23/03/2022
Signed, Sealed and Delivered - Electronic Signing of Documents
Recent amendments to the Corporations Act 2001 (Act) now allow for companies to use technology to sign company documents (including deeds) and sign meetings-related documents in a ‘technology neutral manner’.
Historically, the common law embedded three requirements to creating a deed, in particular that it:
1. must be written on paper, parchment or vellum;
2. must be sealed – by a wax, wafer seal or rubber stamp; and
3. must be delivered.
When executing deeds for a company, they are now no longer needed to be 'witnessed' or 'delivered' to be valid, hence ensuring that document ex*****on will not fail due to non-compliance with mere formalities.
Where a company has 2 directors (or a director and company secretary), the company may execute a document by one director signing a physical form of the document by hand, together with another director signing an electronic form of the document by electronic means. However, both will still need to sign to get the benefit of the assumptions under section 129 of the Act.
This also means that corporate documents lodged under the Act can now be signed and executed electronically.
The amendments also allow an individual with express or implied authority (such as agents) to make, vary, ratify or discharge contracts and execute documents (including deeds), without having to be appointed by a deed. Importantly, where an agent has executed a deed on behalf of a company, parties will be able to rely on the assumptions set out in section 129(3) of the Act.
Meetings can also now be held in a hybrid format, however wholly virtual meetings can only be held if it is expressly permitted to do so under a company’s constitution.
The changes are certainly welcoming for company officers as it will reduce the regulatory burdens involved as traditional means of holding meetings physically, sending documents in hard copy and executing documents physically in wet-ink no longer need to be adhered to.
For more information about the update to the Corporations Act and technology neutral laws, please feel free to contact us for a free quote or consultation: (03) 9005 0829 or [email protected]
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