Are Electronic Signatures Legally Binding in Australia during COVID19? Signing Requirements for a Company Explained.

Sep 23, 2020

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Are Electronic Signatures Legally Binding in Australia

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Section 127 of the Corporations Act 2001

When a Director or Directors of a company sign a document on behalf of the company, the signature section often states that it is being “signed in accordance with section 127 of the Corporations Act.”

However, many people do not know what this means. This section of the Corporations Act explains the witnessing requirements for a company signing.

During COVID19, signing documents electronically is allowed under section 127 as explained in this article.

Section 127: What It Says

Section 127(1), explained in the most basic way, states that a company can sign a document without applying a Common Seal, if:

Sole Director Company

  • Signed by the sole Director.

Company with more than 1 Director

  • Signed by a Director and a Company Secretary; or
  • Signed by two Directors.

Witnessing

Under these requirements, no independent witnesses are required, which is much more efficient for companies, particular those with a sole Director, in signing a document when timing is important.

Deeds

Deeds are generally treated differently to a normal contract, due to the fact that they do not require any consideration in order to be binding on a party. However, section 127(3) confirms that these signing requirements also apply to Deeds, if the signature section specifies that the document is intended to be signed as a Deed.

COVID-19: Electronic Signing

For the period of 6 May 2020 to 6 November 2020, under the Corporations (Coronavirus Economic Response) Determination legislation implemented by the Federal Government, Directors can also execute a document electronically under section 127 as long as they confirm the identity of the parties in the electronic communication, include the entire document in the electronic communication when signing, and confirm the parties’ intention to be bound by the contents of the document being signed. Further, this confirmation must be in a manner that is the most appropriate and reliable in each individual situation.

How Clinch Long Woodbridge Can Help

For further information regarding signing a document on behalf of a company, or any other contract or document-related queries, please reach out to our expert commercial and business law team, by email to Sam Saad on ssaad@clw.com.au or to Dean Woodbridge on dwoodbridge@clw.com.au.

Dean, Sam and our commercial and business law team will be able to review or prepare any documents, advise on any changes needed in order to best protect your interests, and ensure that any documents are signed validly.

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