With the passing of the Treasury Laws Amendment (2021 Measures No.1) Act 2021 (Amending Act) on 10 August 2021, electronic execution and/or utilising split execution (in which the two officers sign different copies of the same document) documents by Australian companies under section 127 of the Corporations Act 2001 (Cth) are once again expressly permitted. The relevant provisions took effect on 14 August 2021.
On 6 May 2020, in response to the Covid-19 pandemic, temporary measures under section 127 – the Corporations (Coronavirus Economic Response) Determination (No.1) 2020 (Cth) and its successor, the Corporations (Coronavirus Economic Response) Determination (No.3) 2020 (Cth), expressly provided for electronic execution and split execution of documents. However, these provisions expired on 21 March 2021 without being replaced.
The Latest Changes
From 14 August 2021, section 127(1) of the Corporations Act permits a company to execute a document if two directors, a director and company secretary, or the sole director/company secretary of a proprietary company, by way of an electronic mode of execution that accurately identifies the person signing the document and shows the person’s desire to sign it.
The copy, counterpart, or electronic communication must include the complete contents of the document (not just the execution pages) and it need not include any other officer’s signature.
The Explanatory Memorandum to the Amending Act provides that a company will not need to follow the established process for signing, sealing and delivering a deed under common law.
A person may confirm their identity and intention to sign in a number of ways, for example by using a stylus tool to sign a PDF document and then emailing the document back to the company, or using a platform such as DocuSign. The copy or counterpart must include the entire contents of the document.
Executing Deeds Electronically
Please note that as these changes do not expressly abolish the common law requirement for deeds to be written on paper, parchment or vellum (known as the “paper rule”), caution should still be exercised by a company executing a deed electronically in states and territories where local legislation does not provide for the electronic signing of deeds (that is, jurisdictions outside of New South Wales, Victoria and Queensland).
How long will the changes remain in effect?
The section 127 revisions only apply temporarily. Under the Amending Act’s transitory provisions, the changes are currently due to automatically expire on 1 April 2022.
