Electronic Signatures: Update
On 5th May the Federal Treasurer introduced temporary measures, designed to last 6 months, to allow company officers additional flexibility in using electronic signatures (eSignatures) during COVID-19 restrictions. This might, therefore, be a good time to provide a brief overview of the situation regarding eSignatures.
Under Common Law, a legally binding agreement does not need to be in writing or signed by one or more parties. However, where it is necessary to refer to the terms of that agreement, it is clearly useful that they be in writing. Acceptance by the parties bound by the agreement can be evidenced by circumstance and the actions of each party. One such piece of evidence can be an eSignature.
Section 127 of the Corporations Act, states that companies may execute documents if the document is signed by 2 directors of the company, a director and the company secretary, or, in the case of only one company officer, that officer. The Federal Treasurer’s new measures have confirmed that those company officers’ signatures may be eSignatures.
While s127 also includes reference to the creation of Company Deeds, which ‘may’ be included in the new measures, there seems to be differing opinions across the legal profession as to whether this is indeed the case and it may be best to continue relying on ‘wet’ signatures for such documents.
In the case of Deeds of Guarantee provided by individuals, there is no countrywide acceptance that eSignatures will be acceptable. The notable exception being under s 38A of the Conveyancing Act 1919 (NSW) (NSW Act), which states that a deed may be created in electronic form and electronically signed and attested for the purposes of Part 3 of the NSW Act.
On 23rd March, the Federal Court released its own guidance in response to COVID-19 restrictions, temporarily allowing all documents that need to be filed with the Court to be signed electronically.
While a little extra reassurance has been provided by the Federal Treasurer, this still remains a complex area and this brief overview should not be relied upon at the expense of professional legal opinion.