Electronic execution of documents and deeds by the Commonwealth, corporations and individuals

What you need to know:

• On 23 February 2022, amendments were introduced to the Corporations Act 2001 (Cth) (Corporations Act) by the Corporations Amendment (Meetings and Documents) Bill 2021 (Bill).  
• The amendments make permanent what had been a temporary suite of measures, introduced in response to the COVID-19 pandemic and compulsory stay-at-home orders, to enable corporations to execute documents, including deeds, by electronic means.
• The rules of electronic execution are a combination of common law and legislation, and depend on the type of entity executing the document, the type of document, and the applicable jurisdiction.

What you need to do:

• Ensure your entity’s policies and execution checklists align with current legal requirements in the applicable jurisdiction.
• Keep an eye out for future reforms, as this is a rapidly evolving area.
• Seek legal advice regarding the execution of documents, as execution is a complex area and getting it wrong may mean that your agreement is unenforceable.

Detailed Insights

Electronic execution of deeds

By individuals

Subject to statutory modification in specific jurisdictions, the common law requirements of signing, sealing and delivering a deed are still applicable. Deeds may be electronically executed by individuals in NSW, Victoria and Queensland, where the common law paper requirement for deeds has been supplanted in a broad range of circumstances.

In general, the requirements of signing, sealing and delivery are:

• Signing: Signing involves the affixing of one’s mark to the deed physically (ie, in “wet ink”).
• Sealing: Legislation in all jurisdiction has simplified the requirement of sealing such that a deed will be sealed where:
• The document is described as a deed or is expressed to have been sealed; and
• The deed is attested (witnessed) in accordance with the relevant legislation. Some jurisdictions allow remote witnessing (eg, via audio-visual link), however the documents which can be witnessed and the witnessing requirements differ across the various legislation in each jurisdiction.
• Delivery: A particular form of words or conduct is no longer required for delivery. Instead, what is necessary is intention to deliver, that being an intention to be presently bound by the executed document. Intention may be inferred by the words or conduct of the party executing the instrument.

The requirements for execution of deeds by individuals is State-specific.  Unless you are certain about the statutory modifications which apply to your specific circumstance, it is best practice to complete the following to ensure that a deed signed by an individual is correctly executed:

• The execution block should include text as follows (or equivalent):

Signed, sealed and delivered as a deed

• Physically signing the deed (in “wet ink”); and
• A witness observing the execution in person and then signing the deed as a witness.

For specific advice on the electronic execution of deeds in NSW, Victoria and Queensland,  contact us to discuss.

By Commonwealth entities

The common law position is generally applicable for Commonwealth entities.  This means that it is best practice to complete the following:

• The execution block should include text as follows (or equivalent):

Signed, sealed and delivered as a deed

• Physically signing the deed (in “wet ink”); and
• A witness observing the execution in person and then signing the deed as a witness.

However, Commonwealth legislation applicable to specific entities may modify the common law position. For example, this could be the governing legislation for a corporate Commonwealth entity. It is essential to check the legislation applicable to your entity to confirm that it has the power to enter a deed and, if so, how the power can be exercised.

Further, you should ensure that the signatory has appropriate authority or delegation in accordance with the entity’s Accountable Authority Instructions, applicable legislation or regulations, and internal Departmental policies.

By corporations

Corporations may execute deeds in a number of ways, including execution by an attorney under power of attorney, execution by an agent authorised by the Company (eg, through a board minute), execution under section 127 of the Corporations Act, and execution in accordance with an alternative method set out in the company’s constitution.

Generally, the preferred method is for corporations to sign in accordance with section 127 as counterparties can then rely on the statutory assumptions in section 129 of the Corporations Act. Until recently, it has been inconvenient for corporations to execute via this method (eg, ensuring that directors are available) and there has been ambiguity about whether temporary measures arising from COVID-19 pandemic overcame the strict common law requirements for deeds.

The recent changes to the Corporations Act arising from the Bill have facilitated easier execution in accordance with section 127, as follows:

• The Corporations Act now explicitly displaces the common law rule that a deed must be delivered on paper, parchment or vellum.  
• Hybrid (mix of electronic and physical signing) and split execution (ie, by multiple counterparts) are permitted. That is, electronic execution does not require:
• a person to sign the same form of the document as another person;
• a person to sign the same page of the document; or
• the same method of signing to be used by each signatory.
• Individual agents may sign a document or deed on behalf of a company (electronically or otherwise) without requiring appointment by a deed (ie, agents can now be appointed by means other than a deed).
• A person may execute a deed for a corporation by signing an electronic form of the document using electronic means, provided that the method of signing:
• identifies the person and indicates the person's intention in respect of the information recorded in the document; and
• was either
• as reliable as appropriate for the purpose for which the information was recorded; or
• proven in fact to have fulfilled the functions of identifying the person and their intent.

Although the Corporations Act adopts a ‘technology neutral’ approach to electronic execution, it is prudent to use an established digital signing platform (such DocuSign) to ensure the above requirements are met.

Electronic execution of agreements other than deeds

By individuals

Individuals may generally execute a document by signing it physically or electronically. However, it is prudent to ensure the signature is witnessed.

By Commonwealth entities

Agreements may generally be executed physically or electronically. However, as noted above, it is important to ensure that:

• you comply with any legislation applicable to your specific Commonwealth entity; and
• the signatory has appropriate authority or delegation to sign on behalf of the Commonwealth entity.  

By corporations

The requirements set out above relating to execution of deeds by corporations are similarly applicable for other agreements. That is:

• corporations may execute agreements in a number of ways, with section 127 of the Corporations Act being the preferred method for counterparties;
• electronic execution is permissible, as long as the above identification and reliability requirements are met; and
• hybrid and split execution methods are permitted.

Please note that this article only focuses on a particular method of execution, for particular documents and by particular types of entities, and is accurate as at the date of publication. The law has evolved significantly in recent years and there are differences across the applicable legislation in each state and territory, particularly in relation to the execution of deeds by individuals.

Electronic execution of deeds and agreements is a complex area.  Although changes have been introduced to facilitate signing of documents electronically (eg, under the Corporations Act), there are still requirements and considerations which will apply.  Where proposing to sign a document electronically, you should legal advice for your particular circumstance in each case.

Further Information

If you have any questions, or would like specific advice on the electronic execution of documents, please feel free to contact us.

Authors:

Rory Alexander, Director + Principal

Mara Dodson, Associate

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