Bills Support Hybrid Shareholder ‘Mail’
Advocates for shareholders, businesses and legal experts are scrutinizing tech neutrality bills before they are presented to parliament next year.
Existing rules for signing documents in person, keeping companies’ accounts at annual general meetings, and disclosing information to shareholders all changed last year when the COVID-19 pandemic struck.
Laws are now needed to replace the temporary measures that expire in March 2022.
The first draft of the commercial communications modernization bill shared by the Treasury appears to allow and enforce the choice of shareholders, the Australian Shareholders Association said on Friday.
Once adopted, companies will be able to send documents digitized or paper, and in more categories, while allowing a shareholder response either on paper or electronically.
âThis contrasts with the COVID concession which has completely abandoned hard copies,â an ASA spokeswoman said.
“This will be positive because electronic communications are suitable for some shareholders and hard copies are suitable for others, for all kinds of reasons – technology, remoteness, individual circumstance.”
Business law experts at the Law Council of Australia typically support the modernization of document enforcement, email notifications and online meetings.
“However, the details of any proposed change should be carefully considered as part of an open and robust consultation process to identify and resolve potential issues,” said Jacoba Brasch QC, Chairman of the Australian Law Council.
The Australian Institute of Company Directors has said it “strongly supports” the bill’s exposure draft.
“These reforms are essential to modernize and upgrade the outdated provisions for signing and sending documents under the Corporations Act,” said a spokesperson for the AICD.
While the AICD supports electronic communications as the default method of communication, she said it is essential that shareholders retain the right to choose to receive a hard copy.
A key element of the bill is the proposed reform to allow electronic distribution of documents to shareholders relating to takeovers.
The AICD supports this change provided that certain safeguards such as the civil penalties provisions, as proposed by the bill, prevent the misuse of contact information by a bidder.
But one measure not covered is the ability to file documents electronically with the Australian Securities and Investments Commission.
In most cases, filing is required on paper with an ink signature.
“This posed considerable challenges during COVID-19 for individuals and organizations, especially when filing these forms can often be time critical,” said the AICD.
The Communications Modernization Bills, released by the Treasury for submission by December 10, build on the Meetings and Documents Bill presented to parliament in October.