Electronic execution of documents: The Corporations Act catches up

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The Corporations Amendment (Meetings and Documents) Act 2022 (https://www.legislation.gov.au/Details/C2022A00009) permanently amends the Corporations Act 2001 (Act). The amendments, which came into effect on 1 April 2022 are summarised as follows:

  • Electronic execution: documents (including deeds) may be signed electronically in accordance with s 126 (execution by agents) and s 127 (execution by 2 directors or 1 director & 1 secretary or sole director) of the Act. This abrogates the common law principle that deeds must be signed in ‘wet ink’.
  • The method of execution must identify the person, indicate the person’s intention in respect of the information recorded and be reliable for the purpose. Whilst no particular method of electronic execution is prescribed, using an electronic signing platform that involves authentication of the signatory’s identity, such as DocuSign or AdobeSign, would satisfy the requirements of identification, intention and reliability. Other methods include using a stylus tool, finger or mouse, or copying and pasting an image of the signatory’s signature into an electronic copy of the document – some measures that can be taken to help satisfy the identification, intention and reliability requirements when using these methods include:  
    • the signatory attaching the e-signed document to a covering email that contains a statement of their intent (e.g. “please find my signed copy attached”);
    • to minimise the risk that a signature was applied without the signatory’s consent (e.g. by someone else in their office), asking the signatory to confirm that they personally applied their signature or that it was applied by someone else with their authority; and
    • maintaining records of the steps taken and factors considered in connection with electronic execution of a document to help prove validity.
  • Hybrid/split execution: the new legislation clarifies that hybrid/split execution is also permitted – that is, a company may execute a document under s 127 by 1 director signing a physical form of the document by hand, together with another director signing an electronic form of the document by electronic means. It is not necessary for a person to use the same signing method or to sign the same page or form of the document as another person. It is also not necessary for the form of the document signed by a person to contain all the information recorded in the document.
  • Deliverya document executed as a deed under ss 126 or 127 does not need to be delivered to be validly executed. It may be delivered in physical form or electronically, however if it is delivered electronically, it must be readily accessible by the recipient so as to be usable for subsequent reference. For instance, it would be sufficient to email the document or a link to allow the recipient to access the document.
  • Agents: agents acting on behalf of companies can make, vary or discharge contracts and execute documents (including deeds) and do not need to be appointed by a deed in order to do so.
  • Capacitieswhere a person is signing in different capacities, they may sign the document in some or all of those capacities by signing the document once.
  • Sole director/secretary: the new legislation fixes a ‘gap’ in the Act that permitted execution under s 127 by a company that had a sole director and sole secretary but was silent on a company that had a sole director but no secretary. It has now been clarified that a sole director who is not a company secretary can execute under s 127.
  • Section 129 assumptionscompanies may rely on the assumptions under s 129 of the Act in respect of electronically executed documents and execution by agents.
  • The new legislation harmonises the treatment of agreements and deeds in respect of electronic execution by corporations. However, note that the reforms are limited to the Act and thus apply only to corporations. They cannot be relied upon as approval of electronic signing of deeds by natural persons – in WA, that remains governed by the Property Law Act 1969 (WA), which requires deed signing to be witnessed (s 9), and the common law. It would therefore be prudent to still require wet ink signing in these circumstances.

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