House of Representatives

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Josh Frydenberg MP)

Chapter 1 - Virtual meetings and electronic communication of documents

1.1 Schedule 1 to the Bill allows companies to execute documents, hold meetings, provide notices relating to meetings and keep minutes using electronic means or other alternative technologies until 16 September 2021. It extends, and expands upon, the changes in the Determination No. 3.

Context of amendments

1.2 The ETA 1999, which facilitates the use of electronic transactions, does not apply to the Corporations Act 2001 (Corporations Act) or instruments made under that Act (section 6 and item 23 of the Schedule 1 to the Electronic Transaction Regulations 2020). Company documents must be executed by all parties physically signing the same static document and there are constraints on companies' ability to conduct meetings using alternative technologies.

1.3 During the Coronavirus pandemic, the temporary power in section 1362A of the Corporations Act was used to make temporary modifications to allow meetings to be held and documents to be executed using electronic means (see the Corporations (Coronavirus Economic Response) Determination (No.1) 2020 and Determination No. 3). This power expired on 24 September 2020 and the temporary determination will expire on 21 March 2021.

Summary of new law

1.4 Schedule 1 to the Bill allows electronic means or alternative technologies to be used to meet the requirements in the Corporations Act relating to:

•

executing company documents;

•

holding meetings of directors of a company, meetings of shareholders of a company (including Annual General Meetings) and meetings of members of a registered scheme;

•

executing documents relating to meetings;

•

recording, keeping and providing minutes; and

•

providing notice of a meeting and give other documents relating to meetings to the prospective attendees.

1.5 These amendments extend, and expand upon, the changes in Determination No. 3. They remain in force until 16 September 2021.

1.6 In response to the positive feedback from consultation, the Government proposes permanent reforms that will continue to allow companies to electronically sign company documents and send meeting related materials electronically. This will be in place when the temporary extension sunsets.

1.7 The Government also proposes to conduct an opt-in pilot for hybrid annual general meetings in which shareholders can choose whether to attend meetings in person or virtually. This pilot will commence when the extension to the temporary relief ends.

Comparison of key features of new law and current law

Detailed explanation of new law

Execution of company documents

1.8 Amendments have been made to make the laws relating to the execution of company documents technology neutral and allow companies to execute company documents electronically. They also ensure that directors, secretaries and witnesses may sign a copy or counterpart of the document. [Schedule 1, items 1 to 7, subsections 127(2) to (5)]

1.9 The new rules relating to the electronic execution of company documents are facilitative in nature. A company may continue to execute documents in the traditional manner by applying wet signatures to the physical paper document. The new law also permits a combination of different methods to be used to execute a company document. For instance, one director may physically sign a paper version of the document while the second director could sign the document using electronic means.

Documents to which the changes apply

1.10 These changes apply to all documents executed by a company under section 127 of the existing law. This includes all:

•

documents executed by a witness observing the fixing of a common seal to the document and signing the document (documents executed with a common seal); and

•

documents executed by two directors, or a director and a secretary signing the document (documents executed without a common seal).

1.11 Section 127 of the existing law, including the amendments inserted by this Schedule, also apply to documents executed as a deed. This means that companies may execute company deeds by following the process outlined in section 127 and companies do not need to follow the established process for signing, sealing and delivering a deed under the common law. This is confirmed by subsection 127(3) of the existing law and the new note inserted under that section. [Schedule 1, item 6, note to subsections 127(3) of the Corporations Act]

Secretary, director or witness may sign a copy

1.12 The director, secretary or witness may sign a copy or counterpart of the document. This reverses the effect of the court's decision in Adelaide Bank v Pickard [2019] SASC 13 where it was held that all persons needed to sign the same single, static document. [Schedule 1, item 5, paragraph 127(3A)(a) of the Corporations Act]

1.13 The copy or counterpart must include the entire contents of the document. This does not mean that the person needs to physically print or sign every page. Rather it ensures that a document cannot be validly executed by signing a document that does not have the same content as the original document. It simply reflects the common law position that the signatories must agree to the same terms. [Schedule 1, item 5, paragraph 127(3A)(b) of the Corporations Act]

1.14 The copy or counterpart does not need to include the signature of any other person (in the case of a document executed by two directors or a director and a secretary). Similarly, the witness does not need to sign the same document as the one to which the seal was affixed and therefore there can be a delay between the witnessing occurring and the document being signed. [Schedule 1, item 5, subsection 127(3C)) of the Corporations Act]

Electronic witnessing of the fixing of a seal

1.15 If the company executes the document by fixing a common seal, the person witnessing the fixing of the seal may do so electronically. They may do this by:

•

using electronic means such as videoconferencing to observe the person fixing the seal to the document (as opposed to watching a pre-recorded video);

•

signing the document or a copy of the document (either physically or electronically); and

•

annotating the document with a statement stating that they have observed the fixing of the seal by using electronic means.

[Schedule 1, item 3, subsection 127(2A) of the Corporations Act]

1.16 These changes expand upon the relief provided by Determination No. 3 and ensure that the rules relating to the execution of company documents using a common seal are not more restrictive than the rules relating to the execution of company documents without a common seal.

Secretary, director or witness may sign the document electronically

1.17 Further, the director or secretary may sign an electronic copy of the document if three conditions are satisfied.

1.18 First, the copy must include the entire contents of the document. As outlined at paragraph 1.13, this does not mean that the person needs to print or sign every page of the document. [Schedule 1, item 5, paragraph 127(3B)(b) of the Corporations Act]

1.19 Second, a method must be used to identify the person and indicate their intention to sign the document. There are a variety of methods that could be used to do this, including:

•

Using a stylus tool to sign a PDF document and then emailing the document back to the company.

•

Using a platform such as DocuSign.

[Schedule 1, item 5, paragraph 127(3B)(a) of the Corporations Act]

1.20 The new law takes a technology neutral approach and does not mandate the use of any particular type of technology. This means the new law is sufficiently flexible to allow for the use of other technologies that may be developed in the future.

1.21 Third, the method must be as reliable as appropriate for the purposes for which the document was generated or proven in fact to have indicated the person's identity and intention. [Schedule 1, item 5, paragraph 127(3B)(c) of the Corporations Act]

1.22 These conditions are modelled on the conditions for electronically signing a document in section 10 of the ETA 1999 and should apply in the same way as in that Act.

1.23 There are two other conditions in section 10 of the ETA 1999 that do not apply to the execution of company documents. Those conditions require the recipient to consent to the use of electronic communication and comply with any requirements of the Commonwealth agency that is receiving the information. These conditions are not applied as they would impose high regulatory costs on companies and are significantly more restrictive than the relief provided by Determination No. 3.

Extension of assumptions

1.24 The assumptions that people dealing with companies are entitled to make under section 129 of the existing law apply to documents that appear to be executed in accordance with the new rules. This is confirmed by the new notes inserted under section 129. [Schedule 1, items 8 and 9, notes to subsections 129(5) and (6) of the Corporations Act

Virtual meetings

1.25 Amendments are made to the law to facilitate the use of electronic means to hold meetings. As a consequence, meetings may now be held by:

•

using virtual meeting technology;

•

inviting persons to physically attend at a designated location;

•

inviting persons to physically attend at different locations and using virtual meeting technology to connect the different locations together; or

•

using a combination of the above methods.

[Schedule 1, item 31, subsection 253Q(1) of the Corporations Act]

Types of meetings that may be held using technology

1.26 The new rules apply to meetings of:

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shareholders of companies (including Annual General Meetings);

•

directors of companies; and

•

members of registered schemes.

[Schedule 1, item 31, section 253P of the Corporations Act]

1.27 Similar amendments were made in Schedule 4 to the Corporations Amendment (Corporate Insolvency Reforms) Act 2020, and the associated delegated legislation, to facilitate the use of virtual meeting technology to hold meetings conducted in the context of external administration, including meetings of creditors and committees of inspection.

Place and time of a virtual meeting

1.28 For a meeting where all of the participants participate using electronic technology, the place of the meeting is taken to be the address of the registered office of the company or responsible entity of a registered scheme. The time for the meeting is the time at the address of the registered office. [Schedule 1, item 31, subsection 253QA(3) of the Corporations Act]

1.29 If a meeting is a hybrid meeting where members have a choice to physically attending or use virtual meeting technology to participate, the place and time for the meeting are taken to be the place where the members physically attend and the time at that location. If there are two or more such locations, the place of the meeting is the main location (as set out in the notice for the meeting) and the time of the meeting is the time at the main location. This ensures that there is only one place and time for the meeting. [Schedule 1, item 31, subsection 253QA(2) of the Corporations Act]

1.30 The meeting must be held at a time that is reasonable at the place where the meeting is taken to be held. It may not necessarily be a convenient time for all of the shareholders or members who are attending using technology, in the same way that face to face meetings may be held at a time that is not convenient for all shareholders or members. [Schedule 1, items 15 and 31, section 249R and subsections 252P(1) and 252P(2) of the Corporations Act]

Content of notices of virtual meetings

1.31 When a meeting is to be held using technology, the notice of the meeting must include sufficient information to allow the persons entitled to attend the meeting to participate using the virtual meeting technology. This information could consist of dial in details or a link to the relevant website, as well as the date and time of the meeting. [Schedule 1, items 14 and 29, paragraphs 249L(1)(a) and paragraph 252J(a) of the Corporations Act]

1.32 For a meeting where members may attend in person, the notice must also designate the location of the meeting. If there are two or more physical locations, the notice must state all of the locations and the main location. For instance, where the company directors are meeting in Sydney and venues in Melbourne and Perth are also made available to shareholders to join the AGM virtually, the notice must state that Sydney is the main location. [Schedule 1, items 14 and 24, paragraphs 249L(1)(a) and paragraph 252J(a) of the Corporations Act]

1.33 These requirements also apply to a meeting that is adjourned because there is not a quorum present within 30 minutes of the time set out for the meeting in the notice. [Schedule 1, item 17, subsection 249T(3A) of the Corporations Act]

1.34 The meeting notice for a meeting that is to be held using technology must also include sufficient information to allow members to provide proxy documents by electronic means. [Schedule 1, item 19, subsection 250BA(1) of the Corporations Act]

Conduct of virtual meetings

1.35 A company or registered scheme must ensure that the meeting is held in a manner that gives the members as a whole a reasonable opportunity to participate in the meeting. [Schedule 1, item 31, subsection 253Q(1) of the Corporations Act]

1.36 The phrase 'members as a whole' ensures that the meeting cannot be invalidated merely because a member experienced technical issues and is unable to participate virtually. The intention is that the meeting should not be individualised so long as the vast majority of members can contribute and no member is intentionally excluded. Similar language is also used in the Corporations Act in the context of members' right to ask questions at an AGM (see existing sections 250SA and 250T).

1.37 Members also need to be given a reasonable opportunity to speak and verbally ask questions in situations where they have a right to speak and ask questions. [Schedule 1, item 31, subsection 253Q(2) of the Corporations Act]

1.38 If the members as a whole are not given a reasonable opportunity to participate, speak or ask questions, the members may apply to the court to have the meeting invalidated. The Court will only invalidate the meeting if it is of the opinion that a substantial injustice has been caused and that injustice cannot be remedied in any other way. This mirrors the circumstances where an irregularity invalidates a physical meeting under the existing law. [Schedule 1, item 32 and 33, note to subsection 1322(3AA) and subsection 1322(3A) of the Corporations Act]

1.39 The new law does not mandate a particular format for a virtual meeting. It recognises that the meeting rules apply to a broad range of companies, from small not-for-profit companies to large listed companies, and allows each company to select the format for the meeting that is most appropriate for that company. However, regardless of the format, the virtual meeting must give the members as a whole a reasonable opportunity to participate. [Schedule 1, item 31, subsection 253Q(1) of the Corporations Act]

1.40 If a meeting is held using technology, all persons participating in the meeting (whether by being physically present or using electronic means) are taken to be 'present'. This means that all of those persons should be counted for the purposes of determining whether there is a quorum. [Schedule 1, item 31, subsection 253Q(3) of the Corporations Act]

1.41 The default method of voting at a virtual meeting of shareholders or members (or a hybrid meeting) also differs from a meeting where all persons are physically attending. At a virtual meeting of shareholders, votes will be taken on a poll rather than a show of hands unless the company or registered scheme determines otherwise in its constitution. In the context of companies, voting on a poll is effectively a replaceable rule, that is, companies are free to elect another default method of voting. [Schedule 1, items 21, 30 and 31 and subsections 250J(1), 253J(2) and 253Q(3) of the Corporations Act]

1.42 The new law does not prescribe the method that should be used to conduct the poll and more than one method may be used. For instance, in the context of hybrid meetings, the Chair may elect to use a different method for conducting the poll for persons attending virtually and for persons physically present.

1.43 Also, all participants who are entitled to vote must be given the opportunity to vote at the meeting. The company may also give the participant the opportunity to record a vote in advance of the meeting, in which case, the participant will be able to elect to either vote in advance or at the meeting. It is not expected that companies would provide a method for voting in advance of the meeting for directors' meetings. [Schedule 1, item 31, subsection 253Q(4) of the Corporations Act]

1.44 Documents may be tabled at a meeting by providing the documents to the person in advance of the meeting or making the documents accessible to persons attending the meeting in any way. For instance, the documents might be shared using a 'screen sharing' facility with virtual attendees or handed out in hard copy to physical attendees. [Schedule 1, item 31, subsection 253Q(5) of the Corporations Act]

1.45 These requirements only apply when virtual meeting technology is used to hold the meeting. They do not apply if a company uses virtual meeting technology for another purpose relating to a meeting, such as to broadcast the meeting or make a recording of a meeting available to those members that choose not to attend.

Electronic communication of documents relating to meetings

1.46 Documents relating to meetings may be given or signed using electronic means. This applies regardless of whether the meeting is held using electronic technology or in person.

Types of documents that may be given or signed electronically

1.47 Any document that relates to a meeting may be given electronically and signed electronically. These documents will generally fall into seven categories.

1.48 First, the rules cover documents in which a person makes a request in relation to a meeting. This includes putting forward a member's resolution or a member's statement for consideration at the meeting (e.g., under sections 249N or 252L). [Schedule 1, item 31, subparagraph 253R(a)(i) of the Corporations Act]

1.49 Second, notices of meetings may be provided electronically. This covers notices provided under section 248C (directors' meetings), sections 249J and 249K (shareholders' meetings) and section 252G (meetings of members of a registered schemer). It would also cover documents that must accompany the notice, such as an explanatory statement provided under section 221. [Schedule 1, item 31, subparagraph 253R(a)(ii) of the Corporations Act]

1.50 Third, notices of a resolution or a record of a resolution may be provided and signed electronically. [Schedule 1, item 31, subparagraph 253R(a)(iii) of the Corporations Act]

1.51 Fourth, notices of a statement in relation to a meeting or a matter to be considered at a meeting may be provided and signed electronically. An example of a notice covered by this category is a members' statement distributed under sections 249P or 252N. [Schedule 1, item 31, subparagraph 253R(a)(iv) of the Corporations Act]

1.52 Fifth, the new rules cover documents relating to a proxy, such as a document to appoint a proxy (provided under sections 250B or 252Z) or a list of persons who are willing to act as a proxy (provided under sections 249Z or 252X). [Schedule 1, item 31, subparagraph 253R(a)(v) of the Corporations Act]

1.53 Sixth, questions for auditors and responses to those questions (including under sections 250PA or 250T) may be provided electronically. [Schedule 1, item 31, subparagraph 253R(a)(vi) of the Corporations Act]

1.54 Seventh, the new rules apply to giving and signing minute books including under existing subsections 251A(2)-(4) and 253M(2) (signing minutes) and subsections 251B(3)-(4) and 253N(3)-(4) (providing copies of minutes). [Schedule 1, item 31, subparagraph 253R(a)(vii) of the Corporations Act]

1.55 These seven categories are illustrative only and they are not exhaustive. Documents that relate to a meeting but do not fall clearly into one of the above categories are also covered by the new rules. For example, a remuneration report considered at a meeting under existing section 250R would be covered by the new rules. [Schedule 1, item 31, subsection 253R of the Corporations Act]

1.56 The new rules also apply to resolutions made without a meeting and all documents that relate to the making of those resolutions as per Division 1 of Part 2G.1 (for directors' resolutions) or Division 1 of Part 2G.2 (for resolutions of proprietary companies). [Schedule 1, item 31, paragraphs 253R(b) and 253R(c) of the Corporations Act]

How to give a document using electronic means

1.57 A document may be provided electronically either by:

•

giving the document to the person by using electronic means (e.g., sending an email); or

•

using electronic or traditional means to provide the person with details sufficient to allow them to view or download the document electronically (e.g., by giving them a card or sending them an email with a link to a website).

[Schedule 1, item 31, subsections 253R(2) and (3) of the Corporations Act]

1.58 A range of technologies can be used to provide a document electronically, including emails, SMS, apps or other technology that may be developed in the future.

When a document may be given electronically

1.59 There are two conditions that must be satisfied before a document can be given electronically.

1.60 First, it must be reasonable to expect that the document would be readily accessible so as to be useable for subsequent reference at the time that the document is given. This replicates the condition in paragraph 9(1)(a) of the ETA 1999 which relates to when electronic communications can be used to give information in writing. [Schedule 1, item 31, paragraph 253RA(3)(a) of the Corporations Act]

1.61 The person providing the document does not need to satisfy the other conditions in section 9 of the ETA 1999. Those conditions require the recipient to consent to the use of electronic communication and comply with any requirements of the Commonwealth agency that is receiving the information. These conditions are not included as they impose high regulatory costs on companies and are more restrictive than the relief provided by Determination No. 3.

1.62 Second, a document relating to a meeting of the members of a company or registered scheme cannot be provided to a person electronically if they opt in to receiving hard copies, or the entity failed to notify the person of their right to opt in. There is no right to opt in to receiving documents relating to a directors' meeting in hard copy. [Schedule 1, item 31, paragraph 253RA(3)(b) of the Corporations Act]

Opting into receiving hard copies

1.63 A member may elect to receive hard copies of documents relating to a meeting or a resolution considered without a meeting. [Schedule 1, item 31, subsection 253RB(1) and 253RC(1) of the Corporations Act]

1.64 The below table sets out when the election applies.

Example 1.1 : When an election to receive hard copies applies

Type of document	When election applies
Documents relating to a resolution considered without a meeting	Documents provided to the member after the election is 'given'* to the company or registered scheme
Documents relating to a meeting	Documents that do not need to be provided to the member within the 10 business days after the election is 'given'* to the company or registered scheme
*An election is taken to be given 3 days after it is posted or the business day after it is sent via electronic means.

[Schedule 1, item 31, subsections 253RB(2), (3) and (6) and subsections 253RC(2), (3) and (6) of the Corporations Act]

1.65 As shown in Example 1.1, if the document is a notice of a meeting or accompanies the notice of the meeting, the election does not apply to any documents that are required to be provided to the member within the next 10 business days. This recognises that it takes time for the company or registered scheme to print and post documents, and for the mail to reach the member. It avoids a situation where the company or registered scheme is placed in a position where it cannot comply with its obligation to notify members of a meeting within a stipulated timeframe because there is insufficient time for printing and postage. [Schedule 1, item 31, paragraphs 253RB(3)(a) and 253RC(3)(a) of the Corporations Act]

Example 1.2 : Commencement of opt-in

Listed companies are required to notify members of their AGM 28 days before the AGM under section 249HA of the existing law.

A listed company decides to hold its AGM on 28 April 2021. Accordingly, it must notify members of the AGM by 1 April 2021.

A member of the listed company opts into receiving documents in hard copy on 27 April 2021. This opt out does not apply to the notice of the meeting that is to be held on 1 April 2021. However, it will apply to the notice for the 2022 AGM and subsequent AGMs.

1.66 A member who had opted into receiving documents in hard copy may revoke their election in writing. Such a revocation applies from the day on which it is given to the company. This means that the company may send documents to the member electronically or in hard copy from that date. [Schedule 1, item 31, paragraphs 253RB(2)(b) and 253RC(2)(b) of the Corporations Act]

1.67 A company or responsible entity must notify members of their right to opt in to receiving hard copies relating to a meeting or a resolution considered without a meeting. This notice may be provided in hard copy or electronically. It must be given within two months of the person becoming a member. [Schedule 1, item 31, subsections 253RB(4)-(5) and subsections 253RC(4)-(5) of the Corporations Act]

1.68 A failure to notify a member of their right to make an election is a strict liability offence carrying a penalty of 30 penalty units. This is the same as the penalty that applies if a company does not notify its members of their right to receive an electronic or hard copy of the annual report under existing section 314. [Schedule 1, item 31, subsections 253RB(7) and subsections 253RC(47) of the Corporations Act, table in Schedule 3]

1.69 A strict liability offence is appropriate in this circumstance as it is necessary to strongly deter companies or registered schemes from failing to advise members of their right to elect to receive a hard copy. The imposition of a strict liability offence reduces non-compliance by ensuring that ASIC can efficiently and expeditiously deal with low-level offending, thereby bolstering the integrity of the regime.

1.70 The strict liability offences meet all the conditions listed in the Attorney-General's Department's A Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers. It does not exceed 300 penalty units for a body corporate and preserves the defence of honest and reasonable mistake of fact to be proved by the accused on the balance of probabilities.

Lodging documents with ASIC

1.71 The new rules do not alter the process for lodging documents with ASIC. [Schedule 1, item 31, subsection 253R(4) of the Corporations Act]

Signing a document using electronic means

1.72 A document relating to a meeting or a resolution considered without a meeting may be signed electronically by using a method to identify the signatory and indicate the signatory's intention. Refer to paragraphs 1.47 to 1.55 for examples of the documents to which this new rule applies. [Schedule 1, item 31, subsection 253RD(1) of the Corporations Act]

1.73 The method used to sign the document must satisfy the conditions in paragraphs 10(1)(a) and (b) of the ETA, that is, it must be:

•

as reliable as appropriate for the purpose of the communication; and

•

proven in fact to have identified the signatory and their intention (by itself or together with further evidence).

[Schedule 1, item 31, paragraph 253RD(c) of the Corporations Act]

1.74 These conditions are discussed further at paragraphs 1.17 to 1.23 (in relation to documents executed by a company electronically).

1.75 Akin to the new rules that apply to documents executed by a company, it is not necessary for all signatories to sign the same document. [Schedule 1, item 31, subsections 253RD(1) and (2) of the Corporations Act]

1.76 Documents lodged with ASIC may also be signed electronically. In situations where ASIC is required to make the document publicly available, the person may wish to remove any personal identifiers (such as their ISPN). [Schedule 1, item 31, subsection 253RD(3) of the Corporations Act]

Minute books

Electronic recording and storage of minute books

1.77 Information may be recorded electronically in a minute book if at the time of recording the information it is reasonable to expect that the information would be readily accessible so as to be usable for subsequent reference. [Schedule 1, item 31, subsection 253S(1) of the Corporations Act]

1.78 The minute book may also be kept electronically if the method used to keep the minute book provides a reliable means of maintaining the integrity of the information and it was, at the time of generating the electronic minute book, reasonable to expect that the information would be readily accessible so as to be usable for subsequent reference. [Schedule 1, item 31, subsections 253S(2) and (3) of the Corporations Act]

1.79 These rules mirror the requirements for when information can be recorded or stored electronically in subsections 12(1) to (3) of the ETA 1999 and are intended to apply in the same way as the relevant ETA provisions.

1.80 If the minute book is stored electronically, it must be open for inspection at the same place where a hard copy would have been required to be retained under sections 251A or 253M of the Act (generally the registered office, principal place of business or another place approved by ASIC). [Schedule 1, item 31, paragraph 253S(2)(a) of the Corporations Act]

New rules apply as mandatory rules

1.81 The new rules relating to electronic execution and virtual meetings (apart from the rules relating to time and place, and the method of voting) apply as mandatory rules rather than replaceable rules. In other words, a company's constitution cannot displace or modify the rules.

1.82 This ensures that all companies have the power to hold meetings virtually and execute company documents electronically if they elect to do so. Further, as the rules are facilitative in nature, they do not preclude companies from conducting meetings or executing documents using traditional means.

1.83 Mandatory rules also ensure that all companies that elect to use technology comply with the minimum requirements. For example, meetings can only be held virtually if the members as a whole have a reasonable opportunity to participate. This ensures that companies cannot opt out of the consumer protection safeguards by adopting a different rule in their constitution.

1.84 It is also consistent with the approach taken in the context of meetings of registered schemes, given that there are no replaceable rules that apply to registered schemes.

Consequential amendments

Amendments to the meetings rules

1.85 Existing provisions which include bespoke rules that provide for the use of electronic communication or alternative technology are repealed to ensure a single consistent approach. [Schedule 1, items 11, 13, 16, 18, 19, 21, 22 and 27, section 248D, subsections 249J (3A) to (5), section 249S, subsection 250B(3), subsection 250BA(1) and section 252Q of the Corporations Act]

1.86 Amendments are also made to provisions which set out how and when notices relating to meetings are provided to ensure that these do not preclude the giving of notices electronically and that they are not inconsistent with the default rules relating to time and place. [Schedule 1, items 12, 13, 22 to 23 and 29, sections 249J, 252G, 252J and subsections 252Z(3A) and (4) of the Corporations Act]

1.87 Similarly, provisions relating to the automatic adjournment of meetings when a quorum is not present are amended to ensure that they operate appropriately for virtual meetings and that members are given sufficient information to allow them to participate in the adjourned virtual meeting. [Schedule 1, items 17 and 28, sections 249T and 252R of the Corporations Act]

1.88 Sections that require meetings to be accessible to members are amended to ensure that if the meeting is held using electronic communication, it is conducted in accordance with the standard rules. [Schedule 1, items 15 and 26, sections 249R and 252P of the Corporations Act]

1.89 Finally, the list of replaceable rules in section 141 is updated to reflect changes in subsection numbers due to the above amendments. [Schedule 1, item 10, table item 22 and 22A in section 141 of the Corporations Act]

Application and transitional provisions

1.90 The amendments to the meeting rules apply to meetings held on or after the commencement of this Schedule and any document that is required or permitted to be given on after that day. [Schedule 1, item 31, sections 1679 and 1679A of the Corporations Act]

1.91 Companies and responsible entities of registered schemes are required to notify members of their right to opt in to receiving documents in hard copy within 2 months of the day of commencement of this Schedule. Failure to provide this notice is a strict liability offence with a penalty of 30 penalty units. [Schedule 1, item 31, section 1679B of the Corporations Act, Schedule 3]

1.92 A strict liability offence is appropriate in this circumstance as it is necessary to strongly deter companies or registered schemes from failing to advise members of their right to elect to receive a hard copy. The imposition of a strict liability offence reduces non-compliance by ensuring that ASIC can efficiently and expeditiously deal with low-level offending, thereby bolstering the integrity of the regime.

1.93 The strict liability offences meet all the conditions listed in the Attorney-General's Department's A Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers. It does not exceed 300 penalty units for a body corporate and preserves the defence of honest and reasonable mistake of fact to be proved by the accused on the balance of probabilities

1.94 The new rules relating to the electronic keeping and retention of minute books apply to minute books kept before, on or after the day of commencement. The new rules that allow companies to give minute books electronically do not have a special application provision and commence and apply from the day after Royal Assent. [Schedule 1, item 31, section 1679C of the Corporations Act]

1.95 The amendments to the requirements for companies to execute a document under section 127 apply from the day that the Act commences. [Schedule 1, item 31, section 1679D]

1.96 The rules in Determination No. 3 for holding meetings using alternative technology do not apply to any meetings or documents covered by the new rules. This ensures that there is no confusion about the rules that apply to meetings convened under Chapter 2G and documents executed under section 127. [Schedule 1, item 31, section 1679E]

Sunset date

1.97 The amendments do not apply on and after 16 September 2021. This reflects the fact that they are designed to provide companies with additional flexibility during the Coronavirus pandemic. The Government is intending to make permanent the changes relating to electronic communication and to conduct an opt-in pilot for hybrid annual general meetings in which shareholders can attend meetings in person or virtually. These changes will be in place when the temporary extension sunsets. [Schedule 1, item 34, section 1679F of the Corporations Act]