Companies can now sign documents by electronic means and with directors using electronic signatures. 

On 10 February 2022, the Australian Senate passed the Corporations Amendment (Meetings and Documents) Bill 2021 ('the Bill').  The passing of the Bill now clarifies the execution requirements of companies when signing documents (including deeds) - whether in physical or electronic form, or a hybrid of physical and electronic.

The permanent changes to the Corporations Act 2001 (Cth) ('Corporations Act') will come into effect on 1 April 2022 and in summary include:

  • Electronic methods are introduced to execute documents, including deeds by or on behalf of companies.
  • Documents may be signed in accordance with section 126 and section 127 of the Corporations Act, by signing either a physical form of the document or an electronic form of the document using electronic means.
  • Parties may rely on the assumptions under s 129 of the Corporations Act when considering acceptance of electronically executed documents.
  • The Corporations Act will clarify that proprietary companies with a sole director and no company secretary may execute documents by that sole director only, without the need to appoint a company secretary to satisfy the requirements of s 126 and s127 of the Corporations Act.
  • In order to validly sign documents electronically, the method of execution must identify the person and indicate the person's intention in respect of the information recorded. 

Some practical tips when executing a document electronically:

  • The signatory should electronically affix their signature within the execution block of any document being signed to both identify them and indicate their intention to be bound by the document.
  • Documents with electronic signatures should be stored and archived appropriately, with protections to reduce the risk of signatures being copied and pasted from a 'signed' document.
  • Where the physical proximity of a witness is required and the same document must be signed and witnessed, any witness should electronically affix their signature in the execution block immediately after the signatory to both identify them as the witness and indicate that they were physically present at the time of execution and witnessed the act of signing.
  • The parties also need to be aware of the requirements of the Electronic Transactions Act 1999 in their respective state where witnessing is done via audio visual link (cf  Section 14G of the Electronic Transactions Act 2000 (NSW) .
  • Clauses should be added to the execution block of relevant documents in which the parties state that they intend to sign electronically and will be bound by their electronic signatures.

The Bill also makes permanent measures to facilitate hybrid and virtual company meetings and electronic despatch of documents.  Keep an eye out for a further article on this topic in the coming weeks.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.