Electronic execution of company documents
This article was supplied courtesy of Kells Your Lawyers https://www.kells.com.au/insights/business/back-to-the-future-electronic-execution-of-company-documents-possible-again/
On 10 August 2021, the Federal Government passed the Treasury Laws Amendment (2021 Measures No.1) Bill 2021 (the Bill), enabling the electronic execution and split execution of company documents under section 127 of the Corporations Act 2001 (Cth) (the Corporations Act). The Bill also permits the remote witnessing of the fixing of a company seal for the purposes of execution under section 127 of the Corporations Act.
The new rules came into effect on 13 August 2021 and will only apply temporarily, until they automatically expire on 1 April 2022.
The Bill makes several key amendments to Corporations Act.
Execution of company documents under section 127(1) of the Corporations Act may now be achieved electronically and will be taken to have been validly executed if:
- a method is used to identify the person and indicate their intention to sign a copy of counterpart of the document;
- the copy or counterpart of the document includes the entire contents of that document; and
- the method used was either as reliable as appropriate for the purpose for which the document was generated or communicated or proven in fact to have indicated the person’s identity and intention to sign.
Execution of company documents under section 127(2) of the Corporations Act may now be achieved electronically, by:
- using electronic means such as audio visual technology to observe the person fixing the seal to the document;
- signing the document or a copy of the document (either physically or electronically); and
- stating in the document that they have observed the fixing of the seal by using electronic means.
Split execution of company documents under section 127(1) is now also permitted with such documents taken to have been validly executed if the person signs a copy or counterpart of the document that is in a physical form and the copy or counterpart includes the entire contents of the document.
However, these amendments do not change the practical requirement for companies to retain a copy of executed documents (this is especially the case where split execution takes place, where a copy of each executed document should be retained).
The new rules will undoubtedly be a welcomed development for businesses on national scale, but particularly for these operating in New South Wales, who are currently one week into a state-wide lockdown to slow to the spread of COVID-19.
If you have any questions or would like to discuss how the new rules for execution can be utilised by your business, contact our commercial law team who would be pleased to assist.