Electronic signing by companies – good news for lenders

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Following previous temporary legislative amendments to allow companies to sign documents electronically, the Corporations Amendment (Meetings and Documents) Bill 2021 (Cth) (the Bill) came into force on 22 February 2022.

The Bill now permanently enables companies to electronically sign documents, including deeds, under section 127 of the Corporations Act (i.e. signing by two directors, a director and a secretary, or a sole director/secretary).

In addition, changes to section 126 permit attorneys and other agents of a companies to electronically sign deeds, irrespective of the jurisdiction governing the deed.

The passing of the Bill is good news for lenders, providing certainty that electronic signing is here to stay for company borrowers, mortgagors and guarantors.

Of course, when accepting electronically signed documents, it’s important that the signing method identifies the person signing and indicates their intent in respect of the information within the document. The method must also be as reliable as appropriate for the purpose for which the information was recorded, or proven in fact to have indicated the person’s identity and intention to sign.

Other notable changes under the Bill include that sole director companies (with no company secretary) can utilise the execution mechanisms and protections in the Corporations Act, and individual agents can electronically sign documents (including deeds) on behalf of companies under section 126 without a common seal and without the agent having been appointed by deed.

Lenders can now proceed to update their systems to allow documents to be signed by companies where previously wet signatures were required.

There is still the need for wet signing for some special types of documents, including real estate mortgages to be physically lodged in some jurisdictions.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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