- Law Society guidance on electronic signatures and virtual executions
Law Society guidance on electronic signatures and virtual executions
Law Society guidance on electronic signatures and virtual executions25th January 2021 - Published by Kuits Corporate team
As the current lockdown persists, this month the Law Society has published a helpful Q&A on how to use electronic signatures and complete virtual executions to assist with practicalities for both lawyers and their clients. Corporate Lawyer Sheridan Broude discusses the key insights to corporate clients on electronic signatures and virtual executions.
Law Society Q&A
While the Law Society has stressed that this new Q&A is not law, it undoubtedly offers valuable guidance on the validity of proceedings. Some of the key insights are as follows:
- Electronic signatures on shareholder written resolutions, forms and documents, digital signatures provided by e-signing platforms and images of signatures pasted into documents are now accepted by Companies House;
- Minutes from a general meeting that are signed by the chair using an electronic signature constitute evidence of the proceedings of that meeting; and
- It is not a requirement for the articles of association of a company to specifically provide that it can enter into documents or transactions using an electronic signature. Additionally in the absence of any specific restriction on using an electronic signature in the articles of association of the company or any board resolution, it is not necessary for the board to approve the use of electronic signatures when entering into documents or transactions.
These are all helpful insights for our corporate clients, but the main sticking point for electronic signatures is in the case where your document is required to be executed in the presence of a witness.
Physical presence: The law still requires that a deed must be signed “in the presence of a witness” and that a witness must be physically present with the signatory.
This limits the practical use of electronic signatures because many documents need witnessing.
In light of the current need to social distance, options for witnesses include witnessing through a window (whether open or closed), at a distance or in an outside public space. The key requirements for correct witnessing are:-
- The physical presence of the witness; and
- Their ability to see the signatory sign the document.
Identity of witness: there has been a relaxation of the rules that mean an adult child, spouse or family member may witness a person’s signature in cases where they are not a party to the document and the document does not specifically require the witness to be an independent person. It remains, however, best practice for the witness to be an independent person over the age of 18.
In light of the current COVID-19 pandemic, with working from home and the need to social distance at the forefront, it is likely that electronic signatures will be used far more widely. However, the Law Society says that developments in statute or case law are needed before the definition of ‘presence’ could be extended to mean something other than physical presence.