Procedures for SMSFs highlighted with draft electronic execution changes

The bill was referred to the Economics Legislation Committee by the Senate with a report due on 3 March next year.

Speaking in a recent webinar, Smarter SMSF chief executive Aaron Dunn explained that the bill builds upon the Corporations Amendment (Meetings and Documents) Act 2022 which received royal assent back in March this year.

Mr Dunn said this latest bill intends to further amend the Corporations Act 2001 to provide that all documents which are required or permitted to be signed electronically or in wet ink will be technology neutral.

“Extending the application of the rules means that a document will be validly signed if it identifies the person signing the document, indicates their intention to be bound by the document and the method of signing is appropriate in all the circumstances,” Mr Dunn stated.

“The extension of the rules also means that a person may sign or execute the document in one or more capacities by signing the document only once if that person’s signature block states each capacity in which they are signing; and the document does not need to be signed on paper, parchment or vellum or meet common law delivery requirements to be validly executed.”

The amendments, if passed, also mean that ASIC or the registrar cannot refuse to receive or register a document on the sole basis that it was signed or executed electronically unless it doesn’t meet the prescribed lodgement requirements, he added.

“This is a good outcome but will obviously only occur once the bill has been finalised by both houses and received royal assent.”

Specifically, the amendments provide that any document that is required or permitted to be sent under Chapters 2A to 2M, 5 to 5D, 6 to 6C, 8A, 8B or 9 or Schedule 2 of the Corporations Act be sent in any of the following ways:

• Hard copy

• Electronically to an electronic address

• By sending, in hard copy, details sufficient to enable the recipient to access the document electronically

• By sending, in electronic form, details sufficient to enable the recipient to access the document electronically

“So it may be sending them a link on a piece of paper or through an email,” he explained.

“The new rules apply to a requirement or permission to send a document, whether the expression ‘send’, ‘give’, ‘serve’ or ‘dispatch’ or any other expression is used. The new rules also apply to any class of documents specified in the regulations.”

In the context of SMSF trustee companies, Mr Dunn said these amendments provide the ability to sign a number of additional documents electronically under the Corporations Act, which currently need to be done in wet ink.

“For example, the appointment of members and directors, the consent to act as a director, the resignation of a director, appointment of alternative director, director meetings and issuing and redeeming shares,” he said.

Mr Dunn said it is also important to note with these amendments that in order for a document to be sent via electronic means, the sender must have access to the recipient’s details.

“This means that there will need to be consents to establish electronic contact details of the member and director to allow for the sending of documents via electronic means,” he explained.

“We need to ensure that we have access to the recipient’s details to enable us to be able to send that information to them so there will need to be a step where we obtain that information in the first place.

“You can’t just simply send something to them because you think you might know what that address is, so formalising that documented step becomes integral to that initial process. This is also important for ensuring the information is sent to them in the format they have requested as well.”

Mr Dunn said SMSF professionals and trustees will need to check that the company constitution allows for the execution of documents in a technology neutral way.