 (Cth) can now be used virtually.
However, the amendment requires that e-signatures:
- Identify the person signing;
- Indicate the person’s intention to make the document binding; and
- Be as reliable as appropriate.
These changes mean that signatories do not always need witnesses, delivery or a common seal if they meet the requirements. Unfortunately, the law doesn’t go so far as to state whether particular e-signing platforms constitute a valid form of signature, however, as long as the above indicia are present your virtual signatures will be considered valid.
In addition, the new laws have brought national requirements into step. Some States had previously allowed agents to sign deeds for their companies, yet other States and Territories had not. Now, all of Australia plays under the same rules.
Did you know? Under the new rules, different signatories can sign the same document in different ways.
For example, if one party signs electronically and another in writing, it would be considered acceptable. If a party signs one page and the other party signs the front of the document, that is also acceptable. As long as the requirements are met, the signatures will be valid.
Lastly, the new law also permits companies and businesses to run their meetings online. These meetings may even be partly online and partly in-person. However, in certain circumstances, a company’s constitution must be updated to reflect this rule.
At the same time, any wholly or partly online meetings must still give participants a reasonable opportunity to participate. Because of this, meetings especially board meetings and those involving corporate governance must:
- be at a reasonable place,
- be at a reasonable time, and
- use reasonable technology.
Further, notice must be provided to attendees before meetings.
As business advisors and corporate/commercial lawyers, we are beginning to detect a pattern here and want to ensure that you satisfy the rules.
Thankfully, e-signing and e-meetings are here to stay. If you need guidance on anything related to e-signing, reach out to our team of business advisory, corporate and commercial lawyers here.
Co-written by Keeley Press-Andrew