Holley Nethercote partner Paul Derham said there are a number of court cases that look at the proper execution of documents where a company signed under a section 127 clause electronically.
“Some of these cases say it’s fine and some of them say it’s not and that it needs to be in writing,” Mr Derham said, speaking at Smarter SMSFs’ SMSF Virtual Day.
“There are many highly regarded lawyers out there that would say that you can sign right now using a platform like DocuSign or Adobe Sign using a s 127 clause and it will be valid, but do you really want to risk it?”
Mr Derham said at this stage, this is still not the generally accepted provision, with many of the banks yet to take that view.
“[However], I think that’s all going to change and the [new] law is going to clarify that. The emergency legislation has been well received and there’s a push to make it permanent,” he said.
The emergency legislation for electronic execution and electronic witnessing for companies, he said, is currently in place to 21 March next year. However, the new legislation is likely to be in by that point, which will be indefinite.
Mr Derham also reminded SMSF professionals that there are slightly different types of relief in place for different states.
“In Queensland, there is electronic execution and witnessing that’s allowable. You’ve got to have a special witness, so it’s got to be like a lawyer or a justice of the peace, you can’t just use your neighbor to witness a document under these rules, and so again, it only applies to certain documents, but it’s fairly wide in Queensland,” Mr Derham explained.
“In Victoria, it’s very wide. You can remote witness and remote sign in Victoria, but you need special wording, the witness needs a declaration with special wording, you’ve got to make sure you’ve jumped through a few hoops around consent and those type of things. The Victorian relief goes until April next year, and that might be extended because COVID is going for longer than everyone thought.”
In NSW, there are some provisions allowing electronic signatures, but it’s mostly around electronic witnessing, he said.
“Sometimes you still need a wet signature, and so in NSW, it’s not quite as broad but NSW has got a pilot now going until the end of next year and if it works, they’re going to allow remote witnessing, so that’s through a webcam,” Mr Derham said.
“A little tip also: If you ever do remote witnessing, make sure you record it, so you’ve got it on file, that it was witnessed properly and the witness has to actually see the person signing.”
I’ve been banging on about this for a long time now.
Electronic signatures (when done correctly) are entirely valid and fit for purpose for the execution of SMSF deeds.
COVID has accelerated the take up and this is a good thing for all involved.