In the June 2021 edition of Fundamental, we wrote about the ongoing saga surrounding Federal Government draft legislation introduced earlier in the year to extend temporary COVID-driven measures to facilitate virtual investor meetings and electronic execution by companies.
The Bill was adjourned for further debate until August 2021, following a lack of support for lighter continuous disclosure obligations, which were also included in the proposals.
Until very recently, it seemed quite possible the legislation may not pass, leaving the legalities of online meetings and electronic signing by company directors up in the air. Then, there were reports One Nation was conditionally prepared to support the package.
However, Parliament has now passed the Bill. This means that at least until the end of March 2022, the measures which were in place to provide certainty around electronic signing and holding virtual meetings, are back in play.
For a document to be validly executed by a company using electronic means under section 127 of the Corporations Act, the copy signed must 'include the entire contents of the document'. This means parties to a document should not just circulate the execution page for signing. It is important the company officers 'sign' a full copy.
The electronic signing process employed must also include a method for identifying the person signing and demonstrate their intention to sign the document.
The key to holding a virtual meeting under the measures introduced last year was ensuring all shareholders or investors have an opportunity to participate in the meeting, using the technology adopted. This continues to be the case under the new law.
However, there is now an additional requirement – the opportunity to participate must include 'a reasonable opportunity to exercise a right to speak'. Moving forward, this means companies and fund managers organising a virtual meeting now need to ensure participants can speak via an audio facility (or video with audio).
The practice of enabling investors to listen to the Chairperson and the company's representatives, whilst viewing slide presentations or similar, will now not be sufficient.
If you need further advice or guidance, then please contact us.