Temporary Measures For Electronic Signing Under The Corporations Act
In a world where almost everything occurs online, it has been a source of frustration for company officeholders that they have been unable to execute documents on behalf of their companies using electronic signatures (such as a digital signature or signature via stylus or saved image). This is due to the Corporations Act 2001 (Cth) (the “Act”) being excluded from the operation of the Electronic Transactions Act 1999 (Cth).
To facilitate the continuation of business during the COVID-19 pandemic and to mitigate the economic impact of the pandemic, the Treasurer has made a determination under the Act that documents (including documents in electronic form) will be validly signed by a company if each person required to sign the document signs it, or a counterpart of it, in physical form or electronic form.
If an electronic signature is used:
- the signatory must be identified in the electronic communication;
- the signatory’s intentions in relation to the contents of the document must be indicated;
- the method of signing must be “as reliable as appropriate for the purpose for which the company is executing the document, in light of all of the circumstances” or is otherwise proven to have identified the signatory and their intentions in relation to the document; and
- importantly, the document signed, whether in counterpart or otherwise, must include the entire contents of the document but does not need to have the signatures of the other signatories on the same document. The practice of only signing and transmitting the execution page of an agreement will not meet the requirements of the direction.
Where a document appears to have been executed in accordance with section 127(1) of the Act (as modified by the Treasurer’s determination), a person dealing with the company is entitled to assume that the document has been duly executed by the company.
The determination also allows meetings of the company to be held using one or more technologies that give everyone entitled to attend the meeting a reasonable opportunity to participate without being physically present. Any votes taken at meetings so held by must taken on a poll and not a show of hands and the participants must have the opportunity to vote in real time and, where practicable, by recording their vote in advance of the meeting. Notices of the meeting may also now be sent electronically.
Unfortunately, the measures set out in the determination are temporary and will only be in force for a period of 6 months from 5 May 2020.
Please contact our Commercial + Property Law Team if you require further information in relation to electronic execution of documents by companies during the COVID-19 pandemic period.