22 April 2020

Signing contracts electronically just got easier in NSW

This article was written by Helena Busljeta.

The NSW Parliament has passed regulations to allow witnessing and attestation of documents to take place by audio visual link.  These changes provide welcome benefits to businesses in circumstances where signatories are working remotely and are unable to sign documents in wet-ink.  However, some uncertainties surrounding electronic execution still remain.

When do the regulations start to operate?

The Electronic Transactions Amendment (COVID-19 Witnessing of Documents) Regulation 2020 (NSW) commences on 22 April 2020.  The regulations were made under s17 of the Electronic Transactions Act 2000 (NSW), which was inserted by the COVID-19 Legislation Amendment (Emergency Measures) Act 2020 (NSW).  The regulations will expire on 26 September 2020, unless this date is changed by further regulation or resolution of Parliament.

What do the regulations say?

The key features of the regulations are:

  • Documents to which the regulations apply. The regulations facilitate electronic signatures on a broader range of documents.  The documents to which the regulations apply include, but are not limited to, wills, powers of attorney, enduring powers of attorney, deeds, agreements, affidavits (including annexures and exhibits) and statutory declarations. 
  • Remote witnessing. The regulations enable remote witnessing of signatures by providing that witnessing, and arrangements in relation to witnessing and attestation, may be performed by audio visual link, so long as the witness:
      • observes the person signing the document (“signatory”) sign in real time;
      • attests or otherwise confirms this by signing the document or a copy of the document;
      • is reasonably satisfied that the document the witness signs is the same document, or a copy of the document signed by the signatory; and
      • endorses the document, or a copy of the document, with a statement specifying the method they used to witness the signature of the signatory and that the document was witnessed in accordance with the regulations.

The regulations further state that a witness may sign a counterpart of the document, or if the signatory scans and sends the witness a copy of the signed document electronically, by countersigning the document.  In each case, the witness must sign as soon as practicable after witnessing the signatory sign of the document.  However, this does not limit the other ways in which a witness may confirm they witnessed the signature.

An “audio visual link” is defined as “technology that enables continuous and contemporaneous audio and visual communication between persons at different places, including videoconferencing”.  This covers video conferencing platforms such as Zoom, Webex, Skype and FaceTime.

  • Oaths, declarations and affidavits. The regulations allow an Australian legal practitioner to take or make an oath, declaration or affidavit required for a purpose specified in s26 of the Oaths Act 1900 (NSW) by the same methods.  They also allow a statutory declaration to be made before a person before whom statutory declarations may be made under the Statutory Declarations Act 1959 (Cth).

So does this fix everything?

The regulations provide much needed relief to businesses struggling to sign documents with signatories who are separated and working from home due to lock-down and social distancing rules.  Parties can now be confident that witnessing and attestation can take place remotely.  However, the regulations have the following limitations.

  • The regulations on witnessing and attestation apply where NSW law requires a document to be witnessed. This means that the challenges remain for other States and Territories.
  • The regulations do not address the uncertainty over whether an agreement or deed in electronic form and signed electronically can satisfy s127 of the Corporations Act 2001 (Cth) (also see our previous alerts). These uncertainties could be resolved by using the Coronavirus Economic Response Package Omnibus Act 2020 (Cth) to amend s127 to provide that:
      • a document under s127 can be in electronic form and signed electronically; and
      • a deed can be signed by a company electronically and in electronic form.

Without any legislative reform of s127, if a counterparty wants to be certain that a deed has been validly executed by a company, and that s127 has been satisfied, a paper document should be signed with wet-ink signatures (or by modified split execution). If the document is an agreement, a purported s127 execution may still be valid at common law but the counterparty will not be able to rely on the statutory assumptions as to due execution.  The counterparty should ensure that the ASIC records and identities of directors and secretaries are properly checked and board minutes, powers of attorney and corporate constitutions are reviewed to ensure there are no limits to execution, and ideally find specific authorisation for the relevant signatories to sign the relevant document.

Where these limitations apply, companies who want to execute deeds or agreements electronically should consider appointing attorneys now under documents signed in wet-ink or by modified split execution so that the attorney can then electronically execute agreements on behalf of the company.  Also, if the attorney is appointed by a deed, and the NSW Conveyancing Act applies, an attorney who is an individual will be able to execute deeds electronically in NSW in accordance with the NSW Conveyancing Act.

Please contact us if you have any questions or would like to discuss. 

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COVID-19: Implications for Business

The spread of Coronavirus (COVID-19) has forced us to think and act differently. Beyond the human response, now is the time to think about what the consequences may be on your business, and how best you can prepare for those.

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