Senate

Revised Explanatory Memorandum

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

General outline and financial impact

Corporations Amendment (Meetings and Documents) Bill 2021

The Bill makes permanent changes allowing companies and registered schemes to hold hybrid meetings (which give shareholders the option of either attending in person or remotely) and use technology to execute company documents, sign meetings-related documents and provide those documents to their members.

Date of effect: The Bill applies to documents sent and meetings held on or after 1 April 2022. The Bill applies to documents executed on or after the day after Royal Assent.

Proposal announced: On 17 February 2021, the Government announced that it would conduct a 12-month opt-in review of annual general meetings held by companies, and finalise permanent changes to provide a statutory mechanism for the electronic execution of company document and communication of meeting-related documents.

Financial impact: The Bill has no financial impact.

Human rights implications: The Bill does not raise any human rights issues. See Statement of Compatibility with Human Rights - Chapter 2.

Compliance savings impact: Average $450 million per year over 10 years.

Summary of regulation impact statement

Regulation impact on business

Impact: Companies, registered schemes and their officers will have the flexibility to use technology to meet their Corporations Act 2001 obligations in relation to meetings and documents. This will reduce regulatory burden as traditional means of holding meetings physically, sending documents in hard copy and executing documents physically in wet-ink no longer need to be adhered to. Instead, technology neutral laws give the option to meet obligations using technology, which makes conducting business quicker, simpler and more cost effective.

Main points:

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On 5 May 2020, the Treasurer used his temporary instrument-making power under the Corporations Act 2001 to issue a determination that temporarily allowed companies and registered schemes to use technology to satisfy their obligations relating to meetings and document execution. This relief expired on 21 March 2021 however the Government renewed the relief through Treasury Laws Amendment (2021 Measures No. 1) Act 2021, to give companies certainty of their obligations through the Coronavirus crisis. This relief will expire on 31 March 2022.

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The temporary relief allows for the use of technology to hold meetings such as annual general meetings virtually, provide meeting-related materials electronically and validly execute documents electronically.

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As part of the Government's Digital Business Plan in the 2020-21 Budget, the Government consulted on making the temporary relief permanent. Following consultation, the Government announced on 17 February 2021 that it would progress making permanent reforms in relation to validly executing and signing documents and conduct a 12-month opt-in review of annual general meetings to enable a proper assessment of the benefits of using technology to engage with members.

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As part of consultation, the Government considered three policy options. The first was to continue with the law prior to the introduction of the temporary relief; the second was to make the temporary relief permanent; and the third was to make the temporary relief permanent, with modifications to provide greater flexibility and technology neutral provisions.

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The Government's objectives are to ensure that where substantive statutory requirements can be met using digital technology, that the law allows companies, registered schemes and their officers to do so. As option three achieves these objectives, this is the Government's chosen option.

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A supplementary analysis on the costs, benefits and risks associated with the policy options in relation to sending and signing documents was prepared and is consistent with the Australian Government Guide to Regulatory Impact Analysis. The supplementary analysis is included at Attachment A. Further analysis on the use of technology to hold meetings will be prepared following the Government's announced 12-month opt-in review of annual general meetings.