Electronic Execution of Documents – Permanent Changes Afoot

Permanent changes to the laws relating to the electronic signing of documents are emerging from the ongoing pandemic. In mid-2020, the Commonwealth Government introduced temporary measures allowing companies to execute documents electronically.'  At around about the same time, the Victorian Government also introduced temporary regulations that expanded the types of documents that could be electronically signed and also allowed virtual witnessing. Despite adequate political motivation in Federal Parliament and substantial industry pressure to extend their operation, the measures introduced by the Commonwealth Government have now been automatically repealed and it is unclear if and when they will be reinstated. However, in Victoria the changes have now been made permanent.

Changes by the Commonwealth Government

In May 2020, Federal Treasurer Josh Frydenberg issued the Corporations (Coronavirus Economic Response) Determination (No. 1) 2020, which temporarily modified the operation of the Corporations Act 2001 (Cth) (Corporations Act) to allow companies to sign documents electronically (amongst other things). ' The Commonwealth temporary changes, which were renewed for a further 6 months in September 2020, allowed companies operating remotely to execute documents by using electronic signing methods (such as scanned signatures or electronic signing platforms) and counterparts of documents. The Commonwealth temporary changes were automatically repealed on 21 March 2021. Before their repeal, the changes were slated by the Commonwealth Government to be extended until 15 September 2021 via the Treasury Laws Amendment (2021 Measures No. 1) Bill 2021. However, in March 2021, the Bill failed to pass the Senate and now faces a further inquiry by the Economics References Committee. The Committee's second report on the Bill is due on 30 June 2021 and further debate in the Senate has been adjourned until August 2021. Recent court decisions have created uncertainties in the law relating to electronic signatures in the absence of the Commonwealth temporary changes. The result has been mixed views in the legal industry as to whether a company can safely execute documents electronically without legislative intervention. ' Therefore, the cautious approach would be for companies to return to pre- document execution practices (traditional "wet ink" signing) until such time as the Commonwealth temporary changes are reinstated or similar new legislation is passed. However, the uncertainty is limited to execution by multi-director companies under the non-exhaustive execution provisions of the Corporations Act, and many lawyers take the view that documents electronically executed by companies are just as enforceable as those executed with "wet ink" signatures, so long as the ' other legal formalities for the execution of the particular document are satisfied (electronically or otherwise). In any case, the Commonwealth Government has already announced its intention to finalise, by September 2021, permanent changes to the legislation permitting the electronic execution of documents by companies.

Changes by the Victorian Government

Also in May 2020, the Victorian Government introduced the Omnibus (Emergency Measures) (Electronic Signing and Witnessing) Regulations 2020 which temporarily modified the application of several pieces of Victorian legislation to expand the types of documents that could be safely electronically executed to include:

• statutory declarations and affidavits;
• enduring and non-enduring powers of attorney;
• executions, alterations and revocations of a will by a testator; and
• deeds and mortgages.

The Victorian temporary changes also allowed virtual witnessing of documents. In March 2021, the successful passage through Parliament of the Justice Legislation Amendment (System Enhancements and Other Matters) Bill 2021 made the Victorian ' temporary changes permanent. The permanent changes came into effect on 26 April 2021. The effect of these permanent changes is that, in Victoria, certainty has been introduced to the practice of signing and witnessing documents electronically including those documents previously considered outside the scope of electronic execution (such as deeds). It is important to note however that the Victorian permanent changes impose significant additional requirements for the electronic execution of statutory declarations, affidavits, powers of attorney and wills that must be complied with to have the protection of the legislation. Further, where a company is a party to a document, this may prevent the document from being executed electronically until companies can once again safely execute documents electronically (see above). Legal advice should be obtained before proceeding with electronic execution of any legal documentation.

Need more guidance?

If you would like to discuss the best way to ensure your documentation is appropriately executed, or need guidance or assistance to ensure compliance with the changes, please contact us for further information.  

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~ with' Lachlan O'Brien,' Associate and' Michael Timlin,' Graduate at Law