Electronic signing update

Companies

New Federal legislation makes it clear that documents can be signed electronically by companies and the parties can rely on the assumptions about valid execution in section 129(5) of the Corporations Act 2001 (Cth), provided certain formalities are met.

The new legislation is the Treasury Laws Amendment (2021 Measures No. 1) Act 2021 (Cth) and it came into effect on 14 August 2021. It confirms that Australian companies may sign documents electronically:

• either by two directors or by a director and the company secretary
• by split execution (different signatures on different counterparts).

This extends to deeds, not just agreements. It includes contracts of sale, leases, deeds of cancellation and deeds of variation.

The new legislation is temporary and will end on 31 March 2022. However, the Federal Government said that it will now seek to introduce permanent legislation later this year.

What about individuals?

The Federal legislation relates to companies. As a reminder, electronic execution of documents by individuals is governed by State and Territory laws.

Each jurisdiction has different rules and requirements for valid signing and witnessing of documents. Both the Victorian and New South Wales parliaments have passed legislation that recognises the validity of deeds and agreements that are electronically signed and in electronic form. This is a permanent measure in both Victoria and New South Wales.

Both the Victorian and New South Wales parliaments have also passed legislation that permits an individual’s signature to be remotely witnessed, provided particular requirements are met. The remote witnessing measures are permanent in Victoria. Similar measures in New South Wales are due to expire on 31 December 2021 unless they are extended.

If you have questions about how to ensure your documents are validly executed, get in touch with the Development team.

Reintroduced rent relief schemes for commercial tenants in Victoria and New South Wales

The various States and Territories introduced temporary schemes protecting commercial tenants when the COVID-19 pandemic first hit last year. Victoria and New South Wales have now reintroduced rent relief schemes. Broadly speaking the latest schemes operate in a similar way to those introduced last year. Here we cover the key aspects of the reintroduced schemes.

Victoria

A new commercial tenancy relief scheme (2021 CTRS) has come into effect in Victoria. The Commercial Tenancy Relief Scheme Regulations 2021 (Vic) (Regulations) were made on 24 August 2021.  The Regulations contain most of the details of the 2021 CTRS.

The protection period runs from 28 July 2021 to 15 January 2022.

Just like the previous commercial tenancy relief scheme that was enacted in 2020 (2020 CTRS), the Regulations provide a temporary process by which a tenant, whose business is affected by the COVID-19 pandemic, may obtain rent relief. Large parts of the new Regulations are similar to the 2020 CTRS. But there are some key differences.

What’s different?

Some of the key differences between the 2021 CTRS and the 2020 CTRS are:

• modified eligibility criteria as JobKeeper no longer exists 
• a new decline in turnover test
• the tenant’s turnover includes Victorian Government grants as well as internet sales
• listed companies are excluded from being eligible tenants
• there are new protections for tenants affected by illness or a natural disaster
• the rent relief process is slightly different
• the tenant’s rent relief request may lapse if it doesn’t provide certain evidence within 14 days
• the tenant is deemed to have accepted the landlord’s rent relief offer after 15 days
• there is a mandatory reassessment of rent relief
• the prohibition on rent increases suggests that they are void and may never be claimed if they are scheduled to occur during the protection period
• there is a new offence where a party provides the other with false or misleading information.

What are the key points about the 2021 CTRS?

Eligibility

Eligible lease – The Regulations only apply to ‘eligible leases’. These are retail leases, nonretail commercial leases and licences which were in effect on 28 July 2021, where the tenant is an eligible tenant and are not in an excluded class of lease (agricultural leases or the tenant is a listed corporation).

Eligible tenant – The definition is similar to that in the 2020 CTRS. The tenant must be a SME with an aggregate annual turnover of less than $50 million at the group level. The tenant must satisfy the decline in turnover test i.e. experience at least a 30% decline in turnover due to COVID-19.

Decline in turnover test – This involves comparing pre-COVID-19 turnover to recent turnover in 2021. The tenant can compare its turnover from any three consecutive calendar months between 1 April 2021 to 30 September 2021 to its turnover in the same three months in 2019.

Application process

The tenant must make a formal application to the landlord for relief. The details are in the Regulations. The tenant’s right to rent relief is potentially retrospective to 28 July 2021. However, if a tenant did not make a rent relief request and provide all of the necessary evidence by 30 September 2021, it will have missed out on rent relief for the period from 28 July 2021 until it makes the compliant request.

Rent relief

The landlord must offer rent relief to the tenant at least proportional to the tenant’s decline in turnover. At least 50% of the rent relief must be in the form of a waiver, with the rest deferred and an offer to extend the term.

Tenant not in breach

Where a tenant has made a compliant rent relief application and observes the process and requirements in the Regulations, the tenant cannot be evicted for failure to pay rent and outgoings during the protection period (i.e. 28 July 2021 – 15 January 2022). Landlords can still take action for other breaches.

Rent reviews

As was the case under the 2020 CTRS, the landlord must not increase the rent during the protection period. The Regulations go further than the 2020 CTRS and say that if the lease provides for a rent increase or review of rent that would increase it during the protection period, the rent review is void and may never be claimed by the landlord.

Mandatory reassessment

The 2020 CTRS did not take into account improvements in a tenant’s financial circumstances. The new Regulations provide a mandatory reassessment of rent relief agreements roughly halfway through the scheme. The reassessment applies if the tenant’s rent relief request was made before 30 September 2021 and the tenant was trading before 1 April 2021.

Deferral under 2020 CTRS extended

The 2020 CTRS enabled rent to be deferred. The Regulations provide that any rent that was deferred under the 2020 CTRS and is payable during the rent relief period, will be further deferred until after 15 January 2022.

Dispute resolution

The dispute resolution provisions are quite similar to those in the 2020 CTRS. Disputes about the impact of the Regulations on leases may be referred to the Small Business Commission for mediation. Tenants are able to apply to the Small Business Commission for binding orders. The parties can go to Victorian Civil and Administrative Tribunal (VCAT) or a court if the Small Business Commission certifies that the mediation has failed or is unlikely to resolve the dispute.