Federal Parliament passes permanent Corporations Act reforms allowing electronic execution of documents

In a move that will bring much needed certainty and relief to businesses ahead of an election, the Federal Parliament has passed a Bill making the electronic signing by companies of documents permanent.

In particular, the legislation makes it clear that a company can electronically execute a deed in electronic form. However, there may still be gaps in jurisdictions other than NSW, Victoria and Queensland in the absence of reform at a State and Territory level.

What is the legalisation and when does it come into effect?

On 10 February 2022, the Federal Parliament passed the Corporations Amendment (Meetings and Documents) Bill 2021 (Cth) making the electronic execution of documents permanent.

The Bill repeals the sunset date in the Treasury Laws Amendment (2021 Measures No. 1) Act 2021 (currently 1 April 2022) effectively making the measures made under that Act in August last year permanent. However, some of those measures have been expanded or modified under the new Bill.

These measures will commence on the day after the Bill receives Royal Assent.

What provisions have been expanded?

Schedule 1 of the Bill includes the following key provisions.

A new section 110A provides that:

• a person may sign a document under section 126 or section 127 in a physical form by hand or electronic form using electronic means if the method used for signing identifies the person, indicates their intention to be bound and is as reliable as appropriate (this mirrors the first two limbs of the Electronic Transactions Act but consent of the other party is not strictly required);
• a person is not required to sign the same form of the document as another person, sign the same page as another person or use the same method as another person; and
• a person may sign a document in multiple capacities by signing the document only once provided the document makes it clear the person is signing in different capacities.

Section 126 allows an agent of a company to execute deeds without a seal (if it is expressed to be executed as a deed) and expressly allows outsiders to rely on the assumptions in subsection 129(3) for dealings in relation to the company.

Section 126 confirms that an agent of a company executing a deed does not need to be appointed by deed or have their signature witnessed.

Subsections 127(1)(c) and (2)(c) allow a sole director proprietary company that has no company secretary to validly execute documents and allow third parties to make a statutory assumption about the valid execution of the document by the company in those circumstances.

No longer need to sign document that include entire contents

Under the temporary measures, a copy or counterpart of a document signed under section 127 of the Corporations Act needed to include the entire contents of the document in order to be valid. While that requirement is no longer strictly necessary under the Bill, care must be taken to ensure that when a party signs only a signature page of a document that there is clear and unambiguous evidence of an intention to be bound by all of the information recorded in the document.

Does the Bill allow for electronic deeds generally?

The Bill allows a company (or a person exercising the powers of a company) to sign a document (including a deed) in an electronic form using electronic means. In jurisdictions which have abolished the common law paper rule by statute (ie. NSW, Victoria and Queensland), a deed may be created and signed electronically in a broad range of circumstances. In other jurisdictions, there are still potential gaps unless and until they enact their own legislation removing the requirement that a deed be written on paper, parchment or vellum.