Posted 10/03/2022 by Juli Tomaras
The Treasury Laws Amendment (Modernising Business Communications) Bill 2022 (the Bill) was introduced in the House of Representatives on 17 February 2022.
Its main purpose is to modernise and improve technology neutrality (allowing choice in the use of electronic or physical means) across an expanded range of business communications, while assisting in the reduction of business costs, and better reflecting how business wants to engage and communicate, by amending:
- the Corporations Act 2001 (Cth) to allow for the use of electronic signatures and execution of legal documents, in addition to the electronic delivery of a wide range of documents
- the National Consumer Credit Protection Act 2009 (Cth) (NCCP Act) to allow for the use of electronic delivery of a wide range of documents by credit licensees, and to facilitate the use of electronic payments.
Amendments are also proposed to various Treasury Portfolio laws, generally replacing current newspaper publication requirements across those Treasury Portfolio laws and allowing for electronic publication of notices.
The proposed changes are part of the government’s ongoing Deregulation Agenda. On 15 June 2020, the Government announced that one of the areas of deregulation priority was modernising business communications. Correspondingly in December 2020, the Government said it would investigate opportunities to adopt technological or ‘regtech’ solutions to Treasury portfolio laws to make it easier for business to cost-effectively navigate and comply with regulatory requirements, and to identify legislative change to give effect to these changes.
The Government has pointed out that:
the importance of appropriate regulation was heightened by the COVID-19 pandemic, which highlighted the need for business to be able to adapt and respond quickly to a changing business environment. The importance of technology to the continued functioning of the Australian economy was also brought to the fore.
Reforms to modernise business communication support a business-led private sector recovery from the COVID-19 pandemic and contributes to the Government’s goal of positioning Australia as a leading digital economy by 2030 ...
The Bill follows an Exposure Draft issued for consultation on 19 November until 10 December 2021. Following this, the Bill was introduced into Parliament with a number of revisions.
The proposed amendments also build on recent reforms contained in the Corporations Amendment (Meetings and Documents) Act 2022 (M and D Act) and the changed requirements around the use of technology to distribute meeting related materials and execute documents.
The Legislative and Governance Forum for Corporations was consulted on the Bill and approved of the proposed changes, as required under the Corporations Agreement 2002.
Key proposed changes
Schedule 1 proposes amendments to the Corporations Act to provide for the following changes:
- All documents required or permitted to be signed under the Corporations Act will be able to be signed electronically (in accordance with the rules under the M and D Act) or in wet ink (item 4, proposed section 110).
- Documents sent under Chapters 2A to 2M (registration and operation of companies), 5 to 5D (external administration, managed investment schemes, and de-registration of companies), 6–6C (takeovers and compulsory acquisitions), 8A (Asia Regions Fund Passport) and 9 (miscellaneous, including records and information, protection for whistleblowers, and offences and civil penalties) or Schedule 2 (Insolvency Practice Schedule) to the Corporations Act can be sent in either hard copy or electronic form (item 9, proposed subsections 110C(1)–(3)).
- The existing relief provided by ASIC to entities for sending documents to ‘lost members’ will be expanded to cover all documents sent to members (item 19, proposed section 110JA).
- Companies will not be required to send particular types of documents to a member where the contact details for that member are known to be incorrect, providing that certain conditions are met including a reasonable belief that the ‘lost’ member’s current address is not known to the sender, and taking reasonable steps to ascertain a current address (item 19, proposed subsections 110JA(1) to (6)). Guidance is not provided on how the onus to take ‘reasonable steps’ is to be discharged. Relief will apply for 18 months after the conditions are satisfied and then cease unless the sender has taken reasonable steps to advise the ‘lost’ member that sending of documents has been suspended but can be resumed if the ‘lost’ member provides a current address (proposed subsections 110JA(5) and (6)).
- Members (and any other person prescribed in the Regulations) will be able to choose whether to receive documents in hard copy or electronic form (items 13 and 18, proposed paragraphs 110E(1)(e) to (g) and 110J(3)(e) to (g)).
Schedule 2 amends the NCCP Act to allow for 'technology neutral provision of documents' by introducing changes to the National Credit Code (NCC) (item 6, proposed subsection 195A(1) of the NCC). This will improve the ability for credit licensees to give documents to consumers in physical form, in electronic form, or by the provision of an electronic postcard provided that it would be 'reasonable to expect that the document would be readily accessible so as to be useable for subsequent reference' (proposed subsection 195A(2) of the NCC).
Significantly, licensees would not need to obtain an individual’s consent in order to provide documents to them electronically (though recipients would have the right to 'opt out' of electronic communication or nominate a preferred form or address). (Item 1, proposed section 187 of the NCC).
The Explanatory Memorandum states that where the provision of certain documents by electronic postcard has unintended negative consequences, those documents can be excluded from the electronic postcard by way of regulation (item 6, proposed subsection 195A(3) of the NCC). The Explanatory Memorandum also clarifies that ‘the new law does not prevent the giver from charging the recipient for the additional cost associated with giving documents in physical form.’
The Bill would also remove certain existing 'technologically prescriptive requirements' relating to payments to make clear that payments may be made electronically (Part 2 of Schedule 2 to the Bill).
Various Treasury portfolio laws require or permit notices to be published in newspapers. Schedule 3 would replace these provisions with technology neutral rules. Technological developments and an evident broadening of the means by which the public engage with commerce have informed this change.
Generally, where a Commonwealth entity was previously required or permitted to publish a notice in a newspaper, the new law now permits it to publish the relevant notice in a manner that results in the notice being ‘accessible to the public and reasonably prominent’.
Generally, where a non-Commonwealth entity was required or permitted to publish a notice in a newspaper, it may now publish the relevant notice provided the manner of publishing results in the notice being ‘accessible to the public and reasonably prominent’ and where required, in a manner determined by the relevant regulator. However, entities may continue to publish their notices in newspapers where appropriate.