Electronic Signatures – Can I use them?

Whilst some businesses have been signing electronically for some time, the current environment has a number of businesses seeking a little bit of clarity as to what can and cannot be signed electronically.

The Contract and Commercial Law Act 2017, more specifically Part 4, which was previously know as the Electronic Transactions Act 2002, clarifies the legal requirements regarding electronic signatures.

Subject to a few exceptions, the general position under the Contact and Commercial Law Act is that electronic signatures can be used and will be considered as valid as real signatures as long as certain requirements are met and all parties consent. This means that in practice you can sign documents such as Agreements for Sale and Purchase, commercial agreements, leasing documentation, Director’s Resolutions, Shareholder Resolutions, and Trustee Resolutions electronically.

Schedule 5 of the Contact and Commercial Law Act; however, lists examples where electronic signatures cannot be used. This includes but is not limited to: Wills, Codicils and other testamentary instruments, affidavits, statutory declarations and other documents that are given on oath or affirmation, Powers of Attorney and Enduring Powers of Attorney, and other information that is required to be given in writing in person unless the receiving party consents to an electronic signature.

We note that 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, and if there is only one director then that director must sign in the presence of a witness.

In the case of two directors, each director can sign in counterparts using electronic signature. However, if you are a sole director and you are required to sign in the presence of the witness, the witness must observe the director’s signature first before signing themselves. The best practice for this is that the witness be physically present when observing the director’s electronic signature. The usual requirements in respect of witnesses still apply with electronic signatures including the witness not being a party to the Deed, and being adequately identified by stating their name, address, and occupation. It’s important to note that an electronically signed document is also considered an original. If a document has been signed electronically, it will constitute an original document on the provision that the electronic signing method reliably assures the integrity of the document. This means that steps have been taken to ensure the document cannot be tampered with or changed after signing other than by using the same amendment rules that apply to web bank documents.
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If you have any queries about what can and can’t be signed electronically through this period of trying to continue operating your business, get in contact with us today.