Legal Insights

Signing documents electronically in 2021 – an update for developers

By Nick Sparks

• 07 May 2021 • 2 min read

The practical difficulties of being unable to physically work together during COVID-19 brought a number of changes to enable parties to execute documents electronically. Unfortunately, for companies some of these changes have now expired.

The detail

The Federal parliament enacted legislation during COVID-19 which modified the Corporations Act 2001 (Act) to allow companies to execute documents pursuant to section 127 of the Act:

  • Electronically, by either two directors or a director and company secretary
  • Split execution (different signatures on different counterparts).

This legislation, the Corporations (Coronavirus Economic Response) Determination (No. 3) 2020 (Determination No. 3), expired on 21 March 2021. This means that from 22 March 2021, companies can no longer rely on Determination No. 3 for electronic or split execution of documents by company officers under section 127 of the Act. 

The Determination has not been further extended at the time of writing. There is legislation before the Federal parliament to, in essence, make the COVID temporary measures permanent, however that has now stalled in the Senate and will not be back before parliament until either May 2021 (if the relevant committee has completed its work by then) or August 2021.

Note that the regulations allowing individuals to sign electronically are still in force and are not affected.

What does this mean for developers?

Any documents which companies sign under section 127 of the Act should not be signed electronically but instead by:

  • two directors or a director and company secretary
  • with wet-ink signatures
  • on the same physical paper counterpart.

This applies to all deeds and agreements including leases, deeds of cancellation, deeds of variation and section 173 agreements.

However, any documents (including deeds and agreements) which a company signs under power of attorney in Victoria may continue to be signed electronically with remote witnessing still permitted. For example, if a deed of variation was signed under a power of attorney (rather than two directors under section 127) then that deed can still be signed electronically.

All Maddocks eContracts can still be signed electronically in the usual way.

What does this mean for purchasers and tenants?

For individuals purchasing or leasing land, they can sign electronically in the usual way. They can also sign other documents (for example, deeds of variation and cancellation) electronically.

For companies purchasing or leasing land they will need to sign documents with wet ink (i.e. paper) in accordance with the above, unless they are signing under power of attorney (in which case they can sign electronically).

By Nick Sparks

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