What should I know about electronic signing of legal documents? April 1, 2022

Changes to Victorian laws will help to navigate the challenges of in-person execution of legal documents, especially in the pandemic era

Stay-at-home orders and lockdowns throughout the pandemic necessitated the rapid adoption of electronic signatures. Now, as we transition out of the pandemic, we are seeing permanent changes to the remote witnessing and electronic signing of legal documents. However, it is important to understand when a wet-ink signature is still required.

What are the legal requirements for electronic signatures? 

While the changes permit electronic signatures and remote witnessing of some documents, the legal requirements that apply to execution of different types of documents are the same. For example, deeds still need to be signed, sealed and delivered.

In Victoria, the Electronic Transactions (Victoria) Act (the ETA) allows electronic signatures where:

• The method used to sign electronically can identify the person and indicate the person’s intention to execute the document;
• The method used to sign electronically is reliable, to the extent appropriate for the particular document being signed; and
• Each party consents to electronic execution

There were a number of categories of documents that were excluded from the ETA and could not be executed electronically, including:

• Statutory declarations
• Documents requiring attestation
• Deeds

However, since Covid-19, this position has changed.

How has Covid-19 impacted electronic signatures?

A range of temporary measures were first introduced by the 2020 Covid-19 Omnibus (Emergency Measures) Act and accompanying regulations. These included provisions for electronic signing and creation and witnessing of documents including:

• Deeds
• Contracts
• Statutory declarations
• Mortgages
  

This altered the previous position by allowing electronic signing and witnessing of deeds and statutory declarations.

From April 2021, these changes became permanent.  

What are the permanent reforms to the Corporations Act?

During the pandemic, companies were hesitant to rely on the various emergency amendments as the legislation had not been tried or tested before a court. Compounding this hesitancy, it was unclear whether the instrument allowed for electronic signature of deeds.

However, in 2022 legislation was passed to establish a permanent mechanism, allowing companies to:

• Hold hybrid (in-person and remote) meetings; and 
• Use technology to execute, sign and share company and meeting related documents, including deeds

More specifically, the Act makes clear that electronic signatures will satisfy sections 126 and 127 of the Corporations Act. That is, agents of companies and the company itself may execute documents including deeds, and make, vary, ratify or discharge contracts electronically. Further, electronic signing will allow parties to rely on the assumptions under the Corporations Act in relation to dealings with a company.

These changes come into effect on 1 April 2022. While the amendments do not mandate the use of a particular program, it is expected that platforms such as DocuSign will be popular and effective. 

However, before implementing electronic signing procedures, companies should be aware that they may need to amend their company constitution to allow for electronic signing of legal documents.  

What are the types of signatures and when can I use them?

• Wet-ink signature: involves affixing a handwritten signature on a physical document. Wet-ink signatures are still required for document certification, arrangements in relation to voluntary assisted dying, and contracts where a party does not consent to the use of a digital signature. Some documents, including advanced care directives, can be signed electronically but cannot be witnessed remotely. 

• Electronic: includes typing your name, inserting an image of your signature or using a mouse or touchscreen to sign an electronic document. For example, many people have an image of their signature on saved their computer, which they then insert into an electronic document. Some documents including wills, affidavits, statutory declarations and powers of attorney documents have special requirements for online witnessing.

When using an e-signature, ensure there is a consent clause confirming the parties’ consent to the use of electronic signatures.

• Digital: digital signatures are a specific type of e-signature and involve using digital document platforms such as Adobe or Docusign. These platforms allow you to create a digital signature that is inserted into the document following the process on the platform. 

Digital signatures are becoming increasingly popular because identification and verification methods are built into the platforms and often include proof of signing (including the exact time), automatic consent clauses and audit trails.

What are some practical tips for electronic signing of legal documents?

Our tips include:

• Always consider the value and risk associated with the document when deciding how you would like to execute. While electronic signing is permitted in many circumstances, it may not be preferable
• Make sure you follow the legal requirements for execution of certain documents, that apply in the same way as they would if you signed in wet-ink (for example, statutory declarations)
• When contracting with interstate parties, consider the laws that apply in different States as the position on electronic signatures may vary
• Implement practical measures to mitigate risks, for example, by using secure digital signature platforms with multifactor authentication and audit trails and locking signed documents after execution to prevent further amendments

The final word

Before taking to cyberspace to affix your signature, consider our key points: 

• Electronic signatures are permitted under the ETA where consent is given, and the method used to electronically sign is both reliable and can identify the signatory
• Post Covid-19, electronic signatures can be used for signing, creation and witnessing of documents, including deeds, contracts, statutory declarations, and mortgages
• Corporations may use technology to execute, sign and share company and meeting-related documents, including deeds. They may also hold hybrid (in-person and remote) meetings
• Witnesses can remotely witness a person signing a document via audio-visual link (for example, Zoom, Skype or Facetime)
• Wet-ink signatures are still required for document certification, arrangements in relation to voluntary assisted dying and contracts where a party does not consent to the use of a digital signature
• Some documents, including wills, affidavits, statutory declarations and powers of attorney documents have special requirements for online witnessing

Contact us to learn more about electronic signing of legal documents.

DISCLAIMER: We accept no responsibility for any action taken after reading this article. It is intended as a guide only and is not a substitute for the expert legal advice you can receive from marshalls+dent+wilmoth and other relevant experts.