Lawpath Blog
Signing Company Documents During COVID-19

Signing Company Documents During COVID-19

The requirements for signing company documents has changed during COVID-19. Here we discuss the amendments made to the Corporations Act.

26th June 2020
Reading Time: 3 minutes

COVID-19 has presented unique challenges for companies regarding their ability to operate remotely. One of the most significant of these challenges concerns how companies deal with the legislative writing requirement. Prior to COVID-19, the law’s position was that documents must be signed physically when relating to certain subject matter. This requirement extended to company documents. COVID-19 has led to social distancing regulations which have made this writing requirement difficult to adhere to. The Federal Government has since released a determination under special temporary powers to address these issues.

The Previous Position

Prior to the Treasurer’s determination, Section 127 of the Corporations Act established that documents could not be validly executed electronically. It was also unclear if split execution (company officers sign different copies of the document) and modified split execution (company document is wet-ink signed and faxed to the other required officer to sign) signatory methods were valid. Generally, this position was not conducive to efficiently running a business during COVID-19.

The Treasurer’s Determination

The Treasurer’s determination intends to allow the continuation of relatively normal business operations during COVID-19. It outlines the following;

  • An electronic signature is permissible (on the temporary basis of the interim legislation)
  • Officers need not sign the same document for it to be valid under the Corporations Act
  • To be valid, eSignatures must identify the signatory and their intention to be bound. They also must be reliable for the purpose.
  • eSignature is only valid under the legislation if it relates to the document in full.

Generally, under these changes, eSignatures are now valid for company documents under the Corporations Act. This determination extends until the 5th of November 2020, a period of 6 months. These changes are somewhat in line with electronic signature requirements under the Electronic Transactions Act 1999 (Cth).

The Determination in Practice

Various forms of electronic signature are now permissible, provided they meet legislative requirements. Permissible electronic signature methods include using a finger, stylus or trackpad, or using our Electronic Signature Tool. Company officers should avoid using copy-pasted signatures. However, if this occurs, the signatory must be able to prove they applied or approved the application of their signature to the document.

Implications for deeds

The treasurer’s determination does not address whether deeds can be signed electronically. This is a point of confusion as deeds traditionally have to be on paper. It is unclear as to whether printing an electronically signed deed into paper form would meet this requirement under the legislation. As a result, the safe option would be to sign deeds physically in wet-ink. For more detailed legal advice, contact a lawyer.

Weaknesses

Firstly, the determination is limited in scope because it only applies to companies identified in the Corporations Act. Because of this, the new electronic signature provisions cannot apply to foreign companies or non-company entities.

A second weakness is that the legislation is due to be repealed on the 5th of November. This may be an issue as this period may pre-date the length of COVID-19 and it’s business impacts. If the treasurer extended the declaration or made it permanent, this would prevent an interruption to business activity.

More signature-related changes

State Governments are also in the process of enacting legislation regarding remote witnessing. New NSW legislation allows the witnessing of some arrangements via audio-visual link (AVL). These arrangements include wills, statutory declarations and deeds and arrangements.

Key Takeaways

  • The Treasurer’s declaration makes electronic signatures valid under the Corporations Act in many situations
  • Our Free eSignature Tool may be of assistance to your business
  • It is likely that the legislation may need to be extended if the effects of COVID-19 on businesses continues.
  • Always seek professional legal advice to ensure eSignature is valid for your documents

Don’t know where to start?
Contact a Lawpath consultant on 1800 529 728 to learn more about customising legal documents and obtaining a fixed-fee quote from Australia’s largest legal marketplace.

Author
Alistair Maclennan

Alistair is a Legal Intern at Lawpath. He is currently studying a Bachelor of Laws at Macquarie University. He is primarily interested in how changes in the digital space influence business activity, privacy, and freedom of speech.