A sigh of relief – the return of electronic signing for companies — Brown Wright Stein Lawyers | Sydney Lawyers - Tax Specialist Lawyers, Corporate & Commercial Lawyers..

Given the ongoing lockdowns due to the COVID-19 pandemic, it is welcome news that companies can once again electronically execute documents under section 127 of the Corporations Act 2001 (Corporations Act).

The new changes to the Corporations Act were implemented by the Treasury Laws Amendment (2021 Measures No. 1) Act 2021 (Cth) (Act) which received Royal Assent on 13 August 2021. Similar reforms were introduced by the Commonwealth government in May 2020, however these measures expired on 21 March 2021.

The new rules are not permanent and will expire on 31 March 2022. However, the explanatory memorandum to the Act suggests that the government intends to implement permanent changes to allow electronic execution by companies before the temporary measures lapse.

Electronic signatures

Section 127 of the Corporations Act governs the ways in which companies can execute documents. The most common method of execution by a private company is by having:

two directors of the company sign the document;
a director and a company secretary sign the document; or
for a sole director/sole secretary company, that sole director/secretary sign the document.

The new changes enable directors and company secretaries to execute documents electronically. Electronic signing can happen in a number of ways, including by signing using a stylus on a tablet device or using electronic signature software such as DocuSign or Adobe Sign.

It is critical that where electronic signing is used, the electronic document signed is the whole document, although the signatory does not need to sign every page of the document. It is also important that the mode of electronic signing used is reliable and appropriate, and able to demonstrate the signatory's person's identity and intention to sign.

The Act and its explanatory memorandum make it clear that:

companies may execute deeds electronically, despite common law principles which otherwise require a deed to be "signed, sealed and delivered";
directors of the same company can sign a document on behalf of that company by signing separate (but identical) documents. In other words, two directors (or a director and secretary) of the same company do not need to sign the same piece of paper (whether that signing is done using "wet ink" or electronically); and
a company may sign a document in a hybrid way, for example, where one director signs on behalf of the company electronically, and the other director signs on behalf of the same company using wet ink on a paper copy of the document.

If you require any advice or assistance regarding how your company can sign a document under these new rules, please contact our Commercial Team.

The material in this article was correct at the time of publication and has been prepared for information purposes only. It should not be taken to be specific advice or be used in decision-making. All readers are advised to undertake their own research or to seek professional advice to keep abreast of any reforms and developments in the law. Brown Wright Stein Lawyers excludes all liability relating to relying on the information and ideas contained in this article.