While electronic signing has been generally accepted as a valid method of execution for many types of documents for some time now, new laws have been implemented at the Federal and State levels to help clarify that:
- certain important documents such as deeds and mortgages can be signed electronically;
- parties may sign separate copies or counterparts of the same document;
- witnessing requirements will be satisfied if undertaken remotely using an 'audio visual link' such as Skype, Zoom, Microsoft Teams or FaceTime; and
- company officers may execute documents electronically in compliance with section 127 of the Corporations Act 2001 (Cth).
While we believe these changes are good news and are long overdue, unfortunately at this stage they are only intended to be a temporary measure and the laws are set to be repealed later this year.
However, for those who have enjoyed the convenience of electronic signing and are ready to ditch the old paper and pen permanently, these temporary measures bring hope that more permanent changes will be forthcoming.
Please read on for further details regarding these important changes.
COVID-19 OMNIBUS (EMERGENCY MEASURES) (ELECTRONIC SIGNING AND WITNESSING) REGULATIONS 2020 ("REGULATIONS") - VICTORIA
The Regulations came into effect in Victoria on 12 May 2020 and will expire on 24 October 2020.
Signing of Deeds and Mortgages
The Regulations clarify that deeds and mortgages can be signed electronically in accordance with the requirements of the Electronic Transactions (Victoria) Act 2000 ("ETA"). They also allow for remote witnessing via an 'audio visual link' (i.e. Skype, Zoom, Microsoft Teams or FaceTime).
The ETA provides statutory validation that under most circumstances, an electronic signature will carry the same weight and legal effect as a wet ink signature. However, previously it was unclear whether a deed could be signed electronically due to the common law requirement that, for a deed to be binding, it needs to be executed on 'paper, parchment or vellum'. As the ETA did not explicitly override this requirement, it was usually advised that deeds be signed physically with all the parties signing the same document.
The Regulations have removed this doubt by specifying that the ETA will apply to the execution of deeds and mortgages.
The Regulations also clarify that:
- parties may sign separate digital copies of the same document, provided that each party receives a copy of every signed page; and
- a party to a transaction can't withhold consent to sign solely on the basis that the document is to be signed electronically.
The Regulations also allow for the witnessing of a signature or verification of identity to take place remotely using an audio visual link.
If the witness is required to sign the document, the witness must provide a statement accompanying their signature that indicates that the signing was observed by audio visual link in accordance with the Regulations.
An example of a valid statement is:
This document was witnessed by audio-visual link in accordance with the COVID-19 Omnibus (Emergency Measures) (Electronic Signing and Witnessing) Regulations 2020.
Oaths, Powers of Attorney and Wills
The Regulations have also made other modifications in relation to the signing and witnessing of oaths, affirmations, powers of attorney and wills. These changes are outside the scope of this article but we encourage you to contact us if you have any questions.
States other than Victoria
The Regulations are largely mirrored in the other Australian States, with slight modifications to the requirements under each State version of the Regulations. You should refer to the relevant regulations for each State and seek legal advice regarding the requirements of the relevant State.
CORPORATIONS (CORONAVIRUS ECONOMIC RESPONSE) DETERMINATION (NO. 1) 2020 ("DETERMINATION") - COMMONWEALTH
The Federal Government has introduced the Determination to enable the electronic signing of documents by corporations during the COVID-19 pandemic. The Determination took effect on 6 May 2020 and will expire on 5 November 2020.
Section 127 of the Corporations Act
Part 3 of the Determination modifies the operation of s.127(1) of the Corporations Act to clarify that a document (including a document in electronic form) has been validly executed by a corporation if each officer required to sign the document on behalf of the corporation does so in the following manner:
- by signing separate copies or counterparts of the same document; or
- by signing an electronic version of the document using a method that identifies the person signing the agreement and indicates their intention, and is reliable under the circumstances.
The requirements of identification, intention and reliability aligns with the language of the ETA. Most modern methods of electronic signing, such as cloud based digital signature platforms like DocuSign, should satisfy this requirement without any further action required.
The Explanatory Statement to the Determination also specifies that company officers may sign a document electronically by pasting a copy of their signature into a document, or by signing a PDF on a tablet or smartphone.
The document being signed must include the entire contents of the document, not just the execution page; however it does not need to include the signatures of the other parties signing the document.
If executed in this manner, then the other party will be entitled to reply upon the assumptions in s.129(5) of the Corporations Act, which specifies that a person may assume that a document has been duly executed by a corporation if the document appears to have been signed in accordance with s.127(1).
It is worth noting that this only applies to the execution of a document by a corporation, as defined in the Corporations Act. This excludes foreign companies, government bodies, statutory corporations and partnerships of non-companies.
The Determination does not explicitly address whether the changes apply to the signing of a deed by a corporation under s.127.
The conservative approach would be to continue to arrange for the execution of a deed by a corporation to be done with wet ink. However, as s.127(3) of the Corporations Act states that a corporation may execute a document as a deed if the document is executed in accordance with s.127(1), and the Determination modifies the operation of s.127(1) to allow for electronic execution, it is arguable that a deed signed electronically in accordance with s.127(1) and the Determination will be valid.
If you require further information or have any queries in relation to this legal update, please contact Alex Ninis or Marcus Hannah.