Temporary reforms electronic document signing

Issued: 20 August 2021

Further temporary reforms to facilitate electronic signing of documents by companies

Temporary amendments have been made to the Corporations Act 2001 (Cth) to enable companies to sign documents (including deeds) electronically. The reforms, which came into effect on 14 August 2021, will be of assistance to NSW government agencies that regularly transact with companies. 

Key points

• The Treasury Laws Amendment (2021 Measures No. 1) Act 2021 (Cth) temporarily amends the Corporations Act 2001 to enable the electronic signing of documents (including deeds) by companies until 31 March 2022.

• The reforms reinstate, and expand upon, temporary relief measures afforded by the Corporations (Coronavirus Economic Response) Determination (No. 3) 2020 (Cth), which expired on 21 March 2021.
  

Background

Under the amended s. 127 of the Corporations Act 2001, until 31 March 2022, a document may be executed by a company:

a) in electronic form; and

b) by the relevant company officer/s electronically signing a complete electronic counterpart of the document. In doing so, the method used must:

i) identify the signatory and his or her intention in respect of the document's contents; and

ii) be as reliable as is appropriate for the purpose for which the company is executing the document.

A counterpart of a document need not include the signature of another person signing the document. In other words, split execution of multiple counterparts (in either physical or electronic form) is permitted.

In relation to the e-signing method (see (b) above), the Explanatory Memorandum states '[T]here are a variety of methods that could be used to do this, including:

• Using a stylus tool to sign a PDF document and then emailing the document back to the company.

• Using a platform such as DocuSign.'
  

Notably, the assumptions that people dealing with companies are entitled to make under s. 129 of the Corporations Act 2001 apply to documents that appear to be executed in accordance with the revised s. 127. This is confirmed by the new notes inserted under s. 129(5) and (6).

As noted in our alert of 21 May 2020, the former Determination did not expressly deal with deeds and did not expressly modify the operation of s. 127(3). Subsection 127(3) 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). The amendments insert a new note under s. 127(3) that confirms that companies may execute deeds electronically by complying with the requirements of the revised s. 127.

Consider seeking advice in relation to the methods of electronic execution accommodated by the amendments to s. 127 if they are not clear in a particular case. The signing method adopted should take into account the degree of risk involved in the transaction, as well as its value. 

Finally, the Explanatory Memorandum indicates that these reforms may become permanent in due course, so watch this space! 

Contacts

Karen Ferris, Principal Solicitor
karen.ferris@cso.nsw.gov.au
02 9474 9265 

Emma McKibbin, Senior Solicitor
emma.mckibbin@cso.nsw.gov.au
02 9474 9497 

Felicity Shaw, Assistant Crown Solicitor
felicity.shaw@cso.nsw.gov.au
02 9474 9442  

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