20 March, 2020
In the wake of the pandemic virus and the current threat it poses on the workforce, many businesses have deployed remote working for the health and safety of their employees. This raises the issue of whether documents can be signed electronically to avoid meeting in person.
The use of web-based e-signing platforms has increased over recent years, as it allows a signatory to execute a document by inserting his or her name into the relevant signature block with a click of a button. The text inserted into the signature block need not always resemble the signatory's handwritten ink signature, rather it can appear in a standard type text or, in some instances, an image of wet ink signature can be uploaded into the signature block. To be effective the electronic signature must demonstrate that the signatory intends to be bound by the terms they have signed to.
Following publication from the Law Commission, under English law, generally, electronic signatures can be used as an alternative to written signatures. However, it is important to understand the nature and legal requirements of the documents you are signing.
With the current measures of self-isolation, leading to minimal social contact, avenues of video conferencing tools can be utilised (such as Skype and Microsoft Teams) for directors and shareholders to hold board meets and pass resolutions effectively. The use of digital signatures could be used to show agreement from all parties, providing there are no restrictions in the company constitution.
Certain authorities or registries, such as HMRC, require documents to be signed with wet ink for legal formality reasons.
The practical issues of electronic execution arise when executing a document as a deed. The requirements for wet ink signatures and authentication of a witness (being physically present) will be challenging. The purpose of a witness is to provide evidence of proper execution of the deed, should this be challenged in the future. It is now accepted (and is confirmed by the statement of law set out in the Law Commission's 2019 report on electronic execution) that deeds will be validly executed, whether as an individual or a company, if an electronic signature is used by the signatory. However, it appears likely that the witness and signatory must be in the same location when a deed is signed electronically, rather than witnessing remotely via live video link, for instance. The witness may also insert his or her electronic signature into the relevant signature block, this does not have to be a wet ink signature.
It is also worth noting that if one signatory to a document uses an electronic signature, the other signatories are not obliged to sign in the same way and can still opt to sign by wet ink signature.
If signing an agreement electronically consider which signing platform will be used and whether there are any security features (examples include, a platform which has ID checks, two-factor authentication);