Did You Know…
Electronic execution back in for Companies
Electronic execution of documents, including ‘split-execution’, is once again permitted under section 127 of the Corporations Act 2001 (Cth), albeit only until 1 April 2022.
The amendments permitting electronic and ‘split-execution’ were initially debated in March of this year, before stalling in the Senate. The renewed impetus on facilitating business processes in the face of extended lockdowns appears to have gotten the ball rolling again, with the amendments becoming effective on 13 March 2021.
The amendments provide a sensible framework for the execution of documents electronically, although perhaps somewhat less sensibly, are again a temporary measure being slated to lapse on 1 April 2022.
Under the amendments a document is taken to have been signed by a person if:
- steps are taken to identify the person and to indicate that person’s intention to sign the document;
- the document to be signed is a complete copy (and not just the execution pages, for example); and
- the steps taken to identify the person were reliable in the circumstances or proven to have been accurate by reference to available evidence.
The amendments also allow split-execution of both a physical and electronic document, provided the procedures identified above are followed. Accordingly, two directors can now sign separate counterparts without risk of the execution being invalid.
We were surprised to see that amendments such as these were not made when the previous laws allowing electronic execution lapsed in March 2021. Their belated introduction is a welcome development, particularly in the current extended lockdown environment.
