Publication date: 5 July 2022, reference number LB125
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Legal briefing: Execution solutions for remote working arrangements [PDF 0.7MB] |
In this issue:
- Summary of solutions
- Practical tips
- Signing
- Witnessing of documents
- Documents signed by Corporations Act companies
This legal briefing focuses on practical solutions for Commonwealth entities which need to sign and accept commercial documents (including contracts and deeds) during an isolation, semi-isolation, socially distanced or remote working scenario. These circumstances pose a number of challenges including diminished printing and scanning capability and the availability of witnesses for execution. It should be read in conjunction with AGS Fact Sheet 37 (execution clauses).
Note that this legal briefing is based on the law as at the date of publication. Circumstances are changing and the Commonwealth, states and territories have all passed legislation and made regulations and declarations to respond to the evolving situation. The Appendix to this legal briefing summarises the current relevant laws and requirements.
This legal briefing does not focus on non-commercial documents such as wills, affidavits or court documents. These documents are referenced only where a change in law which affects a commercial document also extends to them.
Summary of solutions
The below table identifies issues and solutions to facilitate the execution of a range of documents in these circumstances (including under any temporary changes). Additional details are discussed later in this legal briefing.
Document type | Is electronic execution permitted? | Considerations | Solutions |
---|---|---|---|
Correspondence | Yes | Consider value and risk associated with document. | Electronic or digital signature. |
Memorandum of Understandings (MoUs), work orders, and similar | Yes | Consider value and risk associated with document. |
Electronic or digital signature. |
Contracts | Yes | Usual formalities of a contract must be satisfied. | Electronic or digital signature. |
Land documents requiring registration | Only where permitted through an Electronic Lodgement Network (ELN). |
Ensure that a client authorisation Consider particular requirements of the registry and ELN. |
Use ELN If ELN not available, electronically |
Deeds | By individuals – in NSW, Victoria and Queensland. By Corporations Act 2001 companies – yes. |
Particular considerations for companies. No witness required in Victoria or Queensland. (See below in connection with witnessing). Consider the benefits of deed vs contract. |
Where the deed is made in NSW, Victoria or Queensland, sign electronically. Convert to contract (if contract formalities are met) and sign electronically. Where a deed is required and is not made in NSW, Victoria or Queensland, if possible, print (in counterpart), physically sign in the presence of witness, scan and send (note that this qualifies as physical or ‘wet ink’ signing with electronic delivery). See below solutions for companies to execute deeds. |
Documents which require a witness |
Yes, but exercise caution. The types of documents which may be witnessed electronically or via audio-visual link differs across jurisdictions. |
In WA, NSW, Victoria, Queensland, ACT and Tasmania, witnessing of certain documents may occur via audio-visual link and the witness may sign a copy of the document. Outside NSW, Victoria, Queensland, ACT and Tasmania, the proximity of witness (in time and space) is necessary and the same document (not a copy) must be signed by the witness. |
In WA, NSW, Victoria, Queensland, ACT and Tasmania witnesses may use audio-visual link to witness signature in accordance with relevant regulations and may sign a copy of document signed by signatory. Outside NSW, Victoria, Queensland, the ACT and Tasmania, the witness may be physically proximate ‘at a distance’ and may attest that they have witnessed by signing the same document on the same device, or by using a suitable digital execution platform. |
Documents signed by or on behalf of Corporations Act companies | Yes |
The Corporations Act is exempt from the Electronic Transactions Act 1999. Consider value and risk associated with the document. Different execution methods are available. The Corporations Act 2001 (Cth) has been modified to permit electronic execution of documents (including deeds) and witnessing the affixing of a company’s common seal by electronic means, provided certain requirements are met. |
Execution by a company in compliance with the Corporations Act may occur where:
There is no requirement that parties sign in the same form (e.g. one can sign physically and another can sign electronically, or both can sign electronically in a different manner). |
Practical tips
For a specific document or transaction, certain precautions and steps should be taken. Suitably detailed records should also be kept of the steps taken and factors considered in connection with electronic execution of each document in order to manage operational and legal risk, and also to prove the validity of execution by its delegates. The steps may be built into a process or procedure document and, to the extent relevant taking into account whether documents can be electronically created and signed and whether remote witnessing is permitted in the jurisdiction, should include that:
- the signatory assesses:
- the relevant document and the complexity of the document, the value of the agreement and/or the identity of the counterparties to determine whether these increase the likelihood of dispute
- the risks that electronic signatures potentially pose (including that the document may not be enforceable if improperly executed and that an electronic signature may be affixed without proper authorisation), in order to determine whether it is appropriate to sign the document electronically (or whether a physical ‘wet ink’ signature is preferable).
- the signatory should electronically affix their signature in the execution block of any document being signed to both identify them and indicate their intention to be bound by the document
- documents that have been signed electronically are appropriately stored and archived with protections and caveats so that the risk of signatures on the documents being copied and pasted from a ‘signed’ document which is stored in the document management system is reduced
- where the physical proximity of the 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
- an appropriate method of electronic signature is used (e.g. an exchange of pdf versions, affixing facsimile copies of electronic signatures or use of a digital signing program)
- any signatory uses a strong password on their email account
- when production of hard copies is feasible, retaining a hard copy of the contract or deed which has been executed by the signatories
- where possible, consider ‘locking’ the signed documents to prevent further amendments being made to that document – noting that with current technology, very few methods of ‘locking’ a document are foolproof
- caution should be exercised when accepting a document that has been electronically signed by another party. Steps should be taken to require that party to establish to the agency’s reasonable satisfaction the elements of identity and reliability and to minimise the risk of fraud. For example, sending a letter to the signatory at a known mail address thanking them for providing their electronically signed document (and asking them to contact you immediately if they did not so provide it)
- clauses are added to relevant documents in which the parties state that they intend to sign electronically and will be bound by their electronic signatures
- the signatory confirms that there are no limitations under its current financial delegation instrument and in any other internal delegations that require execution of the documents by physical signature.
Signing
Signatures generally
The common law accepts that documents can be signed by a party in ways other than a traditional pen and ink signature (e.g. marks, pseudonyms, printed names and stamps).
The key characteristics of a signature as distinct from ordinary writing are that a signature and the act of signing should:
- evidence the signatory’s identity (that is who signed the document)
- evidence the signatory’s intention to be legally bound by the signed document.
Ideally, a signature will also assist in the authentication of a document (for example showing that a document is not merely a draft) and will make it difficult for a signatory to deny that they are bound by a document (absent evidence to the contrary such as fraud or forgery).
Physical signatures, electronic signatures and digital signatures explained
It is helpful to distinguish between physical, electronic and digital signatures.
Type of Signature | Description | Examples |
---|---|---|
Physical or ‘wet ink’ | The method of marking a physical document to indicate assent to its terms. |
Handwritten signature made with ink on a physical document. A person’s mark on a physical document. |
Electronic | Distinct from physical signatures in that they leave no physical impression on the document that they relate to. Essentially, any electronic communication which satisfies the characteristics of a signature (i.e. evidencing identity and intention) has the potential to be a legally effective electronic signature. |
Typing a name in electronic format Scanning and inserting (pasting) a physical signature into an electronic document. A name appearing in the ‘From’ field in an email. Clicking an ‘I accept’ button. |
Digital |
A type of electronic signature that incorporates a verification element, most often cryptographic authentication technology. Digital signatures under a Public Key Infrastructure (PKI) system provide high standards of assurance of signatory identity, document confidentiality and integrity and non-repudiation. |
To use digital signatures, a specialised platform or software is required. Exercise caution in choosing the platform or software to ensure that it is based on PKI. |
Documents which may be signed electronically
Under the Electronic Transactions Act 1999 (Cth) (ETA) and similar state and territory legislation,1 many documents may be validly created and signed electronically. The ETA does not displace the common law.
Under the ETA if a law requires a person’s signature, there are broadly 3 requirements for a valid electronic signature – being identification, reliability and consent.
- Identification – the recipient must be able to identify from the method of execution the person signing and confirm that the person signing intends to be bound by the information communicated (typically an electronic signature accompanied by the signatory’s name and position).
- Reliability – the method used to sign must be reliable, which is objectively determined by considering all relevant circumstances and the purpose for which the signature is required (it may be sufficiently reliable that a password protected email account is used to send the communication, or that software is used which requires a password or authentication before a digital signature is inserted).
- Consent – the counterparty to the document being electronically signed must agree to the document being signed electronically. If the Commonwealth is the receiving entity, it may impose technical requirements in connection with the signature.
While each document must be considered in context, examples of documents which may be signed electronically include:
- correspondence (including letters, Memoranda of Understanding and emails)
- contracts (preferably where there is no witnessing requirement – as to which see comments below)
- work orders, extensions and variations
- deeds, including deeds poll, but only where these are governed by NSW, Victorian or Queensland law which permits deeds to be created in electronic form and signed and attested electronically
- land registry documents which may be signed and lodged through an Electronic Lodgement Network (ELN).
Solutions for documents which may not be signed electronically
Certain documents may not be able to be signed electronically and for some documents electronic execution may be considered inappropriate (for instance high-value or high-risk arrangements). Options for signing such documents are discussed below.
Temporary modifications to statute made in response to the COVID-19 pandemic are summarised in the Appendix to this legal briefing. The below discussion should be read subject to the specific temporary modified requirements in each jurisdiction.
Property documents requiring registration
Electronic Lodgement Network available
These must be signed in accordance with the requirements of the Titles Office in each jurisdiction and where these cannot be registered through an ELN they will normally require original documents with ‘wet ink’ signatures.
Agreement to sign document via ‘wet ink’ at a later date
Where wet ink signatures cannot be obtained and electronic signing and lodgement through an ELN is unavailable, consider securing a commitment from the counterparty in the form of an electronically signed agreement to execute the relevant instrument or dealing in registrable form with ‘wet ink’ signatures at the earliest reasonable opportunity whereupon the electronically signed agreement would cease to have effect. Among the things to be considered here will be any relevant state based regulatory time limits concerning lodgement of instruments or dealings.
Deeds
General
AGS Fact Sheet 37 sets out the formalities for execution of deeds. At common law, a deed must be written on paper. Legislation may modify the common law.
Approach in jurisdictions which permit the electronic creation and signing of deeds
New South Wales
In NSW, deeds can be electronically created, signed and attested by both individuals and corporations (Conveyancing Act 1919 (NSW), s 38A). The NSW legislation took effect on 22 November 2018. It overrides the old common law requirement for a deed to be on paper.
Victoria
On 23 March 2021 the Justice Legislation Amendment (System Enhancements and Other Matters) Act 2021 (Vic) received Royal Assent. The Act makes permanent the operation of various temporary measures introduced in response to COVID-19. Notably, the Act creates section 12A of the Electronic Transactions (Victoria) Act 2000 which allows for deeds to be created in electronic form and signed by electronic communication. These changes commenced on 26 April 2021.
Section 9 of the Electronic Transactions (Victoria) Act 2000 provides that a requirement for the signature of a person is taken to have been met in relation to an electronic communication if:
- a method is used to identify the person and to indicate the person’s intention in respect of the information communicated, and
- the method used was either:
- as reliable as appropriate for the purpose for which the electronic communication was generated or communicated, in the light of all the circumstances, including any relevant agreement, or
- proven in fact to have fulfilled the functions described in the first dot point, by itself or together with further evidence, and
- the person to whom the signature is required to be given consents to that requirement being met by way of the use of the method mentioned in the first dot point.
Queensland
In Queensland, deeds may be in the form of an electronic document and may be electronically signed by both individuals and corporations (Property Law Act 1974 (Qld) ss 46C–46G). Electronic signing must occur via an ‘accepted method’, which means a method that:
- identifies the signatory and their intention in relation to the contents of the document, and
- is either:
- as reliable as appropriate for the purposes for which the document is made or signed, having regard to all the circumstances, including any relevant agreement, or
- proven in fact to have fulfilled the functions described in the first dot point, by itself or together with further evidence, and
- is consented to by each other signatory to the document (Property Law Act 1974 (Qld) s 44).
These changes were introduced by the Justice and Other Legislation Amendment Act 2021 (Qld), which commenced on 30 April 2022. The Act replaced temporary regulations permitting the electronic execution of deeds that were introduced as an immediate response to the COVID-19 emergency (Justice Legislation (COVID-19 Emergency Response – Wills and Enduring Documents) Amendment Regulation 2020; Justice Legislation (COVID-19 Emergency Response – Documents and Oaths) Regulation 2020).
Solutions for jurisdictions which do not permit the electronic creation and signing of deeds
Using contract form instead of a deed
For agreements which may originally be intended to be created in the form of a deed but are capable of satisfying the formalities of a contract (i.e. essentially where consideration is passing) and which do not need to be in the form of a deed, these may be reframed as a contract and signed electronically. It should also be noted that a document which purports to be a deed but which fails to satisfy the formalities of a deed may nevertheless be enforceable as a contract if it otherwise satisfies the requirements of a contract.
In deciding whether a deed might be reframed as a contract, the following benefits of deeds should be considered:
- They are valid without the need to establish that consideration has been provided.
- The limitation period for enforcing rights under deeds is longer than under contracts.
- They may be binding on each party immediately on that party signing and delivering their counterpart even in the absence of the other party signing.
- There may be additional remedies available under some forms of deed.
- They may contain provisions which appoint one party as the attorney of the other permitting the appointed attorney to sign (other) deeds.
Agreement to execute deed via ‘wet ink’ in future
A further option to consider is for the parties to electronically sign an agreement in electronic form which annexes the form of deed (and any other related document which the parties intend to be signed in hard copy with a ‘wet ink’ signature in due course) and which commits the parties to execute that or those annexed documents at the earliest opportunity, and in the interim confirms that the parties agree to comply with the terms of the annexed deed/documents as if they were formally executed. There would need to be consideration for this agreement to be enforceable as a contract, so this may be problematic if consideration does not pass under the annexed deed, and solutions within the terms of the agreement may be required. Note that an exchange of promises may be sufficient consideration.
An advantage of this approach is that it will ultimately result in the parties physically signing the annexed deed and other documents. At its simplest, this could be achieved by an exchange of emails annexing the agreed deed/documents and agreeing in the terms of the email both to be bound by them and to execute hard copies at the earliest opportunity.
Signing pursuant to authority
A deed may be signed on behalf of another person or on behalf of a company if the authority of the person signing also derives from a deed (i.e. a power of attorney). Accordingly, this option will only be viable for deeds to be signed by that attorney or authorised person if the original authority can be granted via a deed.
Witnessing of documents
Generally
The witnessing requirement for deeds derives from statute and is required in all jurisdictions except Victoria.2 It is not a formal requirement for the validity of a deed at common law.3 A witnessed document will normally be better evidence of the identity of the signatory and their intention to be bound than a document that has not been witnessed. Even in the absence of a requirement at common law, it has long been the practice for an attesting witness to sign a deed in witness of the fact that the deed has been signed, sealed and delivered by the executing party.
Witnessing electronic or digital signatures for documents generally is legally and technologically complex. Subject to the statutory modifications in some jurisdictions which permit witnessing by audio-visual link, the witness needs to be physically proximate when the signatory signs and must see the physical act of electronic execution, before attesting to that fact by themselves signing the same document. These requirements pose a difficulty in certain contexts, such as any requirements for social distancing.
Additionally, there is a risk that the process of electronic execution may be such that a separate but identical copy of the signed document is created which the witness then signs. This might occur where, for example, the document is electronically sent from one device (where the signatory’s signature is applied) to another (where the witness’s signature is applied). Online or cloud based services are more likely to operate in this way. This may be grounds on which the validity of execution of the deed may be challenged.
Approach in jurisdictions which permit remote witnessing
New South Wales
Any document which is required to be witnessed under NSW law can be witnessed by audio-visual link (Electronic Transactions Act 2000 (NSW), s 14G) (for example, by using Zoom or Skype with video).
A person witnessing the signing of a document by audio-visual link must (s 14G(2)):
- observe the person signing the document (the signatory) sign the document in real time
- attest or otherwise confirm the signature was witnessed by signing the document or a copy of the document
- be reasonably satisfied the document the witness signs is the same document, or a copy of the document signed by the signatory
- endorse the document, or the copy of the document, with a statement:
- specifying the method used to witness the signature of the signatory, and
- that the document was witnessed in accordance with section 14G of the Electronic Transactions Act 2000.
A witness may confirm the signature was witnessed by signing a counterpart of the document, or, if the signatory scans and sends a copy of the signed document electronically, by countersigning the document as soon as practicable after witnessing the signature (s 14G(3)).
Victoria
The Justice Legislation Amendment (System Enhancements and Other Matters) Act 2021 (Vic) amends the Electronic Transactions (Victoria) Act 2000 (Vic) to introduce section 12 which permits witnessing by audio-visual link. As noted earlier, these changes commenced on 26 April 2021. In order for witnessing by audio-visual link to be valid, the following requirements must be met:
- the witness saw the signatory sign the document
- the witness is reasonably satisfied that the document signed as a witness is the same document or a copy of the document
- the witness includes a statement on the document signed as a witness that all requirements of section 12 of the Electronic Transactions (Victoria) Act 2000 (Vic) have been met, and
- the above requirements all occurred on the same day.
The Justice Legislation Amendment (System Enhancements and Other Matters) Act 2021 (Vic) also provides for witnessing via audio-visual link with regard to the Oaths and Affirmations Act 2018 (Vic), Powers of Attorney Act 2014 (Vic) and Wills Act 1997 (Vic).
Queensland
In Queensland, certain documents including affidavits and declarations can be witnessed by a ‘special witness’ remotely via audio-visual link (Oaths Act 1867 (Qld) ss 31E, 31J). Special witnesses include Australian legal practitioners, justices or commissioners for declarations and notary publics (Oaths Act 1867 (Qld) s 12).
Where a corporation or the State executes a deed by affixing its seal, the affixing of the seal can also be witnessed via audio-visual link (Property Law Act 1974 (Qld) ss 46F(3), 46GA(3)). Witnesses are not required where deeds are signed by individuals, partnerships or unincorporated associations (Property Law Act 1974 (Qld) ss 46E, 46G).
Remote witnessing was introduced to Queensland by the Justice and Other Legislation Amendment Act (Qld), which commenced on 30 April 2022. The Act makes permanent the changes which were originally introduced by temporary regulations as an immediate response to the COVID-19 emergency (Justice Legislation (COVID-19 Emergency Response – Documents and Oaths) Regulation 2020 (Qld); Justice Legislation (COVID-19 Emergency Response – Wills and Enduring Documents) Amendment Regulation 2020 (Qld)and the Justice Legislation (COVID-19 Emergency Response—Documents and Oaths) Amendment Regulation (No. 2) 2021 (Qld)).
Australian Capital Territory
Currently in the ACT, certain documents can be witnessed by audio-visual link (COVID-19 Emergency Response Act 2020 (ACT), s 4). This is a temporary COVID-19 measure which is in force until 28 November 2022.
The documents which can be witnessed by audio-visual link are:
- affidavits
- wills
- health directions, and
- general or enduring powers of attorney.
In order for the remote witnessing to be valid, the following requirements must be met:
- observe the person signing the document (the signatory) sign the document in real time
- confirm the signature was witnessed by signing the document or a copy of the document
- be reasonably satisfied the document the witness signs is the same document, or a copy of the document, signed by the signatory, and
- endorse the document, or the copy of the document, with a statement:
- of the method used to witness the signature of the signatory, and
- that the document was witnessed in accordance with section 4.
The Act provides that without limiting how a witness may confirm a signature, they may sign a counterpart of the document as soon as practicable after witnessing the signing of the document, or countersign a scan of the document as soon as practicable after the signing of the document.
Tasmania
In Tasmania, the COVID-19 Disease Emergency Notice 18/2020 under section 17(1) of the COVID-19 Disease Emergency (Miscellaneous Provisions) Act 2020 (Tas) permits remote witnessing by audio-visual link of certain types of documents. This includes statutory declarations under section 14 of the Oaths Act 2001 (Tas). In order for the remote witnessing to be valid, the following requirements must be met:
- the person observes, in real time, the action being taken
- the person satisfies himself or herself that the document in relation to which the action is taken is the same document, or a copy of the document, to which the person is to apply his or her signature in accordance with the next subparagraph
- the person attests to the observation made by signing the document, or a copy of the document, and endorsing the document, or the copy of the document, with a statement specifying that the document was sworn, made or signed, respectively, and witnessed, in accordance with this notice.
Further Disease Emergency Notices (2/2021 and 12/2021) have provided for electronic service, signing and witnessing of other types of documents, including certain documents under the Local Government Act 1993 (Tas).
Western Australia
In Western Australia, Division 4 of Part 2 of the COVID-19 Response and Economic Recovery Omnibus Act 2020 (WA) permits remote witnessing by audio-visual link of documents for the purposes of a relevant enactment until 31 December 2022. This includes statutory declarations under the Oaths, Affidavits and Statutory Declarations Act 2005 (WA).
In order for the remote witnessing to be valid, the following requirements must be met:
- person A and the witness are able to see and hear each other
- the witness observes person A do the thing
- if necessary, the witness signs the document or otherwise deals with it, if satisfied that:
- the document they are about to witness is the document signed or otherwise dealt with by person A or a counterpart or copy of that document
- signs the document or the counterpart or copy as required under the relevant enactment, and
- endorses the document or the counterpart or copy with a statement that it was dealt with in accordance with this section.
The witness must comply with the above if the relevant enactment imposes a requirement as to the presence of the witness – in accordance with the requirement. If there is no requirement as to the presence of the witness, then the witness may sign – (i) while the witness and person A are still able to see and hear each other by audio-visual communication; or (ii) if it is not practicable to comply with (i), as soon as practicable after the witness and person A cease to be able to see and hear each other by audio-visual communication.
South Australia
In South Australia, the COVID-19 Emergency Response (Section 16) (No 1) Variation Regulations 2020 suspended the requirement to witness the signing of an instrument in accordance with section 267 of the Real Property Act 1886 (SA). This expired on 1 December 2021.
Solutions for jurisdictions which do not permit remote witnessing
Physical proximity for the purposes of witnessing could include being present at a distance, such as outside the room in which the document is signed and observing through a window. In this scenario, signing the same physical document as the witness within a reasonable time after the signatory signs at or near the same location, even if at the time the witness signs they are not physically proximate to the signatory.
Assuming that the witness is physically proximate to the signatory and saw that person sign the document, either of the following 2 methods would also satisfy the requirement that the same document is signed and witnessed:
- inserting the signatures of the signatory and witness into the same electronic document at the same time on the same device, and in order to do this the signatory and the witness would be in the same room at the time these steps occur
- using a digital platform which replicates the physical process as closely as possible (e.g. a digital platform could be used which allows for the same electronic document to be signed on the same device, and includes steps through which the signatory verifies that the witness is physically present, and certain data such as time, the device’s Internet Protocol (IP) address, etc. is recorded for each signature).
Normally contracts do not require witnessing but it would be prudent to check the requirements of
any legislation that applies to the arrangement.
Documents signed by Corporations Act companies
Permanent reforms for Corporations Act companies
The Corporations Amendment (Meetings and Documents) Act 2022 (Cth) amends the Corporations Act 2001 (Cth). It received Royal Assent on 22 February 2022. Schedule 1, regarding signing and executing documents including deeds, came into force on 23 February 2022. Among other things, this Schedule inserts into the Corporations Act a new section 110A and amends sections 126 and 127.
Section 110A
The new section 110A allows for documents (including deeds) to be signed in a flexible and technology neutral manner, meaning no particular type of technology or platform is required to be used. Many of the elements contained in sections 127(3A to 3C) have been relocated, with amendment, to the new section 110A.
Under section 110A(2) the method of signing must identify the person and indicate the person’s intention in respect of the information recorded in the document, and that the method was either as reliable as appropriate for the purposes, or proven in fact to have fulfilled the person’s intention. The Explanatory Memorandum notes that these requirements mirror those in sections 10(1)(a) and (b) of the Electronic Transactions Act 1999 (Cth).
Section 110A(3) sets out certain things in relation to which a person is not required to indicate their intention for the purposes of section 110A(2)(a). These include the signature of another person, and the common seal. The note to this section provides that it is to accommodate minor differences which arise from the way a document is signed.
Section 110A(4) provides among other things that it is not a requirement that each party so sign the document in the same manner. For example, one director may sign by hand, and another may sign by electronic means. Split execution is permitted. Further, it is no longer a requirement that a person sign the entire contents of the document.
Section 110A(5) allows a person to sign a document in more than one capacity, by signing only once, if the document requires or permits this and states the capacities in which the person is signing the document.
Section 126
Section 126 has been replaced, though elements of the original section are retained in the substituted section. The new section allows agents to exercise a company’s power to execute documents, including deeds, which extends the previous scope which was limited to an ability to exercise a company’s power to make, vary, ratify or discharge a contract.
The agent is not required to be appointed by a deed, which abrogates the common law rule which otherwise requires a person to be appointed by deed in order to execute a deed. The agent may exercise the company’s powers to execute documents and deeds without them being required to be on paper, parchment or vellum and without a witness, and delivery is not required. This abrogates the common law paper rule and the requirement that a deed be delivered (i.e. that there be an intention to be bound) in order to be binding.
Section 127
Sections 127(1)(c) and (2)(c) have been replaced and allow a company with a sole director to use the s 127 statutory document execution mechanisms if that sole director is either also the sole company secretary or the company has no secretary. That sole director may either execute documents, or witness the affixing of the common seal to documents under sections 127(1) or (2).
Section 127(3A) allows for the execution of a document as a deed without execution being witnessed, and regardless of whether it is in physical or electronic form. There is no requirement for the entire contents of the document to be signed. As for execution by agents, delivery is not required for a deed which is executed under sections 127(1) or (2).
Previous temporary reforms to the Corporations Act
13 August 2021 – 22 February 2022
The Treasury Laws Amendment (2021 Measures No. 1) Act 2021 (Cth) received assent on 13 August 2021 and temporarily amended the Corporations Act 2001 (Cth) to facilitate electronic execution by companies, among other things. The Act did not pass Parliament before the expiry of the Determinations (discussed below), and so there was a period during which no additional provisions relating to electronic execution were in force. The Treasury Laws Amendment (2021 Measures No. 1) Act 2021 (Cth), and the temporary amendments to the Corporations Act it facilitated, ceased to apply on 1 April 2022, although it has been modified in part by the Corporations Amendment (Meetings and Documents) Act 2022 (Cth), discussed above.
Section 127(2A) of the Corporations Act provided that the fixing of a common seal was taken to have been witnessed by a prescribed person – being a company officer or officers – if that person or persons observed the fixing of the seal by electronic means, they signed the document and the document included a statement that the person observed the fixing of the seal by electronic means. The third of these requirements was amended by the Corporations Amendment (Meetings and Documents) Act 2022 (Cth), so that rather than a statement being required, the method used can indicate that the person observed the fixing of the seal.
Section 127(3A) allowed for physical copies or counterparts of a document to be signed where the copy or counterpart includes the entire contents of the document. The Corporations Amendment (Meetings and Documents) Act 2022 (Cth) amends this such that the entire contents of the document is not required.
Section 127(3B) of the Corporations Act provided for the circumstances under which an electronic copy or counterpart of a document including a deed could be taken to have been signed by a person for the purposes of s 127. This included circumstances both where a corporation was executing the document under seal (i.e. the witnessing of the affixing of the seal) and without a seal (i.e. by the company officer or officers). The Corporations Amendment (Meetings and Documents) Act 2022 (Cth) substitutes the requirements in this section such that if ss 127(1) and (2) are complied with, delivery is not necessary.
Subsection (3C) also provided that the copy or counterpart of a document which was being signed or witnessed need not include further signatures, or the common seal. Notes were also inserted at sections 129(5) and (6) of the Corporations Act which referred to the new subsections, making it clear that the assumptions of due execution applied where documents appeared to be executed in accordance with the new laws.
The Treasury Laws Amendment (COVID-19 Economic Response No. 2) Bill 2021 (Cth) received Royal Assent on 10 August 2021 and amended Schedule 5 to the Coronavirus Economic Response Package Omnibus (Measures No. 2) Act 2020 (Cth) to allow the responsible Minister for an Act or legislative instrument that required or permitted certain matters (including the giving of information and the signature, production and witnessing of documents) to temporarily alter or adjust these requirements or permissions in response to circumstances relating to COVID-19.
The expiry of the temporary measures does not affect the validity of documents executed in accordance with the Determinations up to 21 March 2021.
6 May 2020 – 21 March 2021
From 6 May 2020 to 21 March 2021, the Corporations (Coronavirus Economic Response) Determination (No. 1) 2020 (Cth) and the subsequent Corporations (Coronavirus Economic Response) Determination (No. 3) 2020 (Cth) permitted the electronic execution of documents under section 127 of the Corporations Act 2001 (Cth).
Documents which were signed in accordance with the Determinations while they were in force remain valid and enforceable notwithstanding the expiry of the Determinations.
The Determinations were made under section 1362A of the Corporations Act and modified the operation of sections 127(1) and 129(5) of the Corporations Act. Section 1362A was inserted by Schedule 8 of the Coronavirus Economic Response Package Omnibus Act 2020 (Cth). The most recent determination expired on 21 March 2021.
Under the now expired Determinations, a company could execute a document, including a document in electronic form, without using a common seal if each person specified in paragraph 127(1)(a), (b) or (c) (i.e. the company officers), as the case requires, of the Corporations Act either:
- signs a copy or counterpart of the document that is in a physical form, or
- complies with the following requirements for an electronic communication:
- the document they are about to witness is the document signed or otherwise dealt with by person A or a counterpart or copy of that document, and
- the method:
- is 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
- is proven in fact to have fulfilled the functions of identification and proof of intention as to the content of the document, by itself or together with further evidence.
The copy, counterpart or electronic communication was required to include the entire contents of the document, but needed not include the signature of another person signing the document nor any material included in the document because of section 6(4) of the determination.
Under the determination, a person could assume in accordance with section 129(5) of the Corporations Act that a document including an electronic document had been duly executed by the company if the document appeared to have been signed in accordance with the above requirements.
Companies in the Norfolk Island
The Norfolk Island Continued Laws Ordinance 2015 (NI), as amended by the Norfolk Island Continued Laws Amendment (Coronavirus Economic Response Measures) Rules (No. 3) 2020 (NI), modifies the operation of sections 93 and 111 of the Companies Act 1985 (NI) (Companies Act).
Compared to s 127 of the Corporations Act, s 111 of the Companies Act provides that a company incorporated under the Companies Act can make, vary or discharge a contract without using a common seal if a person is acting under the express or implied authority of the company. The Amendment inserts s 675 into the Act which permits the electronic execution of documents with the same requirements of the Corporations (Coronavirus Economic Response) Determination (No. 3) 2020 (Cth) above.
Similar to s 129 of the Corporations Act, s 93 of the Companies Act provides assumptions a person dealing with a company can rely upon. The Amendment inserts s 676 which provides a person can assume a document including an electronic document has been duly executed by the company if the document appears to have been signed in accordance with the requirements in s 111 as modified by s 675.
Sections 675 and 676 were originally intended to be temporary. This intention was reflected in section 678 which stated that the provisions were to be repealed on 22 March 2021. However, Part 30 of the Norfolk Island Continued Laws Amendment (Coronavirus Economic Response Measures) Rules (No. 3) 2020 repealed section 678, meaning the provisions are now permanent.
Generally
There are a number of execution methods available to companies4 – including execution by a person holding a power of attorney or a person who is otherwise authorised to execute a document by the Company (for example through a board minute).
Sometimes it is necessary or desirable for a document to be executed by a Company pursuant to s 127(1) of the Corporations Act so that another party can rely on the presumption in s 129(5) of that Act that a document executed in accordance with s 127(1) by a director and company secretary, or by 2 directors, or, for a proprietary company that has a sole director who is also the company secretary, that director, has been duly executed.
If you cannot rely on the presumption in s 129(5) of the Corporations Act, you must satisfy yourself that the person executing the document on behalf of the company is duly authorised to do so. Fundamentally this means that you should seek evidence of their authority. For example:
- execution by power of attorney: ensure that the document is signed by an attorney (being an individual) under a power of attorney and evidence of the attorney’s appointment by the company is provided5
- execution under board authority: request a copy of the board authority and confirm that it applies to the document that is being executed
- execution as permitted under the company’s constitution: if the constitution of the company sets out another method of execution this could be adopted if legally permissible for the type of document (for example the constitution might specifically allow electronic execution)
- execution under s 127(1) of the Corporations Act: if execution must proceed purportedly in reliance on s 127(1) of the Corporations Act, consider:
- including in the agreement warranties as to the authority of the persons signing similar to the statutory assumptions in s 129(5)
- requiring evidence of personal authentication of the officer signatories
- requiring evidence of the identity and actual authority of the signatory or signatories to the relevant documents (e.g. board minutes or company resolutions).
Commonwealth companies
Commonwealth companies could put in place powers of attorney or board resolutions to provide appropriate authority for the business of the company to be conducted efficiently.
Related issues
Legal advice
For high-value or high-risk arrangements where there are obstacles to execution occurring in the traditional way or where the law as it relates to electronic execution is unsettled, legal advice should be obtained.
Physical signing with electronic delivery
This legal briefing focuses on electronic execution and does not extend to detailed consideration of effective binding greements or deeds which may be created through a process of printing a physical document, having that document physically signed (and witnessed where necessary) and then scanning and sending that document to the counterparty. Where mail or courier services are accessible, the physical document could be sent or counterparts exchanged. This approach avoids some of the potential uncertainties connected with electronic execution and may be suitable for some documents, but not all.
Counterparts using different execution methods
There is no compelling legal reason that a deed or a contract could not be executed in counterpart using different valid methods of execution for each counterpart. In fact, for companies this is expressly permitted by s 110A(4) of the Corporations Act. As noted in AGS Fact Sheet 37, the legal effectiveness of exchange of counterpart deeds is somewhat unclear but it is a commercial reality.
This solution might be considered to accommodate the most reliable method of execution which can practically be achieved by each party in their own circumstances, and the level of risk each are prepared to absorb.
As noted earlier, deeds executed in counterpart can be binding on a party as soon as they are executed notwithstanding that execution by another party or exchange has not occurred.
Early engagement
Consider early engagement with the other parties to any arrangement to raise the prospect of electronic signing as a method of execution and to reach agreement as to how the parties will approach this, including practical matters and any specific legal drafting which the resulting agreement will contain.
Making legislative instruments
Under the Legislation Act 2003 (Cth), a legislative instrument is ‘made’ by the signing, sealing or other endorsement of the instrument by the person or body empowered to make it. A Minister or other rule-maker could probably ‘make’ such an instrument by personally applying an electronic signature, on the basis that this would constitute their endorsement (approval) of the instrument.
Where this is done, it would be advisable that a person witness the application by the Minister of their electronic signature and make a contemporaneous file note to that effect, to ensure that evidence can be provided should there be a question raised in future as to whether it was the Minister who endorsed the document. Alternatively, it may be that the electronic signature could be locked to the Minister personally and evidence provided, if required, that only the Minister could access and apply it.
Current legislative developments in response to COVID-19
At the date of preparing this legal briefing, emergency legislation has been enacted by the Commonwealth and by some States and Territories to create regulation-making and declaration-making powers to enable electronic signing and the modification of requirements such as witnessing. Regulations, declaration and determinations have been made in some jurisdictions pursuant to those laws. Some of these temporary measures have since been incorporated into legislation and as such are now more permanent solutions.
The Appendix to this legal briefing summarises relevant historical and current legislation and affected laws, and the related regulations, declarations and determinations.
1 The relevant state and territory Acts are the Electronic Transactions Act 2001 (ACT), the Electronic Transactions Act 2000 (NSW), the Electronic Transactions (Northern Territory) Act 2000 (NT), the Electronic Transactions (Queensland) Act 2001 (Qld), the Electronic Communications Act 2000 (SA), the Electronic Transactions Act 2000 (Tas), the Electronic Transactions (Victoria) Act 2000 (Vic) and the Electronic Transactions Act 2011 (WA).
2 See Fact Sheet 37, Appendix 2
3 Goddard’s Case (1584) 2 Co Rep 4b at 5a; 3 Leon 100; 76 ER 396; Garrett v Lister (1661) 1 Lev 25; 83 ER 279
4 See Fact Sheet 37, page 2
5 See Fact Sheet 37, page 9
Appendix
Table of COVID-19 response legislation relevant to electronic execution across the Commonwealth, states and territories:
COVID-19 Response Legislation | Summary of power/amendment | Legislation to which power extends | Declaration / Regulation description and effective date |
---|---|---|---|
Commonwealth | |||
Coronavirus Economic Response Package Omnibus Act 2020 (the Omnibus Act). (Assent 24/03/2020). |
Various Commonwealth legislation was amended to facilitate different elements of the Commonwealth’s response package. |
Legislation relevant to electronic execution amended by the Omnibus Act includes:
|
The Omnibus Act inserted section 1362A into the Corporations Act which, among other things, permits the Minister to modify a provision of the Corporations Act by legislative instrument. The Corporations (Coronavirus Economic Response) The effect of this determination as it relates to electronic execution is discussed in the body of this legal briefing. (Effective date 22/09/2020). Note: The Determination has now expired. The implications of this is explained in the body of this legal briefing. |
Coronavirus Economic Response Package Omnibus (Measures No. 2) Act 2020. (Assent 9/04/2020). |
Minister responsible for provision can, by legislative instrument, determine that the provision is varied, rendered inapplicable or replaced by another provision. (Sch 5, cl 1(2)). |
Determinations may be made in relation to a provision of any Act or legislative instrument that requires or permits a ‘relevant matter’ (e.g. signature, witnessing, attestation). (Sch 5, cl 1(1)). |
The Coronavirus Economic Response Package (Modifications ─ Statutory Declarations and Notices of Intention to Marry) Determination 2021 has been made under clause 1(2) of Schedule 5.
This Determination, dated 14 December 2021, amends the Statutory Declarations Act 1959 to allow statutory declarations to be made using electronic signatures and witnessing to occur using audio visual technology. These arrangements are in place until 31 December 2022. |
Treasury Laws Amendment (COVID-19 Economic Response No. 2) Act 2021 (Assent 10/08/2021) |
Schedule 5 to the Coronavirus Economic Response Package Omnibus (Measures No. 2) Act 2020 is amended to reintroduce a temporary mechanism for responsible Ministers to change arrangements for meeting information and documentary requirements under Commonwealth legislation. To be repealed at the end of 31 December 2022. |
Commonwealth laws. | Not applicable. |
Treasury Laws Amendment (2021 Measures (Assent 13/08/2021) |
The Corporations Act 2001 (Cth) is amended to, among other things, include provisions to allow electronic execution and split execution of documents and deeds. These amendments ceased to apply from 1 April 2022. Note that the Corporations Amendment (Meetings and Documents) Act 2022 (Cth) has introduced some permanent reforms to the Corporations Act. |
Corporations Act 2001 (Cth). | Not applicable. |
Corporations Amendment (Meetings and Documents) Act 2022 (Cth) (Assent 22/02/2022) |
The Corporations Act 2001 (Cth) is amended to make permanent changes to, among other things, electronic execution of documents and deeds in a technology neutral manner. |
Corporations Act 2001 (Cth). | Not applicable. |
Norfolk Island Continued Laws Ordinance 2015 (NI). | The Companies Act 1985 (NI) is amended to permit the electronic execution of documents under section 111. |
Legislation relevant to electronic execution amended by the Norfolk Island Continued Laws Ordinance 2015 includesthe Companies Act 1985 (NI). |
Norfolk Island Continued Laws Amendment (Coronavirus Economic Response Measures) Rules 2020 (No. 3) (NI). (Effective date 22/12/2020). |
ACT | |||
COVID-19 Emergency Response Act 2020 (Effective from 8/04/2020). As amended by the COVID-19 Emergency Response Legislation Amendment Act 2020 (Amendment effective from 14/05/2020) |
Relevant documents (an affidavit, will, health direction and a general power of attorney or an enduring power of attorney) may be witnessed by audio visual link. (s 4) |
Applies despite any other territory law. | Not applicable. |
NSW | |||
COVID-19 Legislation Amendment (Emergency Measures) Act 2020. (Assent 25/03/2020). |
Regulations may be made under any relevant Act (listed to the right) to alter arrangements for signing documents, witnessing signatures (including requirements for certification and verification of identity) or attesting documents. (s 17). |
|
Electronic Transactions Amendment (COVID-19 Witnessing of Documents) Regulation 2020. The regulation provided in a new Schedule 1 to the Electronic Transactions Regulation 2017 that witnessing of documents can be by audio-visual link if the conditions in cl 2(2) of Sch 1 are complied with, effective 22/04/2020. Note: This schedule has since been repealed and these provisions moved to section 14G of the Electronic Transactions Act 2000, commencing 29/09/2020. The conditions for valid witnessing of documents via audio-visual link are now contained in s 14G(2) of this Act (see below). |
COVID-19 Legislation Amendment (Emergency Measures—Attorney General) Act 2020. (Assent 14/05/2020). |
Section 17 of the Electronic Transactions Act 2000 is amended to allow that regulations may be made under that section or under another Act to provide for matters including making documents in particular forms, execution and provision of documents. (Sch 1, Subsch 1.3). Note: This section has since been repealed. |
Legislation relevant to electronic execution amended by the Omnibus Act includes:
|
No relevant regulations have been made as at the date of publication of this legal briefing. |
Stronger Communities Legislation Amendment (Courts and Civil) Act 2020 No 24. (Assent 28/09/2020). |
Schedule 1 to the Electronic Transactions Regulation 2017 is repealed. These provisions are substantially transferred from the Electronic Transactions Regulation 2017 to the Electronic Transactions Act 2000 No 8. These provisions were amended by the Electronic Transactions Amendment (Remote Witnessing) Act 2021 No 33. Electronic Transactions Act 2000 No 8 is amended to create a scheme for witnessing of documents via audio-visual link, which was originally to be repealed on 1 January 2022. (Part 2B, s 14G(2)). |
Another NSW Act or another law. | Not applicable. |
Electronic Transactions Amendment (Remote Witnessing) Act 2021 No 33 (Assent 29 November 2021) |
Electronic Transactions Act 2000 No 8 is further amended to make the pilot scheme permanent, and to make other changes relating to the original document and place of execution. |
Another NSW Act or another law. | Not applicable. |
Northern Territory | |||
Legislation is yet to be enacted as at the date of publication of this legal briefing. | |||
Queensland | |||
COVID-19 Emergency Response Act 2020. (Assent 23/04/2020). |
Regulations may be made modifying or suspending |
The regulations may apply to any Act or a common law rule that requires or permits any of the relevant matters in s 9(1). | Justice Legislation (COVID-19 Emergency Response - Documents and Oaths) Regulation 2020 as amended. |
Justice and Other Legislation Amendment Act (Qld). |
Amends various pieces of legislation to make permanent some of the temporary measures introduced during the COVID-19 emergency, including those introduced by the Justice Legislation (COVID-19 Emergency Response – Documents and Oaths) Regulation 2020. |
Relevantly for this legal briefing, amends the Oaths Act 1867 (Qld) and Property Law Act 1974. | Not applicable. |
South Australia | |||
COVID-19 Emergency Response Act 2020. (Assent 9/04/2020). |
Governor may suspend or modify any requirement under an Act, law or instrument relating to preparation, signature, witnessing, attestation, etc. of any document. (s 16). This Act expired on 1 December 2021. |
The regulations may apply to an Act or law, or an instrument, relating to the preparation, signing, witnessing, attestation, certification, stamping or other treatment of any document. |
COVID-19 Emergency Response (Section 16) Regulations 2020 (SA) as amended by the COVID-19 Emergency Response (Section 16) (Real Property Act) Variation Regulations 2021 (Effective date 09/09/2021). |
Tasmania | |||
COVID-19 Disease Emergency (Miscellaneous Provisions) Act 2020. (Assent 27/03/2020). |
The Minister may declare, by notice, that any requirement under any Act for an action to be taken physically (such as a signature), or evidenced in a document, may be taken or evidenced by electronic means. (s 17). |
The declaration may alter the requirements of any Act or instrument of a legislative character. |
COVID-19 Disease Emergency Notice 18/2020 was gazetted COVID-19 Disease Emergency Notice 2/2021 was gazetted on 1 April 2021. The declaration provides for electronic service, signing and evidencing of scheduled documents in the Local Government Act. COVID-19 Disease Emergency Notice 12/2021 was gazetted on 4 September 2021. The declaration provides for electronic service, signing and witnessing of scheduled documents, including via video-link in certain circumstances. |
Victoria | |||
COVID-19 Omnibus (Emergency Measures) Act 2020. (Assent 24/04/2020). |
Regulations may be made to modify or disapply the application of a ‘Justice Act provision’ that provides for or regulates the matters listed in s 4 (e.g. witnessing, executing, signing). (s 4). |
The regulations may apply to a ‘Justice Act Provision’ as defined in s 3, including Acts
|
The COVID-19 Omnibus (Emergency Measures) (Electronic Signing and Witnessing) Regulations 2020. The regulation provide for electronic signatures, witnessing the signing of documents by audio visual link, and related matters. The relevant Acts are the Electronic Transactions (Victoria) Act 2000, Oaths and Affirmations Act 2018, Powers of Attorney Act (Effective date 12/05/2020). Note: This Regulation ceased to apply on 26 April 2021. The Justice Legislation Amendment (System Enhancements and |
Justice Legislation Amendment (System Enhancements and Other Matters) Act 2021 (Vic). (Assent 23/03/2021; changes commenced 26/04/2021). |
(Victoria) Act 2000 (Vic) is amended to permit deeds to be created in electronic form and signed by electronic communication. Amendments also permit witnessing of documents via audio visual link, and for mortgages to be in electronic form. The Amendments also affect electronic signing and remote witnessing requirements in the Oaths and Affirmations Act 2018 (Vic), the Wills Act 1997 (Vic) and the Powers of Attorney Act(2014). |
Any other law of Victoria. | Not applicable. |
Western Australia | |||
COVID-19 Response and Economic Recovery Omnibus Act 2020 |
For the purposes of relevant enactments, if a person requires something to be witnessed, a witness may be present by audio-visual communication and may sign the document. (Pt 2 Div 4). |
|
The COVID-19 Response and Economic Recovery Omnibus Act 2020 Postponement Proclamation 2021 extended the operation of the Act until 31 December 2022. |
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