Social Distancing and the Execution of Agreements

Like most businesses, many of you are now facing the challenges of working from home.  This will produce practical considerations when it comes to your corporate governance and execution of documents for your business.  In these times of Social Distancing and working from home you may face challenges in executing contracts.  The most convenient and realistic option in these circumstances is electronic signatures.

Electronic signatures were legally recognised under the Electronic Commerce Act 2000, however up until now it may have seemed like an unnecessary option.  This legal recognition was reinforced by EU Regulation 910/2014 on electronic identification and trust services for electronic transactions in the internal market, which came into force on 1 July 2016 and states that a signature cannot be denied legal effect on the grounds that it is in an electronic signature.

There are several types of electronic signature: simple, advanced and qualified.

A simple electronic signature is in electronic data form, can consist of typed words, a scanned signature or a ticked box indicating acceptance of the terms of an agreement.

An advanced electronic signature is uniquely linked to a signatory and is capable of identifying the signatory, you are able to determine the signature creation date and would have a high level of confidence that it is in the sole control of the intended signatory, the signatory would be notified of any changes to the execution form document, an example of this would be an electronic signature that requires password access.

Lastly, a qualified electronic signature is the strongest form of electronic signature, a high level of KYC or AML checks would be carried out in advance of this signature, it would include a qualified certificate from a trusted service provider and would be associated with a qualified electronic signature device.

In most circumstances in Ireland an advanced electronic signature would be sufficient, however there may be potential barriers to e-signing a document, for example both parties will have to consent to electronic signatures, which could be inferred if both parties e-sign the document.  There are also certain excluded documents, any documents to be executed by a company “under seal” would raise an issue and certain contracts may contain a provision specifying a requirement for a wet ink signature.  Specific excluded documents include wills, some trust documents, enduring powers of attorney, documents creating, acquiring, disposing or registering an interest in land, affidavits, statutory or sworn declarations and some documents as specified by the rules of the courts or a regulatory body, for example the CRO requires wet ink signatures for certain documents.

In most practical scenarios there are resolutions to the potential issues that may arise, for example if a company required a document to be executed “under seal”, they may consider putting in place a power of attorney or appointing an authorised signatory, who could then electronically execute a document.  If a witness is required this may also be done electronically, but the witness must still be physically present at the time of signing, which may lead to difficulty while following current public health recommendations.

The first step towards implementing these requirements is a review of a company’s constitutional documents, which can be amended, to ascertain what is currently required on the execution of documents, and identifying the logistics and requirements of signing of documents electronically.

How we can help

If you have any queries or concerns, or would like to discuss the above in further detail, please feel free to contact Joe McVeigh or Jennifer Watters, in the Corporate Department of BHSM on 01 440 8300 or jmcveigh@bhsm.ie / jwatters@bhsm.ie for further information.

This article is for general information purposes. Legal advice must be obtained for individual circumstances. Whilst every effort has been made to ensure the accuracy of this article, no liability is accepted by the author for any inaccuracies.