Update on electronic signatures

There have been a range of updates to the legislation which governs electronic signatures following our last Alert, Temporary relief measures for electronic signing and virtual meetings lapse. Clients should be aware that these changes to legislation will impact how a party can validly sign documents and enter into agreements, deeds or other transactional documents.

Pleasingly, the ability for companies to execute documents electronically under section 127 of the Corporations Act have been reintroduced.

Below is a summary of the key changes.

1. Electronic execution of documents under the Corporations Act (including section 127)

   Following delays earlier this year, the Treasury Laws Amendment (2021 Measures No.1) Act 2021 (the Treasury Act) has now come into force as at 14 August 2021.

   The Treasury Act introduces (and re-introduces) a number of temporary and permanent provisions relating to the Corporations Act 2001 (Cth) (the Corporations Act). Pleasingly, the Treasury Act has re-introduced relief measures relating to electronic execution of documents under section 127 for the Corporations Act. Prior to the Treasury Act, companies were required to arrange for execution by all relevant signatories to physically sign the same hard copy with ‘wet ink’ signature.

   Electronic execution by companies

   Companies can once again carry out the following using electronic methods:

   • execute documents,
   • hold meetings,
   • provide notices relating to meetings; and
   • keep minutes.

   However, these measures are now temporarily effective until 31 March 2022 (despite hopes that the provisions would be permanent given the increasing use of technology and the ongoing disruptions caused by COVID-19). That said, we are hopeful that these will be made permanent at this time.

   Execution by counterparts

   The Treasury Act also allows company directors, company secretaries and witnesses to sign a copy or counterpart of a document and the use of a combination of methods, to execute a document. For example, one director may physically sign a paper version of the document while the second director could sign the document using electronic means. The Treasury Act’s explanatory memorandum provides that where an electronic copy of a document is being signed, there are 3 conditions that must be satisfied first:

   1. the copy must include the entire contents of the document;
   2. the person signing the document must be identified and they must indicate their intention to sign the document, i.e. using a platform such as DocuSign; and
   3. the method must be reliable in indicating the person’s identity and intention.
      
      

2. Victoria

   On 26 April 2021, the Justice Legislation Amendment (System Enhancements and Other Matters) Act 2021 (Vic) (Amending Act) came into force, which pleasingly made permanent a number of temporary measures which were previously introduced as a result of COVID, in relation to electronic signatures.

   The changes apply to most parties (such as individuals or other entities), but, importantly, do not apply to companies seeking to execute under section 127 of the Corporations Act (see section 1 above regarding this).

   The effect of the Amending Act means that in Victoria, most legal documents can now be electronically signed and/or witnessed (via audio visual link) on a permanent basis. These documents include:

   • Documents defined as a ‘transaction’ within the Electronic Transactions (Victoria) Act 2000, which includes contracts, agreements, declarations and deeds (including leases);
   • Affidavits and stat decs (under the Oaths and Affirmations Act 2018)
   • Wills / codicils / other testamentary instruments (under the Wills Act 1997)
   • Powers of attorney and related documents (under the Powers of Attorney Act 2014).
     
     

   There is no prescribed form of electronic execution, (although there are set requirements and procedures for electronic execution and witnessing of documents under each Act above). Parties seeking to sign documents electronically can do so in a number of ways, including:

   • physically signing a document, then scanning that signed document and exchanging by email with the other party;
   • pasting a copy of a signature into a document;
   • using electronic execution apps or programs, such as Docusign.

   For agreements and deeds, the party receiving the document must consent to use of an electronic signature for validity.

   Execution by signatories and witnesses should occur on the same day and within Victoria for wills, codicils, other testamentary instruments, powers of attorneys and related documents.

   However, execution under the Electronic Transactions (Victoria) Act 2000 only requires execution on the same day, but need not occur within Victoria.

   Parties should seek legal advice to ensure that they are signing and witnessing documents correctly.

3. New South Wales

   Unfortunately, unlike Victoria, New South Wales has not made all electronic transactions permanent.  

   The provisions temporarily allowing electronic execution and remote witnessing via audio visual link under the Electronic Transactions Act 2000 (NSW) (NSW Electronic Transactions Act) are set to expire on 1 January 2022.

   Although in New South Wales, deeds are permitted to be signed electronically under section 38A of the Conveyancing Act 1919 (NSW), the NSW Electronic Transactions Act has temporarily extended this to include other documents such as agreements and statutory declarations. This temporary extension is due to expire on 31 December 2021.

   Under the temporary provisions, an electronic signature will be valid if the following requirements are met:

   • a method is used to identify the person and to indicate the person’s intention regarding the information communicated; and
   • the method used was either ‘as reliable as appropriate’ for the purpose of the electronic communication or ‘proven in fact to have fulfilled the functions’ of identifying person and their intention; and
   • the person signing has given their consent to using the method described above.

   For remote witnessing/attestation to be valid, there are 4 requirements which must be complied with:

   1. the witness must observe the person signing the document in real time; and
   2. the witness must attest or confirm the signature was witnessed by signing the document or a copy of the document; and
   3. be ‘reasonably satisfied’ that the document being signed by the witness is the same document or copy of the document signed by the signatory; and
   4. provide a statement that specifies the method used to witness the signing and a statement that the document was witnessed in accordance with section 14G of the NSW Electronic Transactions Act.
      
      

   However, whilst deeds can still be signed electronically after 1 January 2022, remote witnessing will no longer be available after this date.

How we can help

Please contact Rohan Harris, Andrew Parlour, Rory Maguire, or Jacqueline Vuong from our Corporate and Commercial team, or, Rosemary Southgate, Mark McKinley or Melanie Young from our Property and Development team, should you require further advice in relation to corporate advisory or governance matters. 

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