Go ahead for electronic signing of documents

Articles Written by Simon Haddy (Partner), John Keeves (Partner), Jessica Leppert (Associate)

In the biggest shake-up of Australia’s antiquated company signing requirements, the Federal Government has temporarily modified the Corporations Act 2001 (Cth) to facilitate companies to execute documents electronically.

On Tuesday 5 May, Federal Treasurer Josh Frydenberg MP issued a determination which allows companies and their officers, over the next 6 months, to use electronic software, such as DocuSign or AdobeSign, to execute their documents under s 127 of the Corporations Act and to allow for ‘split execution’ of documents (that is, signing of different counterparts by the officers of a company).

This addresses the pressing need created by the social distancing measures now in place, as well as the ambiguity at common law about whether two officers of a company need to be in the same room or wet-sign the exact same document in order to validly sign under the Corporations Act.[1] Further, where a company executes a document as a deed under the Corporations Act, the new determination similarly extends to the company executing a deed electronically.

While this recent determination has not resolved whether all documents, such as deeds or powers of attorney, can be electronically or remotely signed (particularly by natural persons):

  • on 9 April 2020, South Australia published legislation and regulations allowing for meetings to be held remotely in a limited range of circumstances;

  • on 22 April 2020, New South Wales published regulations allowing for remote witnessing of a range of different documents, with an intention that further regulations will be issued shortly; and

  • on 12 May 2020, Victoria published comprehensive regulations authorising electronic execution and remote witnessing of a range of documents; and

  • on 15 May 2020, Queensland followed suit with detailed regulations allowing for electronic signing and remote witnessing of a multitude of documents.

While it is clear that the Federal and state governments intend for these to be short-term changes only, we hope that these measures are retained in Australia for the long term to allow for the law to embrace and keep up with evolving technology in this space.

The coronavirus emergency measures may be the kick-start the industry needs to push for this change.

What changes has the Commonwealth and the states made to signing, witnessing or attending to documents?

See our table of the changes by jurisdiction.

What should I do with my contracts, agreements or deeds if the position hasn’t changed?

The Commonwealth and each state have passed legislation authorising electronic transactions.[2]

This means that parties can use electronic methods to enter into contracts, unless their transaction or document is excluded by the statute.  These exclusions differ depending on which jurisdiction applies to the contract.   

Generally, if your document needs to be witnessed  (for example, a deed or power of attorney) then it cannot be signed electronically and must be signed in wet ink.[3] The witness must be physically present (and it is debatable whether they can electronically sign the document). NSW, Victoria and Queensland are the exceptions here (see the changes above).

While the recent Federal determination extends to a company executing a deed electronically, until further judicial guidance is available, caution should be exercised to ensure that all formalities to validly form a deed are met.

Things to consider

Where there is any confusion or uncertainty about whether a document can be executed electronically, for caution we recommend you consider:

(a) being cognisant of when these changes cease in your state: the legislative changes are temporary.

(b) utilising digital signing platforms which contain means to verify the identity of the signatories, such as DocuSign or AdobeSign.

(c) agreeing and stipulating the method of signing in the document itself.

(d) being prepared to provide evidence of actual authority of the electronic signature being placed, or the affixing being authorised by, the signatory (such as by board minutes).

(e)changing your deed into an agreement if you can. You may not need the agreement to be in the form of a deed (e.g. there may not been any consideration or limitation issues that need to be addressed via a deed).

(f) printing out a deed after it has been electronically signed by a company (to satisfy the traditional requirement that deeds be on paper). This is not required in Queensland under its temporary statutory rules.

(g) if you are in NSW, Victoria or Queensland and the signing and witnessing is happening remotely, having a suitable and stable audio-visual platform so that the witness can see the act of signing, and ensure that the proper statutory wording recently introduced is used next to their signature (as outlined above).

[1] Bendigo and Adelaide Bank Ltd v Laszczuk [2018] VSC 388, Bendigo Bank v Pickard [2019] SASC 123 at [70].

[2] Such as Electronic Transactions Act 2000 (VIC), Electronic Transactions Act 2000 (NSW), Electronic Communications Act 2000 (SA), Electronic Transactions (Queensland) Act 2001 (QLD) and Electronic Transactions Act 2011 (WA).

[3] See Queensland, South Australia and Western Australia’s electronic transactions legislation.

Important Disclaimer: The material contained in this article is comment of a general nature only and is not and nor is it intended to be advice on any specific professional matter. In that the effectiveness or accuracy of any professional advice depends upon the particular circumstances of each case, neither the firm nor any individual author accepts any responsibility whatsoever for any acts or omissions resulting from reliance upon the content of any articles. Before acting on the basis of any material contained in this publication, we recommend that you consult your professional adviser. Liability limited by a scheme approved under Professional Standards Legislation (Australia-wide except in Tasmania).

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