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Issued: 21 May 2020
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A recent legislative reform to the Corporations Act 2001 (Cth) enables companies to sign documents electronically, while the Electronic Transactions Act 2000 (NSW) ("ET Act") has been amended to more comprehensively facilitate alternative arrangements for making, executing, filing and serving documents and information under State legislation. Familiarity with these developments will enable agencies to manage their dealings at a distance during the COVID -19 pandemic.
Company Signatories - Ordinarily, a company executing a document without a common seal would sign the document under s. 127(1) of the Corporations Act. However, and as noted in our alert of 25 March 2020, it was unclear whether s. 127 applies to the electronic execution of documents. The Determination temporarily modifies the operation of s. 127(1) to facilitate electronic execution of documents by companies where signing by two directors, a director and a secretary or by a sole director who is sole secretary.
Under the Determination, for a six month period up until 6 November 2020, a document executed by a company without using a common seal under s. 127(1):
The Explanatory Note to the Determination states "that there are a wide variety of means by which officers of a company might sign a document electronically. These include:
The Determination also modifies s. 129(5) so that execution of a document by a company in accordance with the modified s. 127(1) will attract the assumption that the document has been duly executed.
The Determination does not expressly deal with deeds and does not expressly modify the operation of s. 127(3), which provides that a company may execute a document as a deed if the document is expressed to be executed as a deed and is executed in accordance with s. 127(1) or (2). Notwithstanding this, NSW government agencies may enter into deeds with companies in an electronic format where companies sign electronically in accordance with the modified s. 127(1). Consider seeking advice in relation to the methods of electronic execution accommodated by modified s. 127(1) if they are not clear in a particular case.
Widening of Regulation-making Power under ET Act - The primary regulatory regime supporting the validity of electronic transactions in New South Wales is the ET Act. On 25 March 2020, the ET Act was amended to permit regulations to be made that alter the signing, witnessing and attesting of documents under certain specified Acts. We have now seen an example of its use to enable the witnessing of documents by audio visual link ("AVL") by the Electronic Transactions Amendment (COVID-19 Witnessing of Documents) Regulation 2020, as discussed in our alert of 23 April 2020.
The Amendment Act expands the regulation-making power under s. 17(1) in two ways.
"Altered arrangements" includes the modification and suspension of arrangements, permissions or requirements (see s. 17(5)).
Modified s. 17 will enable regulations to be made to facilitate a wider range of documents and information to be made or communicated electronically.
Until the regulations are made, agencies should ensure compliance with existing laws and requirements in relation to the making and communication of documents and information.
Amalia Stanizzo, Special Counsel
02 9474 9056
0435 964 226
Felicity Shaw, Assistant Crown Solicitor
02 9474 9442
0466 480 28
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16 Nov 2022
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