Electronic execution of documents restored under the Corporations Act 2001 (Cth)

By Devin Elliott, Lawyer

On 14 August 2021 the Treasury Laws Amendment (2021 Measures No. 1) Act 2021 (Cth) (Act) came into effect. The Act amended the Corporations Act 2001 (Cth) (Corporations Act) to essentially reimplement the changes made by Treasurer Josh Frydenberg last year in his Corporations (Coronavirus Economic Response) Determination (No. 1) 2020.

Section 127 of the Corporations Act has been amended such that:

  • documents executed without a company seal may be signed electronically and the signatories do not need to sign the same copy; and
  • documents executed with a seal may also be executed electronically and the witness may use alternative technology to observe the fixing of the seal.

These changes are not retrospective, meaning improperly executed documents between 22 March 2021 and 13 August 2021 are not now rendered effective. Furthermore, the amendments are a temporary measure and will automatically lapse on 1 April 2022. However, the Explanatory Memorandum states that the Government plans to make these reforms permanent before the temporary extension expires.

The reforms allow a company to execute a document without using a common seal (or execute a Deed) if it is signed by two directors, a director and a secretary, or a sole director/secretary where each such person physically or electronically signs a complete counterpart copy.

If such persons are signing the document electronically, an appropriately reliable method of identifying the person and indicating their intention to sign the counterpart copy of the document must be used.

A company with a common seal may execute a document if the seal is fixed to the document and is witnessed electronically by two directors, a director and a secretary, or a sole director/secretary.

The following procedure must be followed:

  1. The witness must observe the fixing of the seal by electronic means;
  1. The witness must sign the document (a complete, physical or electronic, counterpart copy – as explained above); and
  1. The document includes a statement that the witness observed the fixing of the seal by electronic means.

A counterpart copy of a document need not include the signatures of other signatories or the common seal (if one is affixed). However, the counterpart copy must be complete, i.e. it must include the entire contents of the document – parties cannot simply send only the execution page for signing.

Notably, the Act has not abolished the common law rules which require that deeds be written on paper, parchment or vellum. However, in Victoria, New South Wales and Queensland the Electronic Transactions regimes make it clear that deeds may be executed electronically. The position in other jurisdictions is less clear, and individuals executing a deed electronically other than under the Corporations Act should exercise caution.

If you have any questions or need assistance with determining whether you can execute certain documents electronically, please contact the writer on (03) 8450 0293 or devin.elliott@mst.com.au