The Senate has voted to support the government’s common-sense changes that restore the ability of companies to use electronic signatures during the pandemic and hold virtual annual general meetings,’’ Business Council of Australia president Tim Reed said.
We also thank Senators for supporting legal protections for businesses through workable continuous disclosure laws which maintain the high integrity of corporate governance that the Australian community expects, allowing businesses to focus on preserving jobs instead of worrying about vexatious class actions.
Allowing companies to use electronic signatures is an urgent and sensible move that will limit people moving around unnecessarily to secure physical signatures on documents during lockdowns.
Virtual AGMs are also essential as companies enter reporting season and it will avoid the need for large numbers of people to gather in person.
In relation to the continuous disclosure amendments, business supports maintaining the robust disclosure obligations which exist in the Corporations Act today, while welcoming the return of a legal defence where companies have exercised due diligence. This framework existed up to 2001 and a return to this practice brings us into line with other countries.
Companies and directors will now only be held liable for breaches of disclosure rules where they have acted with knowledge, recklessness or negligence in market-sensitive updates – aligning ongoing directors’ responsibilities to the high standard set for an initial public offering while reducing the incentive for vexatious class litigation.
Every day that companies could have been fighting vexatious class actions would have been a day where they were not preserving a job, serving their customers or creating new jobs.
The changes reflect the reality that we live in a far less certain world. A due diligence defence means instead of directors poring over legal advice they can keep the economy running without lowering their obligation to continuous disclosures.
The legislation doesn’t change the disclosure obligations in any way. It introduces a defence where currently businesses didn’t have one.
We thank Treasurer Josh Frydenberg for his willingness to listen and respond to the concerns of business when hurdles stand in the way of Australia’s economic recovery.