Electronic and split execution of documents under section 127 of the Corporations Act 2001 (Cth) (Corporations Act) are once again permitted.
As previously reported, the COVID-19 emergency measures which allowed for electronic execution of documents under section 127 of the Corporations Act expired on 21 March 2021. The Treasury Laws Amendment (2021 Measures No. 1) Bill (the Bill) was first introduced on 17 February 2021 with the intention of passing in advance of the 21 March expiry. However, the Bill failed to pass and was scheduled to be heard in the Senate in August 2021, resulting in no interim relief. The Bill has now passed on 10 August 2021 and will take effect upon receiving Royal Assent, which is expected imminently.
Schedule 1 of the Bill allows companies to execute documents, hold meetings, provide notices relating to meetings and keep minutes using electronic means or other alternative technologies. Importantly, the amendments in Schedule 1 of the Bill are intended to remain in force only until 16 September 2021. By that time, the Government intends to have permanent reforms in place. However, the Bill includes an amendment to the Corporations Act (section 1267F) which provides that the new rules will automatically expire on 31 March 2022. In effect, the temporary rules will remain in place until the permanent reforms are made or until this sunset date, 31 March 2022, whichever comes first.
The Bill does not contain any transitional or retrospective provision for the interim period whilst the Bill was being read. Therefore, the validity of any documents executed electronically between 21 March 2021 and the commencement date of the Bill, will be determined under the pre-COVID application of section 127. As we have previously noted, company documents were previously required to be executed by all parties physically signing the same static document. This was because the Electronic Transaction Act 1999 (Cth) (ETA) did not apply to the Corporations Act.
If you would like any further information on how this affects you, please do get in touch with our corporate team.