Temporary amendments to the law of electronic signatures

Documents can now be executed electronically for the purposes of s127 of the Corporations Act during the Determination period and in NSW can be witnessed using audio visual technology.

As part of the package of reforms introduced to assist in maintaining distancing during the Covid-19 situation, the Federal and NSW Governments have introduced new measures to help businesses sign commercial documents by electronic means, and in NSW to witness documents by audio visuals links.

NIBA CEO Dallas Booth said, “We recommend members obtain legal advice if needed prior to executing any documents under these reforms if in doubt as to what the specific requirements are to ensure any execution is valid and enforceable.”

The National Insurance Brokers Association (NIBA) Legal Adviser, Mark Radford has summarised these changes below and provided links to further information.

Documents to be executed under s127(1) of the Corporations Act 2001 (Cth)

The Corporations (Coronavirus Economic Response) Determination (No. 1) 2020 (Determination) will enable documents, such as agreements, that are required to be executed by a company director(s) or a director and company secretary under section 127(1) to be executed by electronic means  and in counterparts by those persons from 6 May 2020 until 6 November 2020 (unless extended).

Execution can be made in counterparts however the copy, counterpart or electronic communication must include the entire contents of the document (and not just copies of the execution pages only).

The communication method used must:

  1. identify the person in the electronic communication and to indicate the person’s intention in respect of the contents of the document;
  2. be as reliable as appropriate for the purpose for which the company is executing the document, in light of all the circumstances, including any relevant agreement; or
  3. be proven in fact to have fulfilled the functions described in paragraph (a), by itself or together with further evidence.

Examples of electronic execution can include:

  1. execution using cloud-based platforms such as DocuSign;
  2. signing a PDF on a tablet, smartphone or laptop using a stylus or finger; or
  3. pasting a copy of a signature into a document. In this case care should be taken to ensure the document is sent to and received from the relevant signatory.

The statutory assumption in section 129(5) of the Corporations Act (relating to due execution) will apply where a document is appropriately signed electronically in accordance with the Direction.

Witnessing Documents in NSW 

In addition to the above changes, with effect from 22 April 2020, the Electronic Transactions Amendment (COVID-19 Witnessing of Documents) Regulation 2020 (NSW)  allows for specified documents to be witnessed in NSW by use of audio visual means, effectively allowing a person to witness the signing of a document by another person via means such as video conferencing.

The Regulation will remain in force for six months from its effective date (until 22 October 2020) unless an earlier date is decided by a resolution of the NSW Parliament.

The person witnessing the document must:

  1. observe the person signing the document (the signatory) in real time by audio visual link;
  2. attest or confirm the signature was witnessed by signing the document or a copy of the document;
  3. be satisfied that the document the witness signs is the same document or a copy of the document signed by the signatory; and
  4. endorse the document or a copy of the document with a statement specifying the method used to witness its signing and the witnessing of this was in accordance with the regulation.

These changes should assist members to facilitate electronic execution of documents while the measures remain in force.