With the realities of COVID-19 still impacting day to day corporate governance, the government has announced some welcome relief. The Treasury Laws Amendment (2021 Measures No.1) Bill 2021 (Bill) received royal assent on 13 August 2021 giving relief to those who had been focused on having to meet paper processes again, after the recent COVID-19 relief from paper based company matters expired on 21 March 2021
After a brief lull following that expiration, where we returned to business as usual, the prior relief from paperbased paperwork is back until Easter next year with some added extras!
What's back and new?
Virtual corporate meetings can continue to be held and meeting documents may be distributed electronically to participants.
Electronic execution can be used for company documents and where a common seal is used the fixing of the seal may be witnessed electronically. It should be noted that State by State variations, particularly in relation to deeds, will need to be considered.
Continuous disclosure breaches will be assessed with a 'fault element' meaning that entities can only be found to have breached their continuous disclosure obligations if they did so with a fault element of knowledge, recklessness or negligence. This recognises the difficulty obtaining information about the value of an entity's securities given the state of flux and uncertainty caused by COVID-19.
The previous relief (plus extras) have been extended until the sunset date of 1 April 2022. ASIC may issue instruments to extend the relief for a further 12 months although we hope the measures will be made permanent given the desire with which companies want to operate electronically is only growing.
As is often argued, the use of verification mechanisms by third party such as hashes (which assimilate some of the features which make up blockchain technology) provide a level of objective verification of signatures that simply is not possible with wet ink signatures. Hopefully the extension of electronic extension is more than a sign of the times but a sign of future acceptance of electronic execution in company documents for company documents (and using Blockchain systems where possible).