The digital age, and through an accelerated period during COVID-19, we have seen the transformation in the way many of us operate and communicate, including through the SMSF industry. However, we do typically see legislation lagging behind these technological advancements, resulting in outdated practices that don’t align with modern business needs. This can create practical challenges, but also legislative risk where the relevant parties opt for convenience over the operation of the current laws.
However, the passing of Treasury Laws Amendment (Modernising Business Communications and Other Measures) Bill 2023 helps to move us closer to an situation where the technology neutrality will apply more universally to the Treasury Laws portfolios, and in this instance in the context of all sections within the Corporations Act.
Part 1 of Schedule 1 within the Bill makes the following amendments, which once royal assent is received will become law with immediate effect:
- Electronic Signatures and Document Execution: The Bill proposes amendments to the Corporations Act, allowing for the electronic signing and execution of all documents under the Corporations Act 2001. This extends on the previous measures which only allowed for electronic execution in respect to signing certain documents in accordance with s.127(1) of the Corporations Act – e.g. Deeds.
- Electronic Document Transmission: The Bill also facilitates the electronic sending of specific documents, further streamlining communication processes and reducing the reliance on physical mail.
- Relief from Sending Documents with Incorrect Member Details: Companies often face challenges when member contact details are outdated or incorrect. The Bill introduces relief for companies from the obligation of sending documents in such cases, reducing unnecessary administrative burdens.
The need for change
The COVID-19 pandemic underscored the importance of digital communication, which saw a number of temporary measures in place at a Commonwealth and state level. Some of these measures have now become permanent, including the the “Meetings and Documents Act” which was enacted on 22 February 2022 and allowed companies to:
- Sign and execute documents either electronically or using traditional wet-ink.
- Send meetings-related documents in electronic or hard copy formats.
The current Bill, once royal assent is received will expand on these reforms, ensuring that all documents under the Corporations Act can be signed electronically. It also broadens the categories of documents that can be sent electronically or in hard copy.
Incorporating previous relief measures
The ASIC Corporations (Uncontactable Members) Instrument 2016/187 previously provided relief to entities from sending hard copies of annual reports to members who had opted for this format but were uncontactable. The new Bill seeks to integrate this relief into the Corporations Act, expanding its scope to cover a more extensive range of documents.
What about the Superannuation Laws?
At this stage the Superannuation Industry (Supervision) Act 1993 remains exempted from the operation of the Electronic Transactions Act (“ETA”) 1999, with the only exception that exists relating to section 35B of the SIS Act – i.e. signing of financial statements.
Having been involved in previous Treasury discussions about the impact of these proposed measures for the SMSF industry, I would suspect that the next round of consultation will include proposed technology neutrality changes to the superannuation laws. At this time, there’s no indication of when this may occur, which ultimately means that both professionals and trustees need to be acutely aware of what documents can be signed electronically, and those that must be signed in physical form (i.e. wet ink).
The Treasury Laws Amendment (Modernising Business Communications and Other Measures) Bill 2023 represents a significant step towards modernising business communications, providing greater options in dealing with documents required for signing under the Corporations Act to be dealt with in a technology neutral way. By embracing digital solutions and reducing administrative burdens, this finalised Bill ensures that the Corporations Act is better aligned with the realities of the modern business landscape.