Corporate trustees set for electronic deeds
Temporary amendments to the Corporations Act will see corporate trustees able to sign some SMSF deeds electronically during the COVID-19 crisis.
While the ATO has already addressed document signing concerns brought about by social distancing measures amid the pandemic, Treasurer Josh Frydenberg has temporarily amended the Corporations Act to allow the electronic signing of company documents until 5 November.
According to Smarter SMSF chief executive Aaron Dunn, the amendment may also apply to SMSF deeds if facilitated through a corporate trustee.
“Interestingly, the Determination [amendment] does not expressly state that deeds may be in electronic form and can be signed electronically,” Mr Dunn said in a blog post.
“However, the explanatory note does state that the Determination modifies s.127 [of the Corporations Act] for companies, directors of companies, company secretaries and any persons that have dealings with companies to allow for the use of an electronic signature to meet the requirements for a signature, and further states that ‘the entire process of executing a document can be carried out using electronic communications’.
“It appears that the intention of the Determination is to facilitate electronic documents and electronic signing, which would seem to satisfy that a deed in electronic form and signed electronically by a company satisfies the requirements of s.127.”
Mr Dunn said that this would allow SMSFs to temporarily sign electronically to establish documents including deeds, deeds of variation, bare trusts for LRBAs and changes of trustee.
“However, it would also be prudent to seek further legal advice within the relevant jurisdiction before determining to execute a deed electronically,” he noted.
The amendment does not affect individual trustees, who will still be bound by paper signing requirements “unless it is modified by a statute”.
“An example of this is currently in Victoria where from 14 May 2020, the COVID-19 Omnibus (Emergency Measures) (Electronic Signing and Witnessing) Regulations 2020 now provides a modification to the Electronic Transactions (Victoria) Act 2000,” Mr Dunn said.
“A similar situation also applies in NSW where the signing of contracts was amended through the Electronic Transactions Amendment (COVID-19 Witnessing of Documents) Regulation 2020 (NSW) (commenced on 22 April 2020).”
How documents can be signed
According to Mr Dunn, the amendment means a company can sign a document if the necessary people under the Corporations Act sign counterparts of the document in physical form or by using an electronic communication which “reliably identifies the person”.
Companies will still need documents without a common seal to be signed by two directors, a director and company secretary, or the sole director/secretary of a proprietary company.
Mr Dunn said signatories can physically sign different copies of the document, or a single copy can be signed by the first signatory, scanned and sent to the second signatory who then signs it.
He said signatories can also apply their e-signature to electronic versions of the document.
“The explanatory note to the Determination states that there are a number of ways by which officers might sign a document electronically, such as pasting a signature into a document; signing a PDF on a tablet, smartphone or laptop using a stylus or finger; or using a cloud-based signature platform,” he said.
