On 10 February 2022, the Corporations Amendment (Meetings and Document) Bill 2021 (Bill) was finally passed by both houses. This is welcome news and brings execution of documents into the modern age (albeit belatedly) and more accurately reflects business operations on a day to day basis. The changes with respect to electronic execution will come into effect on the day after the Bill receives Royal Assent. The Bill also makes amendments to the Corporations Act 2001 (Cth) with respect to holding virtual meetings, and these provisions will come into effect on 1 April 2022.
The regime will simplify the execution process and improves on the previous regime in several key respects. Our previous article set out the changes in more detail, click here to read.
No need for paper or complete documents
- Company signatories will no longer be required to physically sign documents in wet-ink or in the presence of a witness. The regime is intended to be technology neutral and does not prescribe permitted methods of execution.
- The practice of executing signature pages of a document only (rather than a complete document) will be permitted.
- It is now clear that deeds may be executed electronically.
Omnibus and split execution
- A director of more than one company may now sign a document once on behalf of all the companies to which that director is appointed.
- Officers of a company are no longer required to sign the same document – i.e. ‘split execution’ is permitted.
Relief for sole directors
Sole directors of proprietary companies without a company secretary are now authorised to sign documents pursuant to section 127 of the Corporations Act, and those relying on the validity of such execution will have the benefit of the assumptions under section 129 of the Corporations Act.
What about agents?
- Agents who are individuals (including attorneys) can make, vary, ratify or discharge a contract or execute documents (including deeds) on behalf of a company under the new regime.
- The statutory assumptions in section 129 of the Corporations Act will also extend to individual agents signing under the new section 126.
- Such agents no longer need to be appointed by deed in order to execute deeds.
Individuals miss out
The new execution regime does not apply to the execution of documents by individuals, which remains governed by State and Territory laws. Work is being done behind the scenes to progress further (standardised) reform in this space.