No 'Split Execution' for Companies under The Corporations Act
RNG Lawyers Partner & Head of Commercial Law, Adrian Riccioni.
The ways in which documents are signed has rapidly changed in the face of the digitisation of the workplace, and this has only accelerated over the last 18 months, with many people working remotely on a now permanent basis.
However, regulations do not always keep pace with these changes, and it is important to ensure you continue to comply with your obligations. A recent South Australian case, Bendigo and Adelaide Bank Ltd & Ors v Kenneth Ross Pickard & Anor [2019] SASC 123, highlights this. A Director and Secretary of the company signed a document in counterparts – that is, they each signed separate copies of the same document. This ‘split’ execution was deemed to be in breach of the signing requirements under s127 of the Corporations Act.
The rules around s127 of the Corporations Act were amended by the Corporations (Coronavirus Economic Response) Determination (No. 1) 2020. This introduced changes to help deal with the new working environment accelerated by the Covid-19 Pandemic. It allowed for documents signed on behalf of a corporations to be signed in counterparts. It also allowed for the electronic signing of documents, and for meetings to occur virtually. These measures were in place from 5 May 2020, and were extended through to 21 March 2021. However, they have now expired.
The Government was expected to make these changes permanent by passing the Treasury Laws Amendment (2021 Measures No. 1) Bill 2021. The Bill passed the House on 17 March 2021, however it failed to pass a vote of the Senate and has been referred to the Senate Economics Legislation Committee for further enquiry.
Therefore, the pre-Covid signing requirements for companies with multiple Directors, or a Director and Secretary have now returned to being in force – that is the two signatures must appear on the same physical document.
For all enquiries please do not hesitate to contact the RNG Lawyers Commercial Law team.