COVID-19 Changes to the Execution of Documents — Electronic Signing Now Permitted

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By Daniel Livingston, Partner and Scott Colvin, Lawyer

They say necessity is the mother of invention. The outbreak of the Coronavirus pandemic has caused a number of quick legislative changes to help Australian business get done. And now the government has made it easier for documents to be signed and for meetings to be held.

Under changes signed into law on 5 May 2020, documents executed in accordance with section 127(1) of the Corporations Act 2001 (Cth) are now able to be executed electronically. Counterparts of such documents are also able to be exchanged electronically.

To comply, electronic executions must clearly identify the person signing and indicate their intention to be bound to the document they are executing electronically. This is merely a written-down description of the concept of execution in the first place — that it is used to signify the acceptance by a person of the terms of a document.

The method of electronic execution must be ‘as reliable as appropriate for the purpose for which the company is executing the document’ or otherwise prove the identity of the person signing and their intention to enter into the terms of the document.

This aligns with a common sense approach to electronic signing, and one that lawyers have long sought from the legislature. Electronic signing of documents outside of the s 127(1) context have become increasingly common, and tools such as DocuSign or other means of rendering electronic signatures are widely understood and implemented. The present changes to the Corporations Act go no further than clarifying the application of such tools to documents signed in accordance with s 127(1).

In our view, any form of electronic execution that adequately identifies the person executing and contains something approximating that person’s usual signature will suffice to comply with the new requirements — in other words, any electronic rendering of what already occurs with wet ink on page.

The Corporations Act changes also allow for a Company’s Annual General Meetings to be held online, and facilitates a number of other electronic allowances to the holding of meetings, including with respect to providing notice of the meeting, the appointment of proxies, the taking of votes, and others.

These changes will be welcome for organisations coming to terms with the new way of doing business. By following a common sense approach and allowing digital tools to supplement old ways of carrying on business, entities everywhere will be able to press on with that which they do best.

For further information, please do not hesitate to contact us.

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