Many businesses have been signing electronically for some time, particularly during the pandemic.
The legal requirements regarding electronic signatures are contained in Part 4 of the Contract and Commercial Law Act 2017 (CCLA) (previously the Electronic Transactions Act 2002).
When can I use an electronic signature?
Subject to a few exceptions referred to further below, the general position under the CCLA is that electronic signatures can be used and will be considered just as valid as written signatures as long as certain requirements are met. All parties to the document must also generally consent to the use of electronic signatures. This means in practice you can sign the following documents electronically:
- Agreements for Sale and Purchase of Real Estate;
- Commercial agreements;
- Leasing documentation;
- Director resolutions;
- Shareholder resolutions; and
- Trustee Resolutions.
When can I not use an electronic signature?
Schedule 5 of the CCLA provides a list of examples where an electronic signature cannot be used. These include but are not limited to:
- Wills, codicils or other testamentary instruments;
- Statutory Declarations;
- Other documents that are given on oath or affirmation;
- Powers of Attorney and Enduring Powers of Attorney; and
- Information that is required to be given in writing in person, unless the receiving the electronic signatures consents.
What about deeds?
Deeds can be signed electronically, but there are important points to consider in terms of formalities. For New Zealand companies, a deed must normally be signed by two directors or, if there is only one director, by that director in the presence of a witness.
In the case of two directors, each director can sign in counterparts using electronic, wet ink signatures or a combination of both. However, if a sole director is signing in the presence of a witness, the witness must observe the director’s signature first before signing themselves (electronically or by wet ink).
Best practice is for the witness to be physically present (not by audio-visual technology) when observing the director’s electronic signature. The usual requirements in relation to witnesses still apply to electronic signatures i.e. the witness should not be a party to the deed and should be adequately identified by stating their name, address and occupation.
Is an electronically signed document an “original”?
Yes. If a document has been signed electronically it will constitute an original document provided the electronic signing method reliably assures the integrity of the document. In practice this means taking steps to ensure that the document cannot be tampered with or changed after signing (other than by using the same amendment rules that apply to wet ink documents).
Disclaimer: the content of this article is general in nature and not intended as a substitute for specific professional advice on any matter and should not be relied upon for that purpose.