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Property Law Noticeboard March 2021: Electronic signing by Corporations

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Legal uncertainties surrounding electronic execution of contracts and deeds by corporations were temporarily addressed by the Corporations (Coronavirus Economic Response) Determination (No. 1) 2020 (lapsed 6 November 2020) and the Corporations (Coronavirus Economic Response) Determination (No. 3) 2020 for the period 6 May 2020 to 21 March 2021. The latter Determination lapsed at midnight on 21 March 2021, and the proposed Bill (Treasury Laws Amendment (2021 Measure No 1) Bill 2021) to amend the Corporations Act 2001, s 127, has yet to be passed. 

From 22 March 2021, the previous uncertainties about the ability of a corporation to sign electronically return. These uncertainties were:

  • Doubt about whether documents could be executed electronically under s 127 of the Corporations Act. There is some judicial support for the meaning of ‘sign’ in s 127 to include electronic signing where the director personally authenticates the document with their signature, but there is no universal acceptance of this position.
  • Doubt about the validity of 'split execution', where one director signs one counterpart, and another director or secretary signs another counterpart. After the lapsing of the Determination, the validity of this practice for documents other than deeds governed by Queensland law is now in doubt.
  • For deeds signed by companies, there were varying views about the breadth of s 127(3) and the application of State Electronic Transactions Acts. For deeds governed by Queensland law, the Justice Legislation (COVID-19 Emergency Response–Documents and Oaths) Regulation 2020 will continue to apply allowing electronic execution of deeds by 2 directors, or a director and secretary, power of attorney or agent. 

In Queensland, solicitors who receive a document signed electronically by directors of a corporation, where the Justice Legislation (COVID-19 Emergency Response–Documents and Oaths) Regulation 2020 does not apply will need to consider, first if electronic execution is a valid method of signing and secondly revert to the previous practice of confirming the authority of the signatories to sign the contract on behalf of the corporation using an electronic signature. The assumption of authority in s 129(5) of the Corporations Act will not apply unless the signing is in accordance with s 127 of the Corporations Act. 

Despite the lapsing of Commonwealth provisions, the relief measure enacted in Queensland (Justice Legislation (COVID-19 Emergency Response–Documents and Oaths) Regulation 2020) for the execution of deeds, powers of attorney and oaths remains effective until 30 April 2021, with a proposal to extend to 30 September 2021 (COVID-19 Emergency Response and Other Legislation Amendment Bill 2021). This means a deed governed by Queensland law may be validly executed by a corporation in electronic form in the following ways:

(a) 2 directors of the corporation; or

(b) 1 director and 1 secretary of the corporation; or

(c) for a corporation that has only 1 director who is also the only secretary of the corporation—that director; or

(d) a lawfully authorised agent or attorney of the corporation, whether or not the agent or attorney is appointed under seal.

In all cases where the deed is signed electronically pursuant to this provision, confirmation of identify and authority of the signatories to sign the contract on behalf of the corporation using an electronic signature will be a prudent step. The only exception will be if a power of attorney is used, in which case the inquiries may be limited to verifying the identity of the signer as the attorney as opposed to their authority.

Provision for electronic execution of deeds by individuals is also in effect in New South Wales and individuals and corporations in Victoria.

Commentary in Conveyancing Manual Qld related to electronic signing by corporations will be updated to reflect this development.

The Property Law Practice Area seamlessly weaves together commentary, annotated legislation, precedents and a report series to assist busy practitioners. Key topics covered include, inter alia, conveyancing, title issues; including priority of registration, defects in title, company title, caveats, leases, torrens system, strata etc. Significant forms and precedents are also integrated into the publications and for some jurisdictions provided as stand-alone sets for practitioners' ease of reference. The publications are frequently updated by high calibre and experienced authors. The Property Law Noticeboard is specifically geared for specialists in the area and will deliver news items of interest and significance written and curated by in-house editors. To subscribe to the Property Law Practice Area on Westlaw, contact Thomson Reuters.
Sharon Christensen
By Sharon Christensen
Gadens Professor in Property Law at the Queensland University of Technology

Sharon is the Gadens Professor in Property Law at the Queensland University of Technology and consultant to Gadens. She is an expert in all facets of property law with a special focus on land contracts, leasing and body corporate law and is widely regarded as one of Australia’s leading property law academics, which is further enhanced by her solid industry experience. She is also the author of several of the leading texts in Queensland on aspects of property law.

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