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Execution of Company Documents Using Electronic Signatures

A determination made by the Treasurer on 5 May 2020 will have consequences for any Australian companies that sign documents electronically, including not for profit companies.

The practise of signing documents electronically is one that has been widely adopted , despite some uncertainties in the law about the extent to which electronic signatures can be relied upon.

Fortunately, this issue has now been addressed by the Government in order to overcome the challenges physically signing a document poses during the current pandemic. The Corporations (Coronavirus Economic Response) Determination (No. 1) 2020 modifies section 127 of the Corporations Act 2001 (Cth), which is the section that deals with how directors (or a director and the company secretary) can sign documents without using a company seal.

The modifications to the Corporations Act will enable directors and company secretaries to execute documents without a common seal by either:

1. signing a copy or counterpart of the document that is in a physical form (i.e. officeholders sign separate physical copies of the document); or

2. signing an electronic copy or counterpart of the document, provided the following requirements are met:

  • a method is used to identify the person signing the document electronically and their acceptance of the contents of the document;
  • and the method must be as reliable as is appropriate for the purpose for which the company is executing the document;
  • and the electronic copy or counterpart must include the entire contents of the document, but need not include the signature of any other person also signing the document.

The modifications also confirm that third-parties are entitled to rely on documents that have been signed in counterparts or electronically. However, there are a few important points companies and officeholders should keep in mind:

  • it is not acceptable to simply print and sign a copy of the signing page of a document – each officeholder must sign a separate, full copy of the document; and
  • the modifications do not apply where documents are executed by an individual with delegated authority to sign documents for the company under section 126 of the Act.

For more information about the changes to the Corporations Act or how companies can execute documents, please contact us.