Update on Electronic Execution under the Corporations Act

by | Mar 26, 2021 | Aged Care Blog, COVID-19 Blog, Education Blog, Health Blog

During the initial height of the COVID-19 pandemic, temporary changes were made to the Corporations Act 2001 via the Corporations (Coronavirus Economic Response Determination (No. 3) 2020 (“Determination”).

This Determination temporarily allowed companies to execute documents electronically and permitted the split execution of documents. In other words:

  • The definition of a ‘document’ was amended to include those in electronic form.
  • Execution of documents under the Corporations Act was able to occur electronically, provided the method of execution was reliable and appropriate for the purpose of identifying and indicating the intention to be bound.
  • For companies requiring two signatures to execute a document (from two Directors, or a Director and Company Secretary), split execution was permissible. That is, the company’s signatories could sign separate counterparts, instead of needing to sign the same copy of a document.

These temporary changes expired on 21 March 2021, and documents executed under the Corporations Act can no longer be executed in reliance on the Determination. Currently, the Treasurer no longer has the power to extend the Determination. Documents that were electronically executed in accordance with the Determination on or prior to 21 March 2021 will remain valid, however.

The Commonwealth Government sought to extend and expand measures found in the Determination until 16 September 2021, by introducing into Parliament the Treasury Laws Amendment (2021 Measures No. 1) Bill 2021 (“Bill”) on 17 February 2021. Schedule 1 to the Bill would temporarily reinstate the ability for corporations to execute documents electronically (in a similar way to the Determination), as well as allowing the use of electronic means or alternative technologies to meet the Corporations Act requirements in relation to meetings.

The Bill, however, was unable to pass the Senate. Generally, it appears Schedule 1 of the Bill (mentioned above) had the necessary support. However, Schedule 2 of the Bill deals with other matters unrelated to electronic execution. These remain more controversial and may ultimately be detrimental to the Bill’s passage in its current form.

The Senate has agreed to refer the Bill back to the Senate’s Economic Legislation Committee for inquiry, with their report due on 20 June 2021.

The Government has also flagged an intention to make permanent reforms (following the end of any temporary extension, should the Bill pass the Senate) to continue to allow companies to electronically sign documents and send meeting-related materials.

If you seek assistance or guidance on electronic execution of contracts, or matters arising under the Corporations Act, please contact David McMullen on (08) 9321 0522.


Authors: David McMullen and Morgan Barnsby.

David McMullen

David McMullen