Electronic execution and remote witnessing

pharmacist with tablet in store

What are the latest developments that pharmacists need to know? Stephanie McGrath explains

The Electronic Transactions Act 1999 (Cth) permits transactions to occur electronically. However, this legislation does not apply to the Corporations Act.

Section 127 of the Corporations Act allows corporations to execute documents without common seal if it is signed by:

  • the sole director;
  • two directors; or
  • a director and a company secretary.

In early 2020 and in response to COVID, emergency legislation was introduced to allow documents to be signed under section 127 by electronic means and using split-execution.

Split-execution is where two or more parties must sign a document on behalf of a corporation but they sign separate copies of the document – one director signs one counterpart, and another director or secretary signs another counterpart.

A South Australian case Bendigo and Adelaide Bank Limited v Pickard [2019] SASC confirms this is a problematic method of signing, including that section 127 requires persons to execute a single, physical document.

The emergency measures were extended to 21 March 2021 and many of us were hoping they would be made permanent.

It was expected that an Amendment Bill would pass Parliament at the sitting before the end of March this year, effecting these measures permanently. However, the discussion on the Bill has been adjourned to August 2021.

As at the date of this article, the temporary relief measures have not been extended.

What does this mean for corporations?

Everyone is a fan of electronic signing. It’s easier, efficient and innovative. However, given the Bill has not been extended, not everyone is comfortable accepting electronic signing by corporations and split-execution remains unreliable.

In Victoria, legislation has passed permanently allowing:

  • Electronic execution of deeds, mortgages, powers of attorney, wills and statutory declarations; and
  • Witnessing of these documents via audio-visual link; and
  • Split- execution.

Queensland and New South Wales also permit electronic execution of a deed. 

However, electronic execution of agreements by corporations is not yet permanent.

In Queensland, the COVID-19 Emergency Response and Other Legislation Amendment Bill 2021 (Qld) has been introduced to extend the period in which temporary relief can operate from 30 April until 30 September.

Execution of documents after 21 March 2021

Persons signing documents on behalf of corporations should sign in the same way they did before COVID. That is, wet ink on a physical document.

Most execution clauses are drafted to require signing in accordance with section 127 in order to take advantage of the assumptions of due execution under section 129 of the Corporations Act.

However, section 127 of the Corporations Act is not the only way corporations may sign documents.

Other methods of execution include by power of attorney or by an authorised representative for an on behalf of the corporation.

If you require any specific information or assistance to protect your interests, please do not hesitate to contact Stephanie McGrath on 0488 00 24 24 or stephanie@twenty20legal.com.au.

Stephanie McGrath is a Senior Legal Advisor practising in commercial law with a focus on health, business and property across Australia.

Stephanie’s significant pharmacy experience includes assisting pharmacy owners in responding to audits and investigations, buying and selling interests in pharmacies Australia-wide, advising clients in relation to compliance with the requirements of different State and Territory Pharmacy Regulators, applications to Medicare, applications and objections under the Pharmacy Location Rules and Ministerial Discretion Process, partnership disputes and much more.

Disclaimer: The content of this article is intended only to provide a summary and general overview on matters of interest. It is not intended to be comprehensive nor does it constitute legal advice. You should seek legal or other professional advice before acting or relying on any content of this article.

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