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Home | News | Sign Here Please

Sign Here Please

January 18th 2021
 

A Q&A published by the Law Society’s Company Law Committee covers the practicalities of using electronic signatures in a business context.

Sam Lyon, Head of Corporate and Commercial reports.

Electronic signatures can take different forms, from simply typing in your name or pasting a scanned image of your physical (or “wet”) signature, to clicking a button to confirm agreement where your identity has been sufficiently verified.

The Q&A covers a number of areas:

Witnessing requirements

  • Where the signing of certain documents needs to be witnessed by another person (e.g. a deed transferring land), that person must still be physically present to witness an electronic signature.

Method of signature

  • Whichever method of electronic signature is used, thought should be given to the information that is retained to evidence that the signing person intended to authenticate the document being signed. For example, retention of the signing person’s email address used to send/receive the document for signing and/or separate written confirmation from the signing party of their intention to electronically sign the document in question.
  • An electronic signature may be validly applied to a document by another person on their behalf, provided the required authority has been delegated to them (so the same as for wet signatures). However, the CLC is less certain that a director can delegate authority for an electronic signature to be applied on the company’s behalf where the Companies Act requires the signature to be made “by” a director. Caution should be exercised in this area.
  • A document can be validly signed by a combination of methods, including wet and electronic signatures, or a different types of electronic signature for the same document.

Board minutes and articles of association

  • Board minutes and member resolutions can be signed using electronic signatures.
  • Companies House will now accept electronic signatures on documents filed with them.
  • In most cases, board resolutions agreed outside meetings may also be agreed by electronic signature.
  • There is no need for a company’s articles of association to specifically allow for the electronic signing of documents. Indeed, referring to electronic signatures in this way may in fact indicate they may only be used in certain circumstances, even if the actual intention is that they may be used generally.

Evidence of signing

  • Contracts and other documents do not need to specifically state that they may be validly signed electronically.
  • Whilst not a strict legal requirement, the use of electronic signatures in certain contexts may helpfully be supported by additional evidence. For example, the Land Registry and financial institutions will typically require additional assurance that electronic signatures have been validly provided, notwithstanding the strict legal position that this is not required for an electronic signature to be valid.

The continued move towards electronic and biometric signatures is inevitable, even before the pandemic and social distancing made them all the more useful. As the legal profession continues its generally cautious adoption of electronic signatures, the CLC’s Q&A provides helpful practical guidance and reassurance.

If you would like more information about the issues raised in this article please contact Sam on 01228 516634 or click here to send him an email.

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