Legal Updates

From the 1 July 2022, some fees may increase for the lodgement of documents with the Australian Securities & Investments Commission (ASIC). ASIC increases its fees each year based on the Consumer Price Index (CPI) for the previous quarter. Annual CPI inflation increased to 5.1% in the last March quarter. Even though these fees are minor, there are penalties for non- compliance. As such, it is important to understand what documents will be impacted and how it will affect your organisation.

Some of the most common documents we lodge are set out below:
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Increases to Registration of Company Fees
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Increases to Business Name Fees
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Increases to Company Documents Generally
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Additionally, the annual proprietary company review fee will increase from $276 to $290. The annual public company review fee will increase from $1,281 to $1,344. All annual review fees must be paid within two months of the review date. If those fees are less than one month late, there will now be an additional charge of $87. If those fees are more than one month late, there will now be an additional charge of $362.

If you have any queries or concerns, please contact us on (07) 3160 0000.

The new financial year always brings a rush of activity to finalise financial transactions for NFPs and charities but at the same time there are other financial considerations, regarding employees and contractors, which should be considered as 1 July approaches.
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Annual wage review

Each year the Fair Work Commission (FWC) decides if the national minimum wage (NMW) will be increased and if so, by how much. The percentage increase is also normally unilaterally applied to the minimum wages documented in the modern awards.

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The decision was released on 15 June, to be implemented for the NMW and identified award wage recipients, in the first pay period after the start of the new financial year. The FWC decided to increase the NMW by $40 per week to account for the significant increases in living costs that resulted in last year’s wage review delivering an effective decrease in earnings for low paid workers.

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Because of the impacts of Covid-19 over the last couple of years, some award increases have been scheduled to start at a time other that 1 July, and this year the FWC decided to exercise their discretion to delay award wage increases to operate from 1 October 2022 for 10 tourism and hospitality awards. All other modern awards will increase on 1 July 2022.

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The FWC decided to increase modern award minimum wages by 4.6 per cent subject to a minimum increase for adult award classifications of $40 per week for low-income adult full-time rates. The decision means that current modern award minimum wage rates above $869.60 per week will receive a 4.6 per cent increase and wage rates currently below $869.60 per week will be increased by $40 per week.

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As an example of the effect of the changes, under the Social, Community, Home Care and Disability Services Industry Award 2010, a social and community services employee level 1 pay point 1 will increase from $840.10 to $880.10, but a level 2 pay point 1 social and community services employee’s rate will increase from $ 899.50 to $940.88. Below is a table of some estimated increases for social and community services employees and crisis accommodation employees:

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The minimum wage increases do not necessarily translate into equivalent increases for workers who are not paid in accordance with the NMW or under a modern award. It remains open for employers to deal with proposed increases for non-award employees at another time, as long as all employees are paid more than the relevant modern award classification that would otherwise apply to their employment. When assessing whether an increase must be applied, you will need to take into account increases to penalties and allowances that may be incorporated into an above award payment.

If you do pay your employees under a modern award, you need to turn your thoughts to the increases, so you can ensure your payroll is ready for the first full pay period after the start of the financial year. Rates can be estimated by applying the increases announced by the FWC. The confirmed rates will be released by the FWC closer to 1 July 2022.

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Superannuation

The Superannuation Guarantee (Administration) Act 1992 provides for a scheduled increase to the employer contribution percentage over a twelve-year period. On 1 July 2022, the compulsory employer superannuation contribution rate will increase to 10.50%. Consequently, employers are required to contribute additional money into their employees’ superannuation accounts, in line with the increased contribution percentage rate.

The Superannuation Guarantee increased to 10% on 1 July 2021 and the percentage rate will rise again to 11% on 1 July 2023. The employer contribution rate will continue rising 0.5% each year until it reaches its final rate of 12% on 1 July 2025.

Removal of the $450 monthly SG threshold

As of 1 July 2022, the $450 minimum monthly income threshold will be removed for employees over 18 or for under 18-year-olds working more than 30 hours per week, unless they are covered by a workplace agreement that states otherwise.

With the government removing the monthly threshold amount, employers are now required to make superannuation contributions for all their employees, including casual and part-time employees, regardless of how much they earn, apart from the exclusions mentioned above.

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Increase in age limit for salary-sacrifice contributions

If you have employees making salary-sacrifice superannuation contributions, the age limit for making those contributions into super, without needing to meet the work test, has been increased from age 68 to 74. That means, from 1 July 2022 eligible salary-sacrifice arrangements paying into superannuation are available to anyone aged under 75 without the need to meet a work test. The other normal eligibility criteria such as a total superannuation balance (including compulsory and voluntary deposits) of less than $1.7 million and sufficient unused annual non-concessional contributions cap still apply.

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NFP Lawyers can assist your NFP or charity to prepare for the impending changes with audits and advice. You can reach us at reception@nfplawyers.com.au or on 07 3160 0010.

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As foreshadowed in our article ‘Can charitable companies can hold virtual meetings? [NFPi], the Federal Government has put in place reforms to continue to allow companies registered under the Corporations Act 2001 (Cth) (“Companies”) to hold wholly virtual general meetings of members on a permanent basis.

Some of the amendments change the position for ACNC charitable companies as regards general meetings of members held on or after 1 April 2022.

The temporary measures described in our previous article applied to ACNC charitable companies in relation to meetings of directors. However, the temporary position ceased on 31 March 2022 and the pre- COVID-19 position is reinstated as regards meetings of directors held on or after 1 April 2022.

Temporary measures put in place for the COVID-19 pandemic under the Treasury Laws Amendment (2021 Measures No. 1) Act 2021 (Cth) (“temporary measures legislation”) were due to expire on 31 March 2022 but the Federal Government had proposed that permanent reforms would be passed before the sunset date.

What are the updated changes?

Our article ‘Can charitable companies can hold virtual meetings?[NFPi] ’ describes the position for ACNC charitable companies under the Corporations Act before the temporary measures legislation commenced and under the temporary measures legislation.

The Corporations Amendment (Meetings and Documents) Act 2021 (Cth) (“Amending Act”) has received Royal Assent. The Amending Act amends the Corporations Act to allow (among other things) Companies to hold general meetings, provide notices relating to general meetings and keep minutes of general meetings, using electronic means or other technologies on a permanent basis. The changes commenced on 1 April 2022.

The Amending Act makes some changes to the temporary measures legislation and repeals the sunsetting provision so the temporary measures, as amended, now apply on a permanent basis.

The legislative structure adopted in the temporary measures legislation has not been followed in the Amending Act. The concept of “Chapter 2G meetings”, which referred to meetings of a Company’s members and meetings of a Company’s directors (including meetings of a committee of directors) that was introduced in new Part 2G.5 under the temporary measures legislation has been discontinued. The previous provisions relating to holding virtual meetings of directors have been reinstated within Part 2G.1 and the permanent provisions relating to virtual members’ meetings have been included within Part 2G.2.

While ACNC charitable companies are generally exempt (under item 9 of section 111L(1)) from complying with the requirements relating to holding general meetings of members under Part 2G.2, some of the new sections in Part 2G.2 are expressly excluded from the exemption.

Part 2G.5 now only contains the provisions relating to the electronic recording and keeping of minute books required to be kept under the Corporations Act that were introduced under the temporary measures legislation. Those provisions have not changed and are permanent from 1 April 2022. For ACNC charitable companies, those provisions do not apply to minutes of members’ meetings and resolutions as these are not required to be kept under the Corporations Act, but they do apply to minutes of directors’ meetings and resolutions.

The provisions relating to sending notices and documents about meetings electronically have been moved from Part 2G.5 to a new Division 2 in Chapter 1 to allow room for future developments. The exemption for ACNC charitable companies does not extend to Division 2 so these provisions apply to ACNC charitable companies in relation to documents sent by the Company relating to meetings and resolutions of members or classes of members.

This article focusses on the application of the permanent changes to the position of ACNC charitable companies. For information about the application of the permanent changes to not-for-profit companies that are not ACNC registered charities please see our article ‘Update – Can not-for-profit companies hold virtual meetings?[NFPii] ’

General meetings - the new permanent position for ACNC charitable companies

·         Holding general meetings

• All Companies have the option to hold a members’ meeting at one or more physical venues or at one or more physical venues using virtual technology (a “hybrid meeting”) regardless of the requirements in the Company’s constitution, but wholly virtual meetings can only be held if this is required or permitted by the Company’s constitution expressly (section 249R).
• A new provision determines where and when a hybrid or wholly virtual meeting is taken to have been held and states that members attending a hybrid or wholly virtual meeting, whether or not at a physical venue, are taken to be present in person for all purposes (section 249RA).
• There is a new obligation requiring a Company that holds a meeting of members to give the members entitled to attend a meeting, as a whole, a reasonable opportunity to participate in the meeting. Before the temporary measures legislation, the equivalent section only related to the use of technology at meetings. Now, it covers all aspects of holding the meeting and, without limiting what else might be reasonably required, there is new detail as to the reasonableness of the choices of venue and time of the meeting, as well as technology, depending on whether the meeting is wholly physical, at one or more venues, or uses virtual technology. Virtual meeting technology must allow members attending the meeting, as a whole, to exercise orally and in writing any rights of those members to ask questions and make comments (section 249S).
• If members who are entitled to attend a members’ meeting do not have, as a whole, a reasonable opportunity to participate in the meeting or a proceeding at the meeting, the meeting or proceeding will only be invalid if so declared by a Court on the grounds that a substantial injustice has been or may be caused which cannot be remedied by any order of the Court (section 1233(3A)).

·         Sending notices of general meetings and other documents

• The new provisions relating to sending of documents apply to any document that is required or permitted under the Corporations Act to be sent by a Company. They cover notices sent by a Company relating to meetings and resolutions of members (and classes of members) and certain other notices, reports and documents.
• The legislation is regrettably unclear in regard to the position of ACNC charitable companies which are exempt from the requirement to hold an annual general meeting or other meetings required under Part 2G.3 (such as a meeting requisitioned by members) but may be required to hold a general meeting for a specific purpose under another part of the Corporations Act such as to change its constitution or name. Is a general meeting that is held only because an ACNC charitable company chooses to do so or because it is required under its constitution (such as an AGM), one that is “permitted under the Corporations Act” and to which the new provisions apply? The legislative intent seems to be that the new electronic document sending provisions apply to ACNC charitable companies because the provisions are intended to be facilitative for Companies (for the same reason that the new virtual meeting provisions are not subject to the exemption for ACNC charitable companies) and it would be a perverse and confusing outcome if the provisions apply to some types of member meetings and not others.
• Under the new provisions, the Company can send notices and documents in physical form or electronic form or make them accessible electronically provided that, at the time the document is sent in electronic form or made accessible electronically, it is reasonable to expect that the document would be readily accessible so as to be useable for subsequent reference. However, these provisions do not limit the ways in which the Company may send a document - a Company’s constitution may set out other ways in which a document may be sent such as by making it readily available on a website (sections 110C and 110D). These provisions apply not only to documents sent to members but to other persons, such as directors and auditors. The effect of these provisions is to give ACNC charitable companies options for sending the specified types of documents to members and others electronically even if its constitution does not provide for notices to be sent by that means.
• Under section 110E, a member may elect to be sent documents in either physical form or electronic form, either in relation to all documents which can be sent electronically or specified classes of those documents, by notifying the Company (whether or not in writing).
• There is a new requirement for public Companies (including ACNC charitable public companies such as CLGs) to either:
• send members, at least once each financial year, a notice about their election rights under section 110E; or
• make such a notice readily available on a website (section 110K).
• A Company that does not take reasonable steps to send a document in a manner that complies with a member’s election may commit an offence of strict liability. However, the failure does not affect the validity of the notice or any act, transaction, agreement, resolution or other thing. A Company must also take reasonable steps (within prescribed parameters) to comply with a member’s ad hoc request to be sent a particular document in a particular form and non-compliance may be an offence of strict liability (sections 110F to 110J). 
• These new provisions pre-suppose that a member has provided both a physical address and an electronic address for communications. There is no requirement in the Corporations Act for a member to provide both types of address. It will be easier for a Company with a website to comply but the new requirement could be an added burden for those that don’t.
• Transitional provisions preserve in force member pre-existing elections about how documents are be sent.

·         Minutes of general meetings

ACNC charitable companies are exempt from the requirement to keep minutes of members’ meetings and resolutions but are required to keep minutes of directors’ and committee meetings and resolutions. The new provisions permitting electronic recording of minutes apply to information “required” to be recorded in a minute book (section 253S). We take this to mean “required under the Corporations Act” so the new provisions do not apply to minutes of members’ meetings and resolutions of ACNC charitable companies.

Matters for consideration by ACNC charitable companies

• ACNC charitable companies may wish to consider whether the ability to hold wholly virtual general meetings could be of practical assistance and if so, whether changes to their constitution are needed to allow, or better facilitate, such meetings.
• ACNC charitable companies that hold hybrid or wholly virtual meetings will need to ensure that the technology is capable of recording the presence of members attending virtually and allowing them to ask questions (orally or in writing) and to vote.
• Given the lack of clarity as to whether the document sending provisions apply to general meetings that an ACNC charitable company is required by its constitution or may wish to hold, ACNC charitable companies may wish to consider whether the notice provisions in their constitution reflect the new provisions and whether to require members who provide an electronic address to elect to opt-out of electronic notices.
• ACNC charitable companies that are public Companies, including CLGs, will need to include in their compliance programme, the giving of an annual notice to members about their election rights or updating their website about those rights.
• ACNC charitable companies may wish to consider whether the ability to sign and/or keep minutes (and other related documents) of general meetings and members’ written resolutions electronically could be of practical assistance and if so, whether changes to their constitution are needed to allow, or better facilitate, this.

Director's meetings - the permanent position for all Companies including ACNC charitable companies
The position as to how notices relating to directors’ meetings or resolutions can be sent has reverted to the position before the adoption of the temporary measures legislation. Section 248D, which was repealed by the temporary measures legislation, has been reinstated and, once again, directors’ meetings can only be called or held using a technology consented to by all directors and a director can withdraw that consent within a reasonable time before the meeting.

Signing documents relating to meetings
The temporary measures legislation included provisions about how Companies could validly sign electronically documents relating to meetings of members or directors. Those measures have been included in the permanent changes and apply to meetings of directors of ACNC charitable companies. For information about those changes, please see our article ‘Update – Electronic executions are in, permanently[NFPiii] ’.

Parliamentary review
This may not be the end of the story for virtual meetings and electronic communications. The new provisions, including those continuing in force under the temporary measures legislation, must be reviewed as soon as practicable after 22 February 2024 and a review report submitted to Parliament.

The position for ACNC charities that are not Companies

The amendments outlined above do not apply to ACNC charities that are not companies registered under the Corporations Act, such as incorporated associations, unincorporated associations and bodies corporate established under other Commonwealth, State or Territory legislation. See our previous article, ‘Can charitable companies hold virtual meetings?[NFPi], as to the position of those charities.

Link NFPi - Can charitable companies hold virtual meetings?

Link NFPii - Can not-for-profit companies hold virtual meetings?

Link NFPiii - Update - Electronic executions are in, permanently

As foreshadowed in our article ‘ Wet-ink aside, electronic executions are (temporarily) back in![NFPi]’, the Federal Government has implemented permanent reforms to permit electronic execution under section 127 of the Corporations Act 2001 (Cth) (“Corporations Act”).

The permanent measures are made by the Corporations Amendment (Meetings and Documents) Act 2022 (Cth) (“Amending Act”) and commenced on 23 February 2022.

Temporary measures put in place for the COVID-19 pandemic under the Treasury Laws Amendment (2021 Measures No. 1) Act 2021 (Cth) (“temporary measures legislation”) were due to expire on 31 March 2022 but the Federal Government had proposed that permanent reforms would be passed before the sunset date.

What are the permanent changes?

The Amending Act makes some changes to the temporary measures legislation and repeals the sunsetting provision so the temporary measures, as amended, now apply on a permanent basis.

Temporary provisions that dealt with electronic execution of documents separately from electronic signing of documents relating to meetings have been replaced with provisions that apply to signing documents more generally that are placed in a new division of the Corporations Act to allow room for future developments. The signing provisions reflect those of the Electronic Transactions Act 1999 (Cth) which do not apply to documents executed for the purposes of the Corporations Act.

The legislation also makes changes relating to the execution of deeds and execution of documents by agents and proprietary companies with a sole director.

These provisions apply to all companies registered under The Corporations Act including ACNC-registered charities.

Execution by electronic means

• Method

The new provisions (in sections 110, 110A and 110B) relating to “technology neutral” signing of documents (including deeds) apply to execution under section 127 and to notices required or permitted to be signed in relation to meetings and resolutions of members and directors (“relevant documents”). They are worded differently from the similar provisions in the temporary measures legislation.

A relevant document that is signed by a person in physical form by hand, or by signing an electronic form of the document using electronic means, will be valid if:

1. the method of signing identifies the person and indicates the person’s intention in respect of the information recorded in the document (the “intention requirement”); and
2. the method was either:

            (i) as reliable as appropriate for the purpose for which the information was recorded, in light of all the circumstances including any relevant agreement; or                                                            

           (ii) proven in fact to have fulfilled the functions described in paragraph (i) by itself or together with further evidence.                                                                                                              

This means that to be able to rely on an electronic signature, there must be an appropriate and reliable method to verify that the person who is named as the signatory did, in fact, sign the document. This may require you to review your technology as well as processes and procedures.

The provisions do not require all persons signing the document to use the same form or method of signing or to sign the same page or that all the information regarding the method of signing by a person is included. A person signing in more than one capacity may sign only once if the document requires or permits this and states those capacities.

The changes do not limit the ways in which a document, including a deed, can be signed.

• Entire contents

The new provisions do not include the specific requirement in the temporary measures legislation that the copy or counterpart of the document must include the entire contents of the document. While execution of an extracted execution page in isolation might be valid in some circumstances, for practical purposes, if the entire document is not included or attached or linked to the signature by some means (such as a link to an online document execution platform) its content cannot be identified so execution in that way seems unlikely to meet the intention requirement.

• Technology

As was the case under the temporary measures legislation, the permanent changes do not mandate the use of any particular technology. As well as technologies already in use such as online platforms and use of stylus tools to sign PDFs, the legislation is flexible enough to allow for use of new technologies.

• Lodgement of documents

Documents signed in accordance with the new measures must be accepted as validly signed if lodged with ASIC or the Registrar of Australian Business Registry Services.

• Execution of deeds

New sections 127(3A) and (3B) provide that a company may execute a document as a deed under section 127:

• without the execution being witnessed; and
• regardless of whether the document is in physical form (ie, the traditional “wet-ink” signature) or electronic form, or a combination of both,

and the deed need not be delivered. These amendments replace common law requirements for the execution of a valid deed that would otherwise apply.

Other changes

• Execution by agents

Section 126 has been amended to extend the ability of agents to execute documents on behalf of companies. Previously the section was restricted to agents making, varying, ratifying and discharging contracts but it now also allows the execution of documents, including deeds. An agent executing a deed need not be appointed by deed, the agent’s execution does not need to be sealed or witnessed, and delivery of the deed is not required. These amendments replace common law requirements for the execution of deeds that would otherwise apply.

The new electronic execution provisions apply to company agents signing under section 126.

• Execution by sole director companies

Section 127 has been amended in relation to execution of documents by a sole director of a proprietary company. While these companies are not required to appoint a company secretary, they have sometimes been forced to do so (by appointing either the sole director or another person) so parties they are dealing with can rely on the presumption of due execution under section 127. The amendments provide that only the sole director is required to sign a document if the sole director is also the company secretary, or the company does not have a company secretary. However, if another person is the company secretary, both are still required to sign in order to rely on section 127.

The assumptions that a person can make in relation to a document executed by a sole director company have been amended to reflect these changes (sections 129(5) and (6)).

Sole director companies that have appointed a separate company secretary solely for the purposes of section 127 may now consider revoking that appointment.

Time gap not addressed

Our article ‘Wet-ink aside, electronic executions are (temporarily) back in! [NFPi]’ noted that the temporary measures were not retrospective and did not contain transitional provisions relating to documents executed between 21 March 2021 (when the initial temporary measures lapsed) and 14 August 2021 when the temporary measures legislation commenced. That remains the case. The validity of documents executed electronically in that period will likely be determined by reference to the pre-COVID application of section 127.

Practical considerations

Where executing documents electronically, it is important to use a technology that can satisfy the elements of identification, intention and reliability. Given there are no legislatively approved or mandated electronic methods, companies (or parties dealing with them) may prefer to stick with traditional “wet-ink” signatures wherever possible.

The amendments do not alter existing requirements for companies to retain copies of executed documents. Companies must retain a copy of each executed counterpart, whatever method of signing was used, including the full document as separately signed (not merely the signature pages).

Watch this space

The permanent provisions, including those continuing in force under the temporary measures legislation, must be reviewed as soon as practicable after 22 February 2024 and a review report submitted to Parliament.

Queensland and other State and Territory legislation

The Justice and Other Legislation Amendment Act 2021 (Qld) was assented to in November 2021. The amendments include permanent changes to allow electronic execution of documents in Queensland in some circumstances including under the Property Law Act 1974 (Qld), Powers of Attorney Act 1998 (Qld) and Oaths Act 1867 (Qld) which have been proclaimed to commence on 30 April 2022. Equivalent laws have been passed in most other States and Territories.

State and Territory laws are also important to consider because the Commonwealth laws generally only deal with some documents signed by or on behalf of companies, whereas the State and Territory laws deal with documents signed by or on behalf of individuals (eg, sole traders, partners and guarantors) and specific documents (eg, statutory declarations and affidavits). 

Your document signing processes and procedures may need to comply with one or more Commonwealth, State and Territory laws, especially online applications and voting, if signatories may be located in different States or Territories. 

Takeaways

It will important to identify:

• whether the signing of a document falls under a Commonwealth, State or Territory law, or possibly both;
• when the document was signed, whether it was permitted to be signed electronically, and if not, what steps should be taken; and
• how your document signing technology, process and procedures (including online applications and voting) may need to be updated to obtain the benefit of these signing laws. Do you have an “appropriate” and “reliable method” to verify that the person who is named as the signatory and appeared to sign the document, did sign the document?

Link NFPi - Wet ink aside, electronic executions are (temporarily) back in

As foreshadowed in our article ‘Can not-for-profit companies hold virtual meetings?[NFPi] ’, the Federal Government has put in place reforms to continue to allow companies registered under the Corporations Act 2001 (Cth) (“Companies”) to hold wholly virtual general meetings of members on a permanent basis, but only if this is required or permitted by the Company’s constitution expressly.

The temporary position for holding virtual meetings of directors ceased on 31 March 2022 and the pre-COVID-19 position has been reinstated in relation to directors’ meetings held on or after 1 April 2022.

This update article focusses on the application of the permanent changes to not-for profit Companies, other than ACNC-registered charities. For updated information about the application of the permanent changes to Companies that are ACNC-registered charities, please see out article ‘Update - can charitable companies can hold virtual meetings?[NFPii] ’

Temporary measures put in place for the COVID-19 pandemic under the Treasury Laws Amendment (2021 Measures No. 1) Act 2021 (Cth) (“temporary measures legislation”) were due to expire on 31 March 2022 but the Federal Government had proposed that permanent reforms would be passed before the sunset date.

What are the updated changes?

Our article ‘Can not-for-profit companies hold virtual meetings?[NFPi] ’ describes the position for not-for-profit Companies under the Corporations Act before the temporary measures legislation commenced and under the temporary measures legislation.

The Corporations Amendment (Meetings and Documents) Act 2021 (Cth) (“Amending Act”) has received Royal Assent. The Amending Act amends the Corporations Act to allow (among other things) Companies to hold general meetings, provide notices relating to general meetings and keep minutes of general meetings, using electronic means or other technologies on a permanent basis. The changes commenced on 1 April 2022.

The Amending Act makes some changes to the temporary measures legislation and repeals the sunsetting provision so the temporary measures, as amended, now apply on a permanent basis.

The legislative structure adopted in the temporary measures legislation has not been followed in the Amending Act. The concept of “Chapter 2G meetings”, which referred to meetings of a Company’s members and meetings of a Company’s directors (including meetings of a committee of directors), that was introduced in new Part 2G.5 under the temporary measures legislation, has been discontinued. The previous provisions relating to holding virtual meetings of directors have been reinstated within Part 2G.1 and the permanent provisions relating to virtual members’ meetings have been included within Part 2G.2.

Part 2G.5 now only contains the provisions relating to the electronic recording and keeping of minute books required to be kept under the Corporations Act that were introduced under the temporary measures legislation. Those provisions have not changed and are permanent from 1 April 2022. They apply to all Companies, to the extent they are required to keep minutes.

The provisions relating to sending notices and other documents about meetings electronically have been moved from Part 2G.5 to a new Division 2 in Chapter 1 to allow room for future developments. This new Division also now contains the provisions for sending annual financial reports to members for Companies other than Companies limited by guarantee (“CLGs”) and ACNC-registered charities.

General meetings - the new permanent position for not-for-profit Companies

·         Holding general meetings

• Companies still have the option to hold a members’ meeting at one or more physical venues or at one or more physical venues using virtual technology (a “hybrid meeting”) regardless of the requirements in the Company’s constitution but wholly virtual meetings can only be held if this is required or permitted by the Company’s constitution expressly (section 249R).
• There is a new obligation requiring a Company that holds a meeting of members to give the members entitled to attend a meeting, as a whole, a reasonable opportunity to participate in the meeting. Before the temporary measures legislation, the equivalent section only related to the use of technology at meetings. Now, it covers all aspects of holding the meeting and, without limiting what else might be reasonably required, there is new detail as to the reasonableness of the choices of venue and time of the meeting, as well as technology, depending on whether the meeting is wholly physical, at one or more venues, or uses virtual technology. Virtual meeting technology must allow members attending the meeting, as a whole, to exercise orally and in writing any rights of those members to ask questions and make comments (section 249S).
• If members who are entitled to attend a members’ meeting do not have, as a whole, a reasonable opportunity to participate in the meeting or a proceeding at the meeting, the meeting or proceeding will only be invalid if so declared by a Court on the grounds that a substantial injustice has been or may be caused which cannot be remedied by any order of the Court (section 1322(3A)).
• Voting on a show of hands unless a poll is demanded has been reinstated as the default voting method at members’ meetings in whatever form the meeting is held (section 250J).

·         Sending notices of general meetings and other documents

• The new provisions relating to sending of documents apply to any document that is required or permitted under the Corporations Act to be sent by a Company. They cover notices sent by a Company relating to meetings and resolutions of members (and classes of members), annual financial reports (other than reports by CLGs) and certain other notices, reports and documents. They apply not only to notices sent to members but to other persons, such as directors and auditors. While the language of these provisions has changed, the terms are essentially the same as the temporary measures, viz, the Company can send these documents in physical form or electronic form or make them accessible electronically provided that, at the time the document is sent in electronic form or made accessible electronically, it is reasonable to expect that the document would be readily accessible so as to be useable for subsequent reference (sections249J, 110C to 110D. A Company’s constitution may provide for other ways that a document can be sent. The effect of these provisions is to give Companies options for sending the specified types of documents to members and others electronically even if its constitution does not provide for notices to be sent by that means.
• Under section 110E, a member may elect to be sent documents in either physical form or electronic form, either in relation to all documents which can be sent electronically or specified classes of those documents, by notifying the Company (whether or not in writing).
• There is a new requirement for public Companies to either:
• send members, at least once each financial year, a notice about their election rights under section 110E; or
• make such a notice readily available on a website (section 110K).

        This requirement applies to CLGs.

• A Company that does not take reasonable steps to send a document in a manner that complies with a member’s election may commit an offence of strict liability. However, the failure does not affect the validity of the notice or any act, transaction, agreement, resolution or other thing. A Company must also take reasonable steps (within prescribed parameters) to comply with a member’s ad hoc request to be sent a particular document in a particular form and non-compliance may be an offence of strict liability (sections 110F to 110J).
• These new provisions pre-suppose that a member has provided both a physical address and an electronic address for communications. There is no requirement in the Corporations Act for a member to provide both types of address. It will be easier for a Company with a website to comply, but the new requirement could be an added burden for those that don’t.
• Transitional provisions preserve in force member pre-existing elections about how documents are be sent.

Director's meetings - the new permanent position for not-for-profit Companies

The position as to how notices relating to directors’ meetings or resolutions can be sent has reverted to the position before the adoption of the temporary measures legislation.

Section 248D, which was repealed by the temporary measures legislation, has been reinstated so that once again directors’ meetings can only be called or held using a technology consented to by all directors and a director can withdraw that consent within a reasonable time before the meeting.

Minutes of meetings

Information that is required to be recorded in a minute book may be recorded in electronic form, if at the time of recording the information, it was reasonable to expect that the information would be readily accessible so as to be useable for subsequent reference. The requirement is taken to be satisfied if the method of generating the electronic form of the minute book provides a reliable means of assuring the maintenance of the integrity of the information contained in the minute book, so that the information is complete and unaltered apart form the addition of any endorsement or any immaterial change which arises in the normal course of communication, storage and display (section 253S).

Signing documents relating to meetings

The temporary measures legislation included provisions about how Companies could validly sign electronically documents relating to meetings of members or directors. Those measures have been included in the permanent changes. For information about those changes, please see our article ‘Update – Electronic executions are in, permanently[NFPiii] ’.

Matters for consideration by not-for-profit Companies

• Companies that wish to hold, or to have the option to hold, wholly virtual general meetings will have to expressly provide for this in their constitution.
• Companies that hold hybrid or wholly virtual meetings will need to ensure that the technology is capable of recording the presence of members attending virtually and allowing them to ask questions (orally or in writing) and to vote.
• Public Companies, including CLGs, will need to include in their compliance programme, the giving of an annual notice to members about their election rights or updating their website about those rights.

 Parliamentary review

This may not be the end of the story for virtual meetings and electronic communications. The new provisions, including those continuing in force under the temporary measures legislation, must be reviewed as soon as practicable after 22 February 2024 and a review report submitted to Parliament.

Link NFPi - Can not for profit companies hold virtual meetings

Link NFPii - Can charitable companies hold virtual meetings

Link NFPiii - Update - electronic signatures are in, permanently

‍Key takeaways

Recent amendments to the Australian Charities and Not-for-profits Commission Regulation[i] will reduce financial reporting requirements for many charities but also add information disclosure requirements for some.

• Starting with reporting in the 2022 Annual Information Statement (AIS), charity size thresholds have increased so many more charities will not be required to prepare financial reports at all and others will no longer be required to have their financial reports audited [ii]
• Starting with reporting in the 2022 AIS, large charities that lodge a special purpose financial statement (SPFS) for their annual reporting to the ACNC and have two or more key management personnel will be required to report on an aggregated basis about remuneration and other compensation paid to key management personnel
• Starting with reporting in the 2023 AIS, large and medium charities that lodge a SPFS can opt to use the simplified disclosures accounting standard AASB 1060, instead of the prescribed standards. This change is expected to reduce compliance costs
• Starting with reporting in the 2023 AIS, charities that lodge a SPSF will be required to report on related party transactions

Changes to size thresholds

What are the size threshold changes?

A charity’s size for a particular financial year is determined by its revenue for that financial year. The current and new thresholds are as follows:

Charity size                                        Current revenue threshold for 2020 – 2021 financial year and earlierNew revenue threshold for 2021 – 2022 financial year and laterSmall                            Less than $250,000Less than $500,000Medium                        $250,000 to $999,999$500,000 to $2,999,999Large                          $1 million or more$3 million or more

• When do the size changes take effect?

The size changes apply to the charity’s 2021-2022 financial year and each later financial year. For a charity with the default and most common financial year of 1 July to 30 June, this means the change applies to the financial year that commenced on 1 July 2021 and ends on 30 June 2022 so the charity’s size as at 30 June 2022 will determine its reporting level for the purposes of the 2022 AIS which must be lodged by 31 December 2022.

For a charity with a financial year of 1 January to 31 December, the 2021 AIS for the year ending on 30 December 2021 is not due until 30 June 2022. The old size threshold applies to that year. The new size threshold will apply to and from the year that commenced on 1 January 2022 and will be reported on in the 2022 AIS which must be lodged by 30 June 2023.

• When is a charity’s size relevant?

A charity’s size determines:

• Whether a charity is required to prepare and lodge an annual financial report at all and if so, whether the report must be audited or reviewed[iii]
• The time period within which a charity must notify the ACNC of changes of name, address for service, responsible persons and governing rules and of a material error in an AIS or financial report – being within 60 days for a small charity and 28 days for other charities[iv]
• The amount of the administrative penalty for failing to give reports, statements, notices and other documents to the ACNC by the due date[v].

Changes to financial reporting standards

For the 2021-2022 financial year and onwards, charities that prepare and lodge a SPSF with the ACNC are permitted to apply accounting standard AASB 1060, General Purpose Financial Statements – Simplified Disclosures for For‑Profit and Not‑for‑Profit Tier 2 Entities (the simplified disclosures standard) in the preparation of the SPSF. If they do opt to apply the simplified disclosures standard, generally the prescribed standards are replaced completely, but there are exceptions.[vi]

The changes to financial reporting requirements, including those relating to reporting of related party transactions, do not apply to medium or large charities that are required to lodge a general purpose financial statement or opt to lodge a general purpose financial statement. Reporting requirements for those charities have not changed.

As is the situation currently, charities will need to consider the financial reporting requirements under other legislation applicable to them (such as if they are an incorporated association or registered under the States’ charitable fundraising laws) to determine how the changes in ACNC reporting requirements align with those other reporting requirements.

New reporting of related party transactions

The changes add a new prescribed accounting standard AASB 124, Related Party Disclosures. The simplified disclosures standard also requires disclosure of certain related party relationships and of transactions with related parties. Therefore, related party disclosure requirements apply to all charities that prepare and lodge a SPSF. These changes apply for the 2022-2023 financial year and onwards.

Under both the simplified disclosures standard and AASB 124, reporting on related party transactions includes disclosure of key management personnel compensation in total (not individually). However, large charities with only one individual who is key management personnel and all medium charities are exempt from this requirement. Large charities with two or more key management personnel must start disclosing remuneration for the 2021-2022 financial year and onwards, even though reporting of all other related party disclosures does not start until the following year.

“Key management personnel” are persons having authority and responsibility for planning, directing and controlling the activities of the charity, directly or indirectly, including any director. “Compensation” includes all forms of consideration paid, payable or provided by the entity, or on behalf of the entity (for example, by its parent or by a shareholder), in exchange for services rendered to the entity.

Allowance of voluntary real time updating of information on the charity register

The ACNC Commissioner is now required to include on the Charity Register any information that a charity voluntarily discloses for the purpose of being included on the Charity Register. This amendment is intended to increase transparency by allowing charities to update their program information on the ACNC Charity Register in real time.

The Charity Register contains a summary of a charity’s activities and, as a recently added feature, information about its programs. This information is currently only updated on the Charity Register after the charity lodges its AIS. Although the change allowing real time updates has already commenced, currently the AIS is the only way for a charity to update information about its activities and programs.

The ACNC has recently informed NFP Lawyers that a new program form is currently in development which will allow charities to log in to the Charity Portal and update information about activities and programs online during the year. This form will be available in the Charity Portal in the future. The ACNC may publicise the availability of this form through its monthly newsletter and social media channels.

[i] The amendments were made by the Australian Charities and Not-for-profits Commission Amendment (2021 Measures No. 3) Regulations 2021 on 11 November 2021 (Amending Regulation). A change to ACNC Governance Standard 3 proposed by the Amending Regulation never commenced.

[ii] According to the Explanatory Statement, approximately 2,500 charities will be reduced from medium to small and over 2,700 will be reduced from large to medium.

[iii] Small charities are not required to lodge a report, large charities must lodge an audited report and medium charities must lodge either an audited report or a reviewed report.

[iv] These are not all of the changes and circumstances that a charity must notify to the ACNC. There are others where the notification time periods are the same for all charity sizes.

[v] Small charities must pay the base penalty amount, medium charities must pay double that amount and large charities must pay 5 times that amount.

[vi] The prescribed standards are listed in regulation 60.30(2). Some requirements in AASB 1054, Australian Additional Disclosures still apply even if the charity opts for the simplified disclosures standard (see regulation 60.30(2A)(d)).

The new “Director Identification Number” or “DIN” regime has commenced following the establishment of the new regulator, Australian Business Registry Services (“ABRS”).

Under the new regime, every Australian company director is required to have a DIN which is a 15-digit lifetime unique identifier. Applications for DINs can now be made.

As foreshadowed in our article “DINs for life – The introduction of Director Identification Numbers” the new DIN regime, which was established by federal laws[i] passed in June 2020, has commenced.

Significant civil and criminal penalties may apply for non-compliance with the DIN obligations and the Registrar of the ABRS may issue infringement notices.

Who needs a DIN?

A person who is appointed to the position of:

• director, or
• alternate director and is acting in that capacity,

(called an “eligible officer” in the new DIN provisions in the Corporations Act 2001 (Cth) (“Corporations Act”) but in this article called a “director”) of:

• an Australian company
• a registered Australian body (such as a State or Territory incorporated association that is registered with ASIC and has an Australian Registered Body Number)
• a foreign company registered with ASIC
• an Aboriginal and Torres Strait Islander corporation registered under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth),

(each in this article called a “company”) must have a DIN. An offence based on breach of this requirement is an offence of strict liability and a person who contravenes the requirement or is involved in a contravention may be liable to a civil penalty.

A person who is not already a director may apply for a DIN if they intend to become a director within 12 months after applying.

All other eligibility requirements to be appointed as a company director still apply.

Currently the DIN requirements only apply to formally appointed directors and do not extend to persons commonly referred to as “de facto” or “shadow” directors.

Time period to obtain a DIN

The deadline dates for obtaining a DIN are:

Type of DirectorDate of appointmentDeadline to obtain DINA director of an Aboriginal and Torres Strait Islander corporation (a "CATSI director")Before 31 October 2021

1 November 2021 to 4 April 2022

5 April 2022 onwards

30 November 2023

Within 28 days of being appointed

Before appointment

Other director

Before 31 October 2021

1 November 2021 to 4 April 2022

5 April 2022 onwards

30 November 2022

Within 28 days of being appointed

Before appointment

The requirement to apply either within 28 days of appointment (1 November 2021 to 4 April 2022) or before appointment (5 April 2022 onwards) applies to a new appointment even if the director was already a director of a company on 1 November 2021 and would otherwise have had until 30 November 2022 (or 30 November 2023 for a CATSI director) to apply.

A person who was already a director on 1 November 2021 who knows they will cease to be a director of any company before 30 November 2022 (or 30 November 2023 for a CATSI director) may obtain a DIN before 30 November 2022 (or 30 November 2023 for a CATSI director) at a time while they are still a director but need not do so, unless and until they intend to become a director of another company within 12 months of making the application.

Extension of time to obtain a DIN

A director will not be required to have a DIN at the time of their appointment if:

• they applied for a DIN before first becoming a director and the application and any reviews arising out of it have not been determined or otherwise disposed of when they are appointed; or
• they apply after being appointed, within a period allowed by the Registrar; or
• they apply after being appointed, within a period allowed by regulations.[ii]

The evidential burden to prove those matters falls on the director. In relation to an application to the Registrar for an extension of time to apply, the Explanatory Memorandum states that the Registrar would exercise the discretion to extend the time for making a DIN application in a particular case “where warranted” and gives the example that the power could be applied to the benefit of directors residing in very remote areas should that remoteness affect their ability to apply for a DIN prior to appointment. It may be taken from this statement, that extensions from the Registrar may not be easily obtained.

Applying for a DIN

Applications for a DIN must meet any requirements of the data standards made by the Registrar. The Registrar has made a data standard for DINs (the “data standard”).[iii]

Applications can be made online, by phone or by paper. There is no fee. Due to the identity verification requirements, directors must make their own application and no one can apply on their behalf.

To obtain a DIN online, the applicant must already have a MyGovID with a Standard or Strong identity strength (see the MyGovID website). We’ve used the online application processes[iv] to obtain a MyGovID and DIN and they are straightforward and quick for an applicant with an average level of computer skills, an email address and a “smart” phone. If your smart phone has a camera you can obtain a MyGovID with a Strong identity strength using a “selfie” for face verification against the photo identification document lodged with your application.

Persons who are unable to set up a myGovID online, can apply by phone or on a paper form. Overseas based directors will have to lodge a paper application form together with certified copies of identification documents and English translations.

The Corporations Act and the data standard specifically provide that applicants cannot be compelled to provide their tax file number.

Current prohibitions against providing false or misleading information apply to DIN applications.

Providing the DIN to companies

Currently, there is no requirement on the director to give their DIN to ASIC or the company, or even to inform the company that they have obtained one. There is no prohibition on a company appointing a director without first being informed of the director’s DIN or that the director has a DIN.

However, for practical purposes, given the potential penalties for directors who breach these requirements, it would be prudent and sensible for companies to advise potential directors about the DIN requirement as early as practicable before appointing them.

ASIC has stated that the ASIC companies register will be transferred to the ABRS, which is expected to occur in September 2023 and from that time, DINs will need to be linked to companies.[v] This would mean that DINs will have to be provided for initial directors to be included in applications for registration of companies as well as when lodging notice of appointment of a new director.

Updating a DIN

Personal details for the DIN can be updated online via the ABRS website and MyGovID or by phone or paper form. While there is no specific obligation in the Corporations Act or the data standard for a director to update their personal details in their DIN record, other than to correct any incorrect information in the application, the data standard permits the Registrar to require updated information to be provided.

The existing obligations for directors to advise the company of changes to their personal details and for companies to advise ASIC of those changes (other than ACNC-registered charities who are only required to notify the ACNC of changes to details of responsible officers) continue to apply.

Privacy of a DIN

Information collected under the data standard is “protected information” under the Corporations Act and is subject to the secrecy and disclosure provisions in Part 9.1 of the Corporations Act. The Registrar may disclose information relating to a person’s DIN as permitted under that Part.[vi]

Cancellation of a DIN

Once a person has a DIN, their DIN will remain valid for life even if they stop being a director, become a director of a different company, change name or address or become disqualified from being a director. However, if a person who is not already an eligible officer when they obtain a DIN does not become an eligible officer within 12 months of obtaining their DIN, the DIN will be automatically cancelled.

Forward planning

The new regime may present practical challenges for directors, potential directors and companies if proper planning is not in place. From 5 April 2022, a person will not be able to be appointed as a director “on the spot” to fill a casual vacancy or cover for an absent director if the proposed appointee does not already have a DIN. A person will not be able to stand for election as a director if the candidate does not have a DIN when the election is held.

Existing directors as at 31 October 2021 who are required to retire and stand for re-election before 30 November 2022 (or 30 November 2023 for CATSI directors) are, if re-elected, in effect, re-appointed as a director and must therefore obtain a DIN before the election is held (for an election from 5 April 2022).

ABRS registers

The DIN is the first registry to be established and administered by the ABRS and by 2024 the ABRS will take over as the registry (and collector of fees) for 34 registers currently administered by ASIC under various legislation and the Australian Business Register (ABR) currently administered by the Commissioner for Taxation. Additional Commonwealth registers may be brought into the new regime by future legislative reforms.

While the ABRS will administer these registers, the registrars for different registers may be different Commonwealth bodies. So far, the Commissioner for Taxation has been appointed as Registrar of the ABRS in relation to business names registration and the companies register and other registers kept under the Corporations Act (including DINs), the new Commonwealth Registers Act 2020 (Cth) and the National Consumer Credit Protection Act 2009 (Cth).

It is not proposed that the ACNC charity register will be administered by the ABRS.

Effect on ACNC charities and their directors

The new DIN regime applies to all directors, even if the company is an ACNC-registered charity. The provisions of the Corporation Act that are “switched-off” for ACNC-registered charities are not affected.

New director appointments for ACNC-registered charities need not be notified to ASIC, only to the ACNC. As yet, there is no public information as to how DIN notification requirements will apply to ACNC-registered charity directors.

Key takeaways

• All current and new directors of companies and Aboriginal and Torres Strait Islander corporations, including those that are ACNC-registered charities, are required to have a DIN.
• Transitional periods to obtain a DIN apply to current directors as at 1 November 2021 and new director appointments from 1 November 2021 up to 5 April 2022 and from that date, all persons (including those who are already directors) must have a DIN before being appointed or re-appointed as a director.
• It is the director’s personal responsibility to obtain a DIN.
• There are substantial criminal and civil penalties for failing to comply with obligations under the new regime.
• Currently there is no requirement for a director to inform a company of their DIN or for a company to obtain a new director’s DIN. This will change when responsibility for the register of companies is transferred from ASIC to the ABRS.

If you are unsure of what your obligations are under this new regime, please seek legal advice. You can contact us on (07) 3160 0010 or at reception@nfplawyers.com.au

[i] *Schedule 2 to the Treasury Laws Amendment (Registries Modernisation and Other Measures) Bill 2019 amending the Corporations Act 2001 (Cth) and the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth) for the purposes of DINs and the Commonwealth Registers Act 2019 (Cth) which established the ABRS.

[ii] At the date of this publication there is no regulation relating to extensions of time for applying for a DIN under section 1272C(2)(ii) of the Corporations Act.

[iii] Corporations Director Identification Number Data Standard 2021 issued 15 April 2021.

[iv] https://www.abrs.gov.au/director-identification-number/apply-director-identification-number

[v] https://asic.gov.au/for-business/running-a-company/company-officeholder-duties/director-identification-number/.

[vi] The Registrar has, as permitted by section 1270K of the Corporations Act, by legislative instrument, made a disclosure framework relating to disclosing protected information. See Corporations (Director Identification Number) Disclosure Framework (PGPA Bodies, Courts and Tribunals) 2021, issued 15 April 2021.

Whilst the vexed question of whether employers may insist on mandatory vaccination remains and is dependent on the circumstances and type of business involved, the FWC has shown support to the concept, where reasonable to do so.

On Friday, 3 December 2021, the full bench of the Fair Work Commission (FWC) handed down its much awaited decision on mandatory vaccination. In Construction, Forestry, Maritime, Mining and Energy Union, Mr Matthew Howard v Mt Arthur Coal Pty Ltd T/A Mt Arthur Coal [2021] FWCFB 6059, the primary issue under consideration was the need for consultation and what constituted consultation for organisations operating under enterprise agreement.

However, the FWC took the opportunity to make some broad remarks in relation to employer workplace health and safety (WHS) duties and the mandating of vaccinations, clearly supporting an employer’s right to mandate vaccinations where it is reasonable on an assessment of the facts.

Challenges for employers

The FWC acknowledged that “employers face a difficult task in managing the risks for their workers in such a dynamic environment”[1] but that where there is no government mandate in place, there is a basis for employers to require employees to be vaccinated, arising from the contractual term that an employee must “obey the lawful and reasonable directions of their employer.”[2]

The Full Bench went on to say:

“The reasonableness of a direction is a question of fact having regard to all the circumstances, which may include whether or not the employer has complied with any relevant consultation obligations; the nature of the particular employment; the established usages affecting the employment; the common practices that exist; and the general provisions of any instrument governing the relationship.”[3]

and,

“If the object and purpose of such a direction is to protect the health and safety at work of employees and other persons frequenting the premises then such a direction is likely to be lawful. This is so because it falls within the scope of the employment and there is nothing illegal or unlawful about becoming vaccinated. But such a direction must also be reasonable.”[4]

Reasonable directions

Whether a decision is reasonable will come down to an assessment of the facts of a situation and will vary from employer to employer, and to “roll out” a decision based on another employer’s decision may result in an unreasonable decision. Whilst there may be a range of reasonable decisions available in a particular situation, in coming to a “reasonable” decision, “it is not necessary to show that the direction in contention is the preferable or most appropriate course of action or in accordance with ‘best practice’ or in the best interest of the parties.”[5]

Managing risk

When considering the facts of this case, the FWC considered that a suggestion that the employer should wait to assess the risk of COVID infections after movement restrictions had been lifted was in itself unreasonable and would increase the risk of the spread of illness in the workplace, particularly for unvaccinated people, which would be a breach of the employers WHS obligations.

Whilst the vaccination topic is dividing the community, employers must consider their lawful obligations when making decisions about whether they will require workers to be vaccinated and whether they will refuse entry to unvaccinated customers.

Clearly, consultation is an essential and obligatory component under WHS obligations and will go a long way to smoothing the way for the implementation of mandatory vaccinations.

Should you mandate vaccinations?

The vaccination mandate topic has been clouded with a range of other issues and opinions that have left some employers afraid to make firm decisions to comply with their most immediate obligations to protect the health and safety of their workers and clientele. There are other legitimate issues that may affect decisions, but the best approach is to seek professional legal advice to form decisions and processes to comply with WHS obligations.

If you need assistance to determine if you need to implement a vaccination policy in your workplace, NFP Lawyers can assist you. You can contact or workplace relations team at 07 3160 0010 or at reception@nfplawyers.com.au.

[1] Construction, Forestry, Maritime, Mining and Energy Union, Mr Matthew Howard v Mt Arthur Coal Pty Ltd T/A Mt Arthur Coal [2021] FWCFB 6059 [257].

[2] Ibid, [258].

[3] Ibid, [259].

[4] Ibid, [261].

[5] Ibid, [264].

Restrictions are easing around the country, just in time for the festive season. However, it is unlikely that festive celebrations will look like the type of parties we were used to before COVID appeared.

The COVID-19 pandemic has changed the way we gather, with government-imposed restrictions on social gatherings, the operations of work premises and travel. The changes that COVID has brought to the way we interact with our fellow workers has been managed quite effectively by many NFPs, who have staggered start times, changed workplace layouts and transitioned employees to working from home where possible.

A number of workplaces have benefited from the flexibility these new arrangements have presented, but with Christmas around the corner it is time to reflect on the impact COVID restrictions will have in an environment that is the opposite of social distancing … the work Christmas party.

What will the Christmas party really look like?

Given the increased risk of transmission of the virus indoors, particularly in venues where food and alcohol are consumed, it is possible that many NFPs will choose to have their Christmas party outside and during the day to minimise their risks. Some may even conduct virtual Christmas parties.

Each state government is updating their COVID management plans regularly and it is important that you consider your state’s plan when you are organising your event and again directly before it happens.

A virtual Christmas party? Is that a thing?

Yes, a virtual Christmas party is a thing! COVID has made us quite adept at online work conferences, meetings and Friday night drinks and it is possible that we will see some workplace Christmas parties happen online this year. An alternative for NFPs to consider, may be to hold a small workplace gathering and give employees the option of dialling in on a video call so they can share the workplace Christmas spirit from home. However, consider if your team (and organisation) would benefit from the personal touch within the social distancing limits. Everyone is feeling a bit COVID fatigued and the opportunity to gather safely may be the tonic they need.

Regardless of whether your staff are partying in their home during work time or at a work event, you still need to consider the risks arising from their behaviour at your work Christmas party. The liability of NFPs for the actions of their employees extends to work functions, so it is important to ensure all staff understand safe alcohol consumption, compliance with COVID restrictions and there can be no workplace hi-jinks.

Work health and safety obligations for home based work

NFPs as employers have a legal responsibility to protect the health, safety and welfare of their employees when they work from home, and that includes participating in authorised work functions.

If your employees have already been working from home, you should have already conducted a risk assessment of the workspace to see if there are any potential hazards or safety risks. Your team must understand that the risk assessment extends to work social activities and they must make sure any hazards are removed (particularly coffee tables and glass items that won’t survive the ‘Nutbush’ or ‘macarena’) before they join the celebrations.

Inevitably, alcohol combined with a party atmosphere increases the likelihood of accidents, and the problem with online events is there is no-one to practically ensure responsible service of alcohol in the employee's home. NFPs must be mindful of their responsibility to their workers, and in order to avoid the risk of employees causing harm to themselves (or others) both during and after the function, it may be best practice to make the Christmas party a dry event.

However, if you are permitting employees to drink during an online Christmas party, it is suggested that you consider:

• having the function during the day;
• whether or not partners and children are also invited to attend;
• nominating a specific start and finish time for the function;
• confirming any actual or online parties facilitated by staff before, during, or after those times are not approved by the NFP.

For small functions, we suggest that you have a designated moderator who is not drinking and is able to "keep an eye" on employees' behaviour online. The moderator should have administrator functionality over the online platform in use for the party, the ability to mute participants and, if necessary, remove attendees from the session. Shift the focus from the consumption of alcohol and schedule non-drinking activities to take place during the party. You may like to organise for food delivery to the homes of attendees, so everyone gets to enjoy a similar experience.

It is important that you confirm the address of where employees will be located for the online Christmas party, and ensure the moderator is provided with rapid access to those details should an emergency occur.

Bullying and discrimination

In addition to commonly understood work health and safety (WHS) obligations, NFPs need to be vigilant in preventing bullying, sexual harassment or other forms of discrimination that can occur (for example: derogatory or sexually explicit comments made about a person that the employee says was "just a joke") at the Christmas party. Remember, the person who defines whether a comment is offensive is the person who receives it.

In a relaxed environment, employees may be more inclined to make inappropriate statements about other workers. It is important to remind all workers that they are still at work, and the same conduct standard is required during a function as when they are at work. Inappropriate comments and conduct (such as obscene gestures) must not be tolerated by an employer.

A failure to take steps to manage the risk of workplace bullying, discriminatory or sexually harassing conduct can result in a contravention of anti-bullying laws in the Fair Work Act 2009 (Cth), WHS laws, and state and federal discrimination laws. In some circumstances your organisation as the NFP could be held directly liable for the discriminatory conduct or unlawful sexual harassment of an employee. However, where an employer has taken all reasonable steps to prevent the conduct, they may have a defence to a claim.

It is important to remember that complaints about bullying, discrimination and sexual harassment should never be ignored. They should be investigated promptly and in accordance with your grievance or other applicable policy.

Tips for a successful Christmas party

1. Remind employees in advance of the Christmas party that it is an extension of the workplace, and inappropriate behaviour may lead to disciplinary action being taken in the same way it would as if it took place during work hours.
2. Also, remind employees that workplace policies continue to apply to employees in the way they would for any other work function, including policies setting out the expected standards of behaviour of employees and policies relating to conduct in the workplace, and computer use for anyone attending virtually.
3. Provide employees with information on how to stay safe while attending the Christmas party, including responsible alcohol intake, ensuring they have considered any hazards (such as trip hazards or small children) in the environment if they intend to join the online party, and providing the employer with up-to-date information on their location.
4. Make sure your organisation's Sexual Harassment, Bullying and Discrimination Policy specifically covers employee behaviour at social functions and out-of-hours conduct where such conduct has a connection to the workplace, and those employees are reminded of its applicability to online events.
5. Ensure your organisation's policies relating to use of the organisation's IT resources and network, and workplace surveillance, cover any current or new resources or online platforms proposed for the online Christmas party.
6. Refresh staff on your Social Media Policy to ensure that inappropriate photos, videos, or comments are not taken, made and/or posted online during or after the party.
7. Have a complaints policy and procedure for dealing with any complaints promptly and in the appropriate manner.
8. Consider potential issues or emergencies that may arise and develop plans or procedures to respond to those issues or emergencies. Ensure that those employees who are responsible for the smooth running of the Christmas party are aware of those plans or procedures, have been trained in them (if necessary) and have the equipment or means necessary to implement the plan or procedure.

Most of these points will also be relevant for in-person events as well. Most importantly of all, have a safe and happy festive season from everyone at NFP Lawyers.

If you need assistance in planning to avoid risks in your workplace during the festive season, contact us on 07 3160 0010 or email us at reception@nfplawyers.com.au.

Following the passing of the Treasury Laws Amendment (2021 Measures No. 1) Act 2021 (the Act) on 10 August 2021, electronic execution of company documents is once again permitted under section 127 of the Corporations Act 2001 (Cth) (Corporations Act).

The amendments made by the Act largely mirror those initially implemented under the Corporations (Coronavirus Economic Response) Determination (No. 1) 2020, which subsequently lapsed on 21 March 2021.

In today’s climate of sporadic lockdowns and working from home, the return of electronic executions from 14 August 2021 has been a welcomed return.

Unfortunately, the amendments made by the Act only exist as a temporary measure from 14 August 2021 until 1 April 2022.

What (temporary) amendments has the Act made to section 127?

Execution by electronic means

Most notably, the Act reinstates the previously temporary amendments to allow for the electronic execution of documents.

New sub-section 127(3B) provides that where a document has been electronically executed, it will be held as valid if:

1. a method is used to identify the person and to indicate the person’s intention to sign a copy or counterpart of the document; and
2. the copy or counterpart includes the entire contents of the document; and
3. the method used was either:
   
   
4. reliable and appropriate for the purpose for which the document was generated or communicated; or
5. proven in fact to have identified the person and indicated their intention to sign.

Method

The Act does not define nor mandate the use of any specified platform. According to the Explanatory Memorandum accompanying the Act, there are a variety of methods that could be used to do this, including:

• using a stylus tool to sign a PDF document and then emailing the document back to the company; or

• using a platform such as DocuSign.

Entire contents

Importantly, the executed page must remain with the document and be signed together with the document in its entirety. This means that where an execution page is extracted and signed in isolation, the execution will not be valid. This does not mean that the person needs to physically print or sign every page. Rather it ensures that a document cannot be validly executed by signing a document that does not have the same content as the original document.

Reliable and appropriate

The Act does not provide any guidance for the determination of what means of execution could be considered “reasonable or appropriate”. The method must be as reliable as appropriate for the purposes for which the document was generated or proven in fact to have indicated the person’s identity and intention. It is likely a method of electronic execution where a signatory signs directly onto the copy or counterpart, would be considered reliable.  

Split Execution of documents

The Act also amends section 127 by inserting a new sub-section 127(3C) which provides that a copy or counter part of a document (either signed in wet-ink or electronically) need not include the signature of another person signing the document.

As the Act still permits wet-ink executions, companies may use a combination of different methods to validly execute a document under section 127. For example, allowing two directors, or a director and the company secretary, to sign a document in separate counterparts (physically, electronically, or one of each), as opposed to the traditionally onerous requirement of both signatories signing the same physical document.

Remember, where a document is signed (either electronically or physical, or a combination of both), the entire document must be attached to the signature.

Doesn’t the Electronic Transactions Act 1999 (Cth) allow for electronic execution of documents?

Yes, section 10 of the Electronic Transactions Act 1999 (Cth) allows for the electronic execution of documents.

However, the Corporations Act is exempt from the operations of the Electronic Transactions Act 1999 (Cth). This meant that prior to COVID amendments and the Act, companies were required to execute documents through traditional wet-ink signature.

Understanding the time periods

The amendments made by the Act exist only as a temporary measure from 14 August 2021 until 1 April 2022.

Notably, the Act does not contain any transitional provisions that deal with documents electronically executed between 21 March 2021 (when the previous temporary amendments lapsed) and 14 August 2021 (when the Act takes effect).

Given the Act does not have retrospective application, the validity of documents executed during this period will likely be determined by reference to the pre-COVID application of section 127, which prohibited electronic executions and split execution.

Practical Considerations

Where executing documents electronically, it is important to use a platform that can satisfy the elements of identification, intention, and reliability. Electronic platforms such as DocuSign, which automatically insert the name and digital signature of the signatory, are likely to be accepted by the courts as an appropriate method of execution under the amended section 127.

The amendments do not alter the existing requirement for companies to retain copies of executed documents. Where a document is executed under split execution, the company must retain copies of each executed document. Further, noting the express requirement that signatures must be affixed to the entire document, the entire executed document should be retained, not merely the pages bearing signatures.

Whilst the amendments made by the Act are to facilitate greater flexibility and encourage the continuity of business in today’s COVID climate, it is important to remember that companies can continue to execute documents by traditional “wet-ink” signature methods. With no mandated method of execution provided under the Act, methods which may be used by company officers are broad.

Watch this space

Despite the temporary nature of the amendments, the Explanatory Memorandum issued with the Act makes it clear that the Federal Government intends to implement permanent reforms to permit electronic execution under section 127.

In Queensland, the Attorney-General has recently introduced the Justice Legislation (COVID-19 Emergency Response - Permanency) Amendment Bill 2021 to make permanent the temporary “Document Reforms” introduced during the COVID-19 emergency.