Last year, various temporary measures were introduced (both at a Federal and State / Territory level) in response to the COVID-19 pandemic to allow electronic execution in certain circumstances. Prior to these measures electronic execution, including eSignatures and video-witnessing, of certain documents was problematic in Australia, particularly in relation to execution by corporations.
On 21 March 2021, the changes introduced by the Commonwealth temporarily permitting electronic and split executions under section 127 of the Corporations Act 2001 (Cth) expired. For further detail regarding what that expiration means you can read our article.
Despite the expiration of the Commonwealth changes and no clear indication that they will be extended, some States still have in place their own measures (which does make things somewhat confusing!). Importantly, just last week Queensland passed a bill to extend special measures permitting electronic signing of deeds and statutory declarations and remote witnessing of documents until 30 September 2021. Prior to the introduction of these measures, late last year, the New South Wales special measures allowing for the remote witnessing of certain documents such as affidavits, deeds and statutory declarations were extended until 31 December 2021. Meanwhile, Victoria has permanently allowed the witnessing of documents via audio visual link, and electronic signatures for the execution of transactions, deeds, mortgages and statutory declarations governed by Victorian law. The relevant law came into effect in Victoria on 26 April 2021.
Even with the above state-based measures in place, it is not easy to assess the requirements when executing under section 127 of the Corporations Act 2001 (Cth). As a quick reminder, s127 allows the parties to rely on the execution without having to make any further enquiry. I.e. by signing with two directors or a director + secretary (or the sole director in a sole director company) the parties can assume the document has been validly executed and is binding. To attract this protection a ‘wet ink signature’ (i.e. signing with a pen rather than electronically) must be used.
- You can execute various documents in an electronic way as specifically permitted under current state-base measures;
- To execute a document with the s127 protection, you must sign using wet ink and not electronically.
Overall, the array of disparate state-based measures and the failure of the Commonwealth Government to provide clarity through its own measures creates a rather murky environment when it comes to electronic execution. We haven’t even tried to cover split executions and how the requirements for signing a deed versus an agreement may differ. There are just too many variables and permutations, and the laws could change at any time.
Organisations should continue to monitor electronic execution measures closely to ensure valid execution occurs, particularly for those seeking to rely on the changes to continue operations during snap lock downs, or otherwise wanting to take advantage of the ability to sign documents without everyone physically present in the same room.