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Australia Government to Make Virtual AGMs, E-signatures Permanent

Legislation allowing listed companies to conduct online-only shareholder meetings and sign documents electronically permanently could result in savings of up to $4.42 billion over ten years. An exposure draft of the legislation, released by the government on 25 June 2021, seeks to make measures introduced to allow companies to conduct virtual meetings at the height of the pandemic permanent.

The measures – which also permitted companies to sign documents electronically – officially expired in March after the government failed to pass legislation in time to continue the temporary relief. The Australian Securities and Investments Commission (ASIC) was subsequently forced to turn a blind eye to virtual meetings, though electronic signatures are excluded from this ‘no-action’ position.

Under the draft legislation, listed companies would be able to “execute documents electronically”, meaning persons may sign the document or witness the “fixing of the seal” electronically. The government has written into the laws that it will take a “technology-neutral approach” to ensure that any “digital platforms and new technologies that may emerge in the future” can be used.

The legislation will also allow companies to hold physical and hybrid meetings, with “wholly virtual meetings” also to be permitted if written into a company’s constitution (either before or after the reforms take place).

Companies will, however, be expected to give “give members a reasonable opportunity to participate” by using reasonable technology and holding meetings at a reasonable time and place. Any documents relating to meetings, regardless of whether the meeting was conducted virtually, in-person or in hybrid form, will be permitted to be “given electronically and signed electronically”.

The government has estimated that the regulatory changes will save between $404 million and $442 million on average per year over 10 years. Around $20 million of this is expected to flow from sending meeting-related materials electronically, with the remaining gains the result of electronic document execution. The nation’s Treasurer stated that the changes would “provide shareholders with enhanced opportunities to both participate in and scrutinise company meetings”.

Consultation on the legislation will close on 16 July 2021. Electronic or digital signatures are a method of authenticating a person as the source of a digital message and indicates their approval of the information contained in the message.

Digital signatures include:

  • digitised signatures—a scanned handwritten signature inserted as an image; use of signature blocks (e.g., on emails)
  • online forms—Adobe forms; workflow approvals in applications (e.g., timesheets)
  • touch screens—signature on a touch screen using a stylus (e.g., Australia Post courier delivery)
  • digital signatures—use of digital code and encryption technology to verify the contents of a digital document.

Recent research shows that due to the burgeoning requirement for smooth digital transaction management and user authentication, the demand for digital signatures is rising rapidly.

Moreover, the increasing acceptance of online transactions and payment procedures, and the surging digitisation rate are driving the demand for digital signatures. Due to these factors, the global digital signature market size is expected to attain a value of $25,211.3 million in 2030, while the market will advance at a CAGR of 29.2% during 2021–2030.

The COVID-19 pandemic has helped digital signature solution and service providers expand their operations. The growth of the digital signature market increased significantly from 2019 to 2020 and this trend continued from 2020 to 2021 as well. Due to the growing requirement for online transactions and secure connectivity and the rising popularity of the remote working culture, the market is exhibiting huge expansion.

Due to the pandemic, many information technologies (IT) and banking, financial services, and insurance (BFSI) companies have taken measures for securing remote contractual, financial, and other associated procedures. Hence, with the surge in the volume of digital transactions, the market is growing rapidly.

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