HOW DOES A DIGITAL SIGNATURE LOOK FOLLOWING THE CORPORATIONS AMENDMENT (MEETING AND DOCUMENTS) BILL 2021

YOON KIM

ABSTRACT: This paper examines a hypothetical scenario, from a legal perspective, where a company (a potential client) wants to build an app that allows an electronic approval and esignature in light of the recent Corporations Amendment (Meetings and Documents) Bill 2021, and tests in terms of what may (or may not) help the company prepare for any legal implications and potential business opportunities arising from the Bill 2021.

I Introduction

The Corporations Amendment (Meetings and Documents) Bill 2021 received assent in February 2022130, which amended the Corporation Act (the CA).131 One of the amendments, among other things, is allowing an electronic signature or electronic means to sign an electronic form of the document for the purpose of the CA as long as it meets certain requirements.132 The requirements for an electronic signature can be met, if the method of an electronic signature identifies the person who is electronically signing and the signing person’s intent to do so.133 Furthermore, the method of an electronic signature needs to be ‘as reliable as appropriate’ to fulfill or be able to prove both the person’s identification and intent to do so.134

While the (amended) CA seems to have intended to dictate its intent and application of the law as clearly as possible, given the relatively new legislation, it is not clear enough whether the CA may mean or allow an electronic signature in the way the client has described which is a digital version of a person's actual signature or/and a generic but stylized representation of the person's name. To answer this, the provision(s) of the CA dealing with an electronic signature needs to be carefully examined.

II THE ACT’S PURPOSE

When an Act or legislation is interpreted or examined in terms of finding out what it actually means, the purpose or object of an Act is given preference over other potential interpretations as per the Acts Interpretation Act (the AIA).135 As per Mann and Secretary136, a Second Reading Speech made by a minister in relation to a Bill and Explanatory Memoranda can be referenced and helpful in understanding the purpose or object of an Act. Also, the AIA allows use of extrinsic material, such as a Second Reading made to the Parliament, in the interpretation of an Act.137

130 Corporations Amendment (Meetings and Documents) Bill 2021 < https://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;page=0;query=BillId:r6784%20Recstruct:billhome> (‘the Bill’).

131 Corporations Act 2001 (Cth).

132 Ibid s 110A.

133 Ibid.

134 Ibid.

135 Acts Interpretation Act 1901 (Cth) s 15AA (‘AIA’).

136 (2014) 140 ALD 443.

137 AIA (n 6) s 15AB.

Since a Second Reading Speech can be referenced in ascertaining the purpose or object of an Act for the aforementioned reason, the Second Reading - Senate Hansard - 2 December 2021 can be referenced and assist the interpretation of the CA, which has the following excerpt138:

The reforms allow documents to be signed and executed in flexible and technology-neutral ways to ensure that, regardless of whether company officers execute documents electronically or physically, the execution will be valid. The reforms extend the ability of company agents to make contracts and execute documents - including deeds - flexibly.

The above Reading excerpt has the two key words that are flexible and technology-neutral, which seems to indicate that there is no limitation or boundary regarding which (electronic) form, method or a kind of technology can be used for an electronic signature in the electronic document for the purpose of the CA. The question then becomes what is ‘electronically’.

When the meaning of a provision of a statute is uncertain or obscure, section 15AB(1)(a) of the AIA suggests ‘the ordinary meaning conveyed by the text of the provision taking into account its context in the Act and the purpose or object underlying the Act'.139 The ordinary meaning can be found in a well-known dictionary. As such, the Macquarie Dictionary defines electronically as ‘of or relating to electrons or concerned with electronics or any devices or systems based on electronics’.140 Also, the Dictionary defines digital as, among other things, ‘electronics of or relating to units of information that exist in two states only, on and off, as pulses (opposed to analog); binary’ or ‘involving or relating to the use of computer technology’.141 Hence, since the word of electronically (or electronical) includes digital or is digital-based for units of information, an electronic signature includes a digital signature (while the two words are often interchangeably used between them in practice). In other words, the CA permits any form of an electronic signature including a digital version of a person’s actual signature and a generic but stylized representation of the person’s name, which is, however, subject to other provisions of the CA discussed in detail below.

While the CA permits any method of an electronic signature flexibly and in a technologyneutral way, the method must comply with three conditions or requirements in order to be effective and valid.142 First, the method needs to identify the signing person.143 Second, the method needs to indicate the signing person’s intention with respect to the information in the document.144 Third, the method needs to be as reliable as appropriate or can be proved to satisfy or meet the two preceding conditions by itself or together with other relevant evidence.145 Hence, as long as the method meets these three conditions, it can be flexibly any form or method of an electronic signature.

Iii Application

A digital version of a person’s actual signature, which can be viewed as one of the electronic signature methods, may be used for a company’s execution of corporate document via its electronic signature for the company purpose, if it meets the aforementioned three requirements that are identification, intent, and reliability. However, a digital version of a person’s actual signature seems to be vague without further context or details around what a digital version means in terms of technology or method used. For example, a digital version of a person’s actual signature may refer to simply a computer-scanned copy of a person’s physical signature which may or may not have a technical feature of authentication or digital signature that seems to be based on a mathematical algorithm and a key element of determining whether the information being electronically transmitted is authentic, identifiable, safe, and reliable.146

138 The Bill (n 1) Second Reading (2 December 2021) <https://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=BillId_Phrase %3Ar6784%20Title%3A%22second%20reading%22%20Content%3A%22I%20move%22%7C%22and%20move%22%20Content%3A %22be%20now%20read%20a%20second%20time%22%20(Dataset%3Ahansardr%20%7C%20Dataset%3Ahansards);rec=1> (‘Second Reading’).

139 AIA (n 6) s 15AB(1)(a).

140 Macquarie Dictionary (online at 20 March 2023) ‘electronically’.

141 Ibid.

142 Corporations Act 2001 (Cth) s 110A(2).

143 Ibid.

144 Ibid.

145 Ibid.

So, if the client’s idea of using a digital version of a person’s actual signature (or of using a generic but stylized representation of the person's name for that matter) includes the features like authentication or digital signature, the information or context of which can be provided by the client to confirm that, such method may be able to prove that it meets the requirements (identification, intent and reliability) under the CA. Specifically, if the underlined technology behind the client’s method of electronic signature has a technological feature like an authentication, digital signature or some form of mathematical algorithm-based encryption for security, the method can be used for a company purpose under the CA.

However, this is not to say that an authentication or digital signature is the only technology that can be used or approved under the CA, since the CA notes that the method is technology neutral as can be found textually in the CA (‘Division 1 — Technology neutral signing’) and explicitly in the Second Reading for the intent of the CA. Regardless of a kind of technology used for the method of an electronic signature, any technology that meets the requirements can be used for an electronic signature under the CA

While the method of an electronic signature is technology neutral and must meet the requirements to be valid, the method does not need to be too strict or stringent in terms of format of the method or the way which it applies to. For a greater clarity purpose, section 110A(4) of the CA provides some flexibility around the manner in which an electronic signature can be made.147 Specifically, the signing person does not have to sign the same form of the document, the same page of the document, and the same method to sign the document as another.148 This flexibility may provide some room for the client to develop an app more cost-effectively or at a lower cost, as the app does not need to match or coincide with every signing person’s electronic signature page, form or/and method which can be administratively burdensome and costly from an app developer’s perspective. Also, when a person electronically signs a document, the app does not have to be in such a way that all the information in the record is included in that document,149 which then may allow the client minimizing or cost-efficiently managing any relevant or applicable data storage related to the electronic signature app development.

Iv Conclusion

In conclusion, the client’s idea of either a digital version of a person's actual signature or a generic but stylized representation of the person's name can be used for an electronic signature in a corporate capacity, if they meet the requirements under the CA that are identification, intent and reliability. Also, there seems to be some room or potential for the client to develop the electronic signature app in a way that is simpler and less costly, since the

146 Ravneet Kaur and Amandeep Kaur, ‘Digital Signature’ (Research Paper 2012 International Conference on Computing Sciences) 295-301 < https://ieeexplore.ieee.org/document/6391693>.

147 Corporations Act 2001 (Cth) s 110A(4).

148 Ibid.

149 Ibid.

CA allows flexibility around technology (technology-neutral) and a way in which an electronic signature is made with respect to its form and method.