A wrap-up of key changes in corporate and commercial laws and regulations in 2021

Director identification numbers

In November 2021, the new requirement for Australian company directors to apply for director identification numbers (DINs) commenced. A DIN is a unique 15-digit identifier issued to a director after they have verified their identity with the ABRS. A significant advantage of a DIN is the ability to track the director’s company relationships, making it harder to engage in unlawful behaviour such as phoenixing. All new directors and existing directors are required to apply a DIN in a staged process. For further information, visit out blog post https://www.henrywilliam.com.au/single-post/let-the-rollout-of-dins-begin-director-identification-numbers-1.

Restrictions on director resignation

On 18 February 2021, reforms were introduced affecting company director resignations in two major ways. Firstly, subject to limited exceptions ASIC must now reject director resignations and members’ resolutions removing directors where the company would be left without another director. Secondly, directors are now unable to backdate their resignation for more than 28 days, unless they apply to ASIC or the Courts for an exemption. Previously, there was no limit on how late a notification of resignation could be lodged with ASIC. The move is hoped to increase the accountability of directors resigning from troubled companies and reduce the occurrence of illegal phoenixing activity.

Electronic execution of documents

Since the start of the COVID-19 pandemic, a wide range of legislation and legislative instruments have been enacted on a temporary basis at both State and federal levels to enable electronic execution and witnessing of deeds, agreements and other documents. This wave of new legislation has resolved to a large extent the perennial uncertainty as to the validity of electronically executed documents, in particular deeds. In 2021, a number of these temporary measures have become permanent in several States and Territories and it is generally expected that this trend will continue. It should be noted however that it is not safe to assume that all documents can be executed and witnessed electronically. In particular, where the relevant document is required to be lodged with a court or regulatory authority, it is highly recommended that the signatory seeks professional legal advice or confirms with the relevant authority on the requirements in advance. We expect to see further consolidation of these legislative reforms and wider acceptability of electronically executed documents in 2022.

New rules for holding .com.au and .net.au domain names

New rules for holding .com.au and .net.au domain names commenced in April 2021. All new registrations and renewals are now subject to stricter requirements. Unless the domain name exactly matches the registrant’s registered or applied trade mark, the registrant will need to demonstrate sufficient Australian presence. In addition, registrants must also meet the eligibility and allocation requirements to ensure that the desired domain name represents the registrant’s commercial activities. The new rules also set out a new complaints process for third parties to challenge existing registrations of domain names due to ineligibility. For existing domain name registrants, in order to secure the domain names it may be necessary to seek registration of a new Australian trade mark (i.e. an exact match to the domain name) or take other steps to ensure that the eligibility requirements are met to avoid domain name cancellation or challenge by other interested parties.

.au domain names

Separately, .au Domain Administration Limited (auDA), the governing body of Australian domain names, has announced that .au direct domain names (like henrywilliam.au), which are shorter and simpler domain names, will be made available from 24 March 2022. .au direct names are general purpose – they are open to anyone with a verified connection to Australia who wants to create or manage an online presence for themselves or their organisation.

All .au direct domain names that correspond to an existing .au namespace (e.g. .com.au) will be reserved for the first six months after the launch date. The current holder of the corresponding namespace may apply for priority status to register its exact match in .au in this period. If no priority application have been received at by end of this period, the .au direct name will become available to the general public.

Existing domain name registrants who wish to secure the corresponding .au domain names should take action in March 2022 when priority status is open for application.

Increase of value threshold for consumer protections under the Australian Consumer Law

From 1 July 2021 onwards, the definition of consumer for the purpose of Australian Consumer Law (ACL) will include persons and entities who are acquiring goods or services that are valued at up to $100,000, a substantial increase from the previous threshold of $40,000. This means that more customers will be deemed “consumers” and therefore be subject to protection under the ACL. These protections include statutory consumer guarantees that cannot be excluded. Businesses that were previously not subject to key provisions of the ACL due to the lower threshold may need to refresh staff training and also review their supply agreements to ensure that they comply with the current legal requirements.

NSW substantially prejudicial contract terms

Since January 2021, NSW Fair Trading has been enforcing new provisions in the Fair Trading Act 1987 (NSW) that require businesses in NSW to disclose contract terms that are substantially prejudicial to the interests of consumers. The definition of consumer is broad and includes individuals and businesses who are acquiring goods or services that are valued at up to $100,000, or valued at more than $100,000 but are a car or trailer, or of a kind ordinarily acquired for personal, domestic or household use or consumption. Examples of substantially prejudicial terms may include clauses that excludes the liability of the supplier (including damage to the goods during delivery to the consumer), clauses that allows the supplier to share consumer data with third parties, and requirements for exit fees or balloon payments. In contrast to the federal unfair contract terms regime that applies to only standard form contracts, these new provisions apply to all contracts.

New foreign investment regime

On 1 January 2021, major changes to Australia’s foreign investment regime took effect, with the intention to enhance the review of acquisitions of property or businesses which are regarded as sensitive towards Australian national security. Under the new regime, the monetary thresholds for foreign investments subject to Foreign Investment Review Board (FIRB) approval, which were temporarily removed in March 2020 in response to the pandemic, were reinstated to their previous levels. However, certain investments that raise national security concerns are now subject to mandatory notification to the FIRB, regardless of their value. Investments not notified to the FIRB may be “called in” by the Treasurer on national security grounds. The Treasurer also now has access to “last resort” powers to impose conditions relating to investments where national security risks emerge, including those previously approved within the last ten years. Foreign investors as well as vendors of local assets are encouraged to take note of the new notification requirements.

Henry William Lawyers is available to assist businesses to understand how these changes may affect them. We are also here to assist all legal aspects of your commercial transactions, equity and debt raisings, restructuring and commercial contracts.