As we get ready to turn the page on 2024, we take a look at the present state of the Australian corporate law landscape. In the last 5 years, the mahogany boardrooms of corporate Australia have undergone a rapid digital shift towards the electronic and the virtual. In this article we identify 5 Changes to Corporate Law in Australia that the era of disruption and transformation has rung in.
In 2025, the rise of AI and machine learning models promise to forever change human professions as we know them. Commentators, including former UK Chief Scientific Adviser, Sir Patrick Vallance, have likened the impact of AI to that of the Industrial Revolution, some 250 years ago.
Whilst changes to the law are not anywhere near keeping pace, the light speed of digital disruption has forced legislators and regulators to respond. Whilst there have been a spate of changes in the last 5 years accelerated by the COVID-19 pandemic, not every digital development is shiny and new. The quest for the paperless office has been a long campaign, and digital record-keeping has been endorsed by regulators for a quarter of a century, included in drafts of the Corporation Act as early as 1998. The ATO has affirmed digital financial recordkeeping since 2002.[1]
A key pillar of this, from a legislative point of view at the Australian federal level, has been the Corporations Amendment (Meetings and Documents) Act 2022 (Cth) (Corporations M+D Act).
This article focuses on five key “e-reforms” to Australian corporate law in the last five years.
The ‘wet ink’ execution of documents has long been accepted as the best evidence you can get of an intention to be legally bound. However electronic signatures have been around for some time. Australia opened the floodgates for e-signing at the turn of the 21st century with the Electronic Transactions Act (1999) (Cth) and corresponding State and Territory legislation. However, the legislation included certain exceptions, such as documents which directors and secretaries were required to sign under s 127 of the Corporation Act needing to be in wet ink.
Momentum for further reform to e-signature legislation was brought about by the COVID-19 pandemic, which increased the impracticability of wet ink signatures. Government mandated social distancing and the popularisation of ‘work from home’ accelerated the rise of e-signatures.
The increased usability and ubiquity of digital platforms such as DocuSign, PandaDocs and Adobe Sign have fuelled the exponential growth of online execution by modern business. According to some sources, the number of businesses using e-signature has increased by 50% since the start of the pandemic.[2] The global digital signature market size was valued at USD 5.34 billion in 2023, and is projected to grow from USD 7.61 billion in 2024 to USD 118.88 billion by 2032.[3] The graph below gives a flavour of the rise of the influence of e-signing in the corporate world.[4]
The virus and the plethora of social distancing regulations that were spawned to keep people safe made obtaining “face to face” wet ink signatures increasingly difficult. This accelerated the need to make the bedrock provision of s 127(1) of the Corporations Act more flexible. The Corporations (Coronavirus Economic Response) Determination (No 1) 2020 (Cth) (Determination) modified s 127(1) to provide that a company may validly execute a document if:
These temporary reforms were made permanent on 22 February 2022, under the Corporations M+D Act.
Certain types of legal documents need to be independently witnessed.
With the rise of A/V platforms such as Zoom and Microsoft Teams, legislation now allows for legal documents to be witnessed remotely via an audio-visual link (AVL). In NSW, these changes were temporarily introduced under the Electronic Transactions Amendment (COVID-19 Witnessing of Documents) Regulation 2020 (NSW) following the COVID-19 pandemic and made permanent in November 2021.
As part of a raft of conditions for valid e-witnessing, the witness must be able to see the signatory signing the document in real time over AVL. For more information about the changes to witnessing documents by AVL following COVID-19, please read our earlier article.
Under s 110K(1) of the Corporations Act, public companies are required to send shareholders a notice of Annual General Meeting at least once per financial year. Failure to strictly comply with this section can result in a hefty fine.
Complying with such notice requirements is now facilitated by digital technologies. Under s 249J(3), a company may give a notice of meeting to a member including through the electronic method specific under s 110D(1)(c). Further, under s 110K(1), companies may make satisfactory notice by making such notices readily available on a website.
An e-notice will be deemed as valid under s 110D(2) if, at the time the document is sent, it is reasonable to expect that the document would be readily accessible so as to be useable for subsequent reference. Past this validity requirement, there is no definition of “electronic form”, meaning that a company is not technically restricted from using a third party electronic platform for e-communications, although caution should be taken when doing so. If, for example, the shareholder must sign into a third-party platform to receive the notice, that may go beyond the legislative intention.
Despite e-notices being valid under the Corporations Act, members can still elect to have physical forms provided to them under s 110E(2). It is a strict liability offence under s 100F to fail to take reasonable steps to comply with a member’s election to receive documents or not to be sent documents, equating to a penalty equal to that of failing to provide a notice at all.
For further information about how technology neutral sending of documents relating to notices of meetings, please read this article.
Companies may also now electronically issue other documents that relate to shareholders, including notices of resolution, proxy documents, minute books and members’ resolutions. This provides significant cost saving advantages for companies utilising cloud-based and other digital software which allows digital communications to be delivered quickly and to a large number of recipients.
These changes were implemented under The Corporations M+D Act which implemented Part 1.2AA Division 2 into the Corporations Act in relation to meetings and sending of documents. The Corporations M+D Act also allows these documents to be recorded and stored electronically, as long as they are accessible for later reference.
Under s 110E of the Corporations Act, a member can elect to be sent documents in physical form, electronic form, or choose not to be sent documents at all.
In an age of remote and globalised work, virtual meetings have become common practice for businesses. However, the Corporations Act was only reformed to allow meetings of shareholders and directors to take place by hybrid and virtual only means following the COVID-19 pandemic. Such changes to the Corporations Act were implemented under the Treasury Laws Amendment (2021 Measures No.1) Act 2021 (Cth) (Amendment Act). Although the amendment was set to expire on 1 April 2022, the Corporations M+D Act made such changes permanent.
The amendments allow meetings of directors and shareholders of companies, and members of registered schemes, to be held entirely virtually. This provides major cost and administration savings for companies, especially those which are under-resourced and/or have a large number of shareholders to accommodate.
The technology used to carry out the virtual meeting must provide attendees with a reasonable opportunity to participate in the meeting without being physically present. Video conferencing platforms such as Zoom, Skype and Microsoft Teams would meet this requirement.
ASIC increasingly allows corporate filing forms to be lodged electronically, with about half of all forms currently being offered via these means. Additionally, some forms are now only offered via electronic means. For example, a Form 484 which is required when there is a change to company details, has not been accepted in paper form since November 2015.
The ATO has also implemented similar reforms, completely abandoning paper issuing of activity statements or tax notices if they have ever been lodged electronically by a user.
These changes signify a further streamlining of company processes by facilitating swift communications with regulators and a digital record of such communications which can be more readily stored in electronic books.
Given the Corporations Act now permits certain documents to be sent in a ‘technology neutral’ way, that being either in hard copy or electronically,[5] the law has crystalised to make e-takeovers more seamless. The requirements for documents and communications during takeover bids and compulsory acquisitions have been developed under the Treasury Laws Amendment (Modernising Business Communications and Other Measures) Bill 2023, which received royal assent on 14 September 2023.
The changes provide further clarification about the time at which a document is deemed to have been sent via digital means during a takeover, which is beneficial given the strict timing requirements in such matters.
Further, the security holder details requirements under Chapter 6 have been expanded to include the target company’s email address as well as the names and address of any person with a security interest in the bid class.
Finally, security holders have been granted greater choice as to how they choose to receive documents relating to the bid either physically, electronically, or not at all. The new legislation permits this election on the basis of a specific document or a class or type of document.
Although technology has been encouraged by corporate regulators since the dawn of the modern internet, COVID-19 provided further impetus for significant and lasting digital reforms, many of which have since been made permanent.
As we look ahead to 2025, we can expect a corporate world further disrupted and transformed by digital developments, and in particular generative AI. These changes are set to continue to improve the way companies are run and make them suitable for the pace and expectations of a modern business world.
Edwards + Co Legal advises companies and directors on a range of corporate regulatory and compliance matters under Australian law in the digital age. For further advice on modernising your corporate processes and other governance matters, please contact us confidentially below.
[1] Through the TR 2002/10 – https://www.ato.gov.au/law/view/pdf/pbr/tr2002-010.pdf
[2] https://www.airslate.com/blog/airslate-looked-into-how-individuals-and-us-businesses-are-using-esignature-during-covid-19/; https://explodingtopics.com/blog/esignature-stats
[3] https://www.fortunebusinessinsights.com/industry-reports/digital-signature-market-100356
[4] https://explodingtopics.com/blog/esignature-stats
[5] Chapter 2A-2M, 5-5D, 6-6D, 8A, 9 and Schedule 2 Corporations Act.
