Australia: Go Ahead For Electronic Signing Of Documents

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), we expect that most states will follow New South Wales' suit and issue clarification soon.

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 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 is the exception 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).

(g) if you are in NSW 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).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.