Business management

Q&A on how to use electronic signatures and complete virtual executions

Introduction

This Q&A has been drafted by a working group of the Company Law Committee of the Law Society and is focused on electronic signatures in commercial law matters.

The Q&A is a companion to the following two practice notes, which you are encouraged to read and consider alongside it:

(together, the "practice notes").

The purpose of the Q&A is to assist lawyers with some of the practicalities of using an electronic signature in England and Wales, including in a Mercury-compliant manner.

It represents the views of the Law Society’s Company Law Committee as to general practice in commercial and contract law.

It does not address the making of statutory declarations, wills or other documents that have formality requirements which mean that electronic signing is not possible.

Users of this Q&A should consider what relevant regulators, registries and government bodies might require when completing transactions generally and when executing a document by electronic means and when registering any document.

Nothing contained within this Q&A represents legal advice to any person, nor does it represent a comprehensive statement of the law. Accordingly, this Q&A should not be relied upon as such.

Witnessing

1.1 The provisions of the Law of Property (Miscellaneous Provisions) Act 1989 and the Companies Act 2006 (CA 2006) require the “presence of a witness”. Although they do not specify “physical” presence, it is not clear that the requirement may be satisfied by remote forms of witnessing, such as by video link or other types of technology. In addition, the statement of the law published by the Law Commission in September 2019 provides that: “With specific regard to deeds and the witnessing requirements thereof, a deed must be signed in the physical presence of a witness who attests the signature. This is the case even where both the person executing the deed and the witness are executing/attesting the document using an electronic signature.”

1.2 Therefore, to be certain that a deed has been validly executed, the witness must be physically present to witness the act of signature (whether that signature is applied electronically or otherwise) by the person signing the deed. Developments in case law or statute are needed before one could, with any certainty, comfortably extend presence to mean something other than physical presence. An example is the temporary amendment made to the Wills Act 1837 to specify that “presence” for the purpose of witnessing wills can include virtual presence by means of video conference or other visual transmission.

1.3 Where individuals are required to socially distance, in order to comply with the requirement for a witness to be physically present, consider witnessing through a window (whether open or closed) or at a distance or in an outside public space. So long as the witness is physically present and able to see the signatory sign the document, these are all valid forms of witnessing.

2.1 No. If a person applies a signature on behalf of the person who is entering into the deed they are in reality signing on that person’s behalf, and so cannot also act as a witness to the signature. For more information on whether an individual's signature can be applied by another individual electronically, see the answer to question 8.

3.1 Yes, unless that person is a party (see paragraph 3.2) or the document itself specifically requires the witness to be an independent person. The witness may also be a minor (but see paragraph 3.4 as to the veracity of evidence).

3.2 Another party to a document may not act as a witness (Seal v Claridge (1881) 7 QBD 516). This may include a person who is named in a document as being someone in whose favour an obligation is to be performed. Where this may be problematic, one solution (for a company with two or more officers) is to avoid any need for witnessing by having the company execute the deed instead by two directors, or a director and the company secretary. For more information on the execution of a deed by a company by having two authorised signatories sign, see the answer to question 9.

3.3 The use of a relative who benefits from the document as witness should be avoided.

3.4 A witness to a signature may be required to testify that the document was signed by the signatory in their presence. The veracity of the evidence presented by a witness may be diminished if the person is closely related to the signatory and/or is a minor. In selecting a witness one should identify a person whose evidence may be relied on should the document or deed be challenged.

4.1 Yes.

5.1 The general role of a notary is to draw, attest or certify, under an official seal, documents that are intended for use in another jurisdiction. Each notary has an individual registered seal that they will affix to documentation and the seals are registered at the Foreign and Commonwealth Office (and potentially also registered at consuls/embassies). Notarisation can take different forms. It involves the notary verifying signatures, confirming the identity of parties and potentially either witnessing the execution of the document that is to be notarially certified and/or confirming capacity/authority of parties to sign documents. The exact requirements for notarisation will depend on the purpose of the notarisation and in particular what, if any, specific requirements are imposed by the laws of the overseas jurisdiction which require the relevant document(s) to be notarised. It will therefore always be necessary to confirm the overseas legal requirements with lawyers in the relevant jurisdiction ahead of approaching the notary.

5.2 Where the individual signatory is known by the notary it may be possible for the document not to be signed in the physical presence of the notary as the notary may be confident that they can confirm the identity of the signatory and that their signature is genuine without physical witnessing. This would be subject to that being permitted under the laws of the relevant overseas jurisdiction. Where the individual signatory is not known by the notary, generally the notary will need to witness the signature of a document physically in order to notarise the document. In exceptional circumstances, some notaries may be prepared to notarise a document where they witness execution through video communication if permitted by the relevant overseas law. This will then be a matter for the individual notary to satisfy themselves on and should be discussed with them in advance.

5.3 It is important to distinguish between the potential scope for a notary not to be physically present in order to witness and notarise a document (that will primarily be a matter of the laws of the relevant overseas jurisdiction requiring notarisation) on the one hand and the requirement for a witness to be physically present in circumstances where English law imposes the requirement for witnessing (see the answer to question 1)  on the other.

Methods of electronic signature

6.1 The 2016 electronic signatures practice note states that: "Electronic signatures can take a number of different forms, including:

  1. a person typing his or her name into a contract or into an email containing the terms of a contract;
  2. a person electronically pasting his or her signature (e.g. in the form of an image) into an electronic (i.e. soft copy) version of the contract in the appropriate place (e.g. next to the relevant party’s signature block);
  3. a person accessing a contract through a web-based electronic signature platform and clicking to have his or her name in a typed or handwriting font automatically inserted into the contract in the appropriate place (e.g. next to the relevant party’s signature block); and
  4. a person using a finger, light pen or stylus and a touchscreen to write his or her name electronically in the appropriate place (e.g. next to the relevant party’s signature block) in the contract."

Note also, that in Neocleous v Rees [2019] EWHC 2462 (Ch), the court found that an automatically generated email footer containing the name and contact details of the sender constituted a signature for the purposes of section 2(3) of the Law of Property (Miscellaneous Provisions) Act 1989.

6.2 The 2019 Law Commission report on electronic execution of documents, which has been endorsed by the UK government, effectively endorsed that position and confirmed that other forms of electronic signature (in addition to electronic signature platforms) could be used. For more information on the different types of electronic signature, please refer to paragraphs 2.20 to 2.23 and Appendix 2 of the Law Commission report. Whilst all of the methods set out above are legally effective, as a practical matter parties should also consider the evidential weight of a particular method of electronic signature in demonstrating that the signatory intended to authenticate the document.

6.3 For example, the method described in (c) above (use of an electronic signature platform) is evidentially strong as it is secure, resilient to fraud, and typically generates a tamper-proof completion certificate containing the signing information at the end of the process.

6.4 Depending on the form of electronic signature used, parties may consider it helpful from an evidential perspective to collect and retain supporting information, for example the email address used by the signatory to send/receive a document for signing or, where appropriate, separate confirmations provided by the signatory as to their authenticating intention. There is not, however, any legal or other requirement to do so.

6.5 As set out in the 2016 electronic signatures practice note, "Leading counsel has advised that, if the authenticity of a document signed using an electronic signature were to be challenged, an English court would accept the document bearing the electronic signature as prima facie evidence that the document was authentic and, unless the opponent adduced some evidence to the contrary, that would be sufficient to deal with the challenge."

7.1 In some cases, yes. This will be effective in the case of a contract that is not required to be executed as a deed (assuming there are no other formalities relating to execution of that contract) and does not need to be filed with a registry. It will be appropriate to include in the email a statement confirming that the email constitutes a signature of (or agreement to) the attached document, together with the signatory’s typed name or email signature. An alternative is for a signatory to type their name into the ‘soft copy’ contract – this will be effective as an electronic signature. However, see the answer to question 6 regarding the evidential weight of different methods of electronic signature.

8.1 For deeds or other documents executed by a company in accordance with section 44 CA 2006 there is a strong argument that this does not constitute valid execution because section 44 requires signature “by” a director (or company secretary) and does not contemplate a director or a company secretary delegating their function as a signatory.

8.2 For documents executed on behalf of a company in accordance with section 43(1)(b) CA 2006, it is considered best practice for the person with the authority to sign to apply their electronic signature personally, unless they have an express power to sub-delegate and give appropriate authority to the individual who will be applying the electronic signature.

8.3 For deeds and simple contracts executed by an individual this may be valid execution (see Ramsay v Love [2015] EWHC 65 (Ch)), but this will depend on whether the person inserting the signature on behalf of that individual had authority to do so. A valid delegation of authority to sign a deed on behalf of an individual must be given by deed (i.e. in the form of a power of attorney). For simple contracts it is also advisable to obtain written authority from the individual whose signature has been applied.

9.1 This issue could arise where a limited company is executing a contract or deed under section 44(2)(a) of the Companies Act 2006 by the signature of two directors or one director and the company secretary. In this case, although there is no legal authority on the point, paragraph 4.3(a)(i) of the 2016 electronic signatures practice note states that execution in accordance with section 44(2) “can be achieved by each of two authorised signatories signing the deed (using an electronic signature or another acceptable method) either in counterpart (emphasis added) or by one authorised signatory signing, followed by the other adding his or her signature to the same version (electronic or hard copy) of the deed.”

9.2 However, where a company is executing a deed by affixing the company seal in the presence of two directors, they will both need to be physically present to witness the application and therefore should sign on the same counterpart.

10.1 The three Mercury-style signing protocols, which you can find in the 2010 Mercury practice note, were carefully developed to be compatible with relevant case law. The use of an electronic signature platform should not be considered as a fourth protocol, but a manner in which option 1, as presented in the 2010 Mercury practice note, is delivered. The main difference is that, with an electronic signature platform, the signature page is embedded in the document rather than sent under cover of the same email. Therefore, deemed confirmations should be obtained from each party whether by way of email or through the electronic signature platform (or both).

11.1 Yes. The 2016 electronic signatures practice note provides in paragraph 4.5 that English law governed documents may be signed using a combination of different methods provided that each party uses a valid signature method. Signing in counterpart may facilitate this. For example, a party could sign a counterpart with an image signature, while another party could sign a counterpart in wet ink. Paragraph 4.5 notes however that there may be practical advantages if a document is only signed electronically, such as electronic storage. 

11.2 Paragraph 6 of the 2016 electronic signatures practice note confirms that it is possible, depending on the facts, to have multiple originals of a document in both electronic and hard copy form where this does not conflict with other legal requirements. This would be the case with, for example, promissory notes.  Where parties have signed in counterpart using a combination of signing methods, each counterpart would be an original. It is good practice for parties to agree whether or not the intention is to produce hard copy originals by printing out "soft copy" originals. It is also good practice for parties to agree to the creation of a composite document where a document has been executed using a combination of electronic and wet-ink signatures, as contemplated in paragraph 6(d) of the 2016 electronic signatures practice note. Where an electronic signing platform is used, it is good practice to confirm to all parties that the original is the executed document emailed from the platform.

Company board minutes and articles of association

12.1 The 2016 electronic signatures practice note contemplates in paragraph 4.4 that:

  1. minutes of a directors' meeting under section 249 CA 2006 and a members' written resolution under section 296 CA 2006 can be signed with an electronic signature (see paragraph 4.4(a) of the 2016 electronic signatures practice note).  It is our understanding that Companies House will now accept electronic signatures on shareholder written resolutions, forms and documents, and that electronic signatures acceptable to Companies House include digital signatures provided by e-signing platforms and images of signatures pasted into documents.;
  2. minutes of the proceedings of a general meeting that are signed by the chair using an electronic signature constitute evidence of the proceedings of that meeting in accordance with section 356(4) CA 2006 (see paragraph 4.4(b) of the 2016 electronic signatures practice note); and
  3. the directors of a company that has adopted the Model Articles for Private Companies Limited by Shares, the Model Articles for Public Companies Limited by Shares or the Companies Act 1985 Table A Articles may take a decision or pass a directors' written resolution (as applicable) under those Articles by the relevant directors signing a resolution using an electronic signature (see paragraph 4.4(c) of the 2016 electronic signatures practice note).

12.2 However, note that where electronic signatures are being used to facilitate board decisions being made outside of a physical meeting of the directors, consideration should be given to whether the decision-making process gives rise to any concerns in relation to the tax residence of the company. Where tax is a concern, tax advice should be sought.

12.3 In addition, note that (as mentioned in the answer to question 6) not all types of electronic signature have the same evidential weight. Therefore, you need to consider the evidential weight of the proposed electronic signature in case there is a dispute about, for example, who in fact signed the document or about the content of the document.

13.1 It is not necessary for the articles of association to specifically provide that the company can enter into documents or transactions using an electronic signature. In addition, in the absence of any specific restriction on using an electronic signature in the articles of association of the company or any board resolution, it is not necessary for the board to approve the use of electronic signatures when entering into documents or transactions.

13.2 In general, the best approach is not to refer to electronic signatures in the articles of association or board resolutions because, depending on the drafting, it may have the effect of being more prohibitive than permissive (see also paragraph 8(a) of the 2016 electronic signatures practice note). However, as a matter of good governance practice, it remains important for the board minutes to evidence all material documents entered into by the company (either through approving documents to be entered into or ratifying or noting those which already have been entered into).

General

14.1 No, such statements are unnecessary under English law. This is because electronic signatures are valid under English law and admissible in evidence without inclusion of such wording. The conclusions set out in the 2019 Law Commission report on electronic execution of documents, which the UK government has endorsed, make no reference to the inclusion of any type of confirmation statement. The 2016 electronic signatures practice note also provides in paragraph 8(g) that "it is not necessary to include any specific reference to electronic signatures in the document itself in order for it to be validly executed using an electronic signature".

14.2 Inclusion of such wording may risk creating unhelpful precedent and unnecessary practice suggesting that such statements are required. The position may be different in other jurisdictions where confirmatory wording is required by law or market practice.

15.1 Yes. Although this fact pattern was not specifically envisaged at the time of publication of either the practice notes, the widespread adoption of technology tools such as PDF writers and stylus pens, and recent developments in market practice for email/electronic signings, along with the conclusions of the practice notes, indicate that this is feasible. You can: 

  • compile a hard copy original from a Mercury-compliant signed document;
  • have multiple originals in both electronic and hard copy form; and
  • include a date in an undated document both electronically and in a printed out hard copy.

15.2 It therefore follows that an additional "soft copy" PDF original from the Mercury-compliant final document and signature page can be compiled, into which a date can be included using a PDF writer tool or stylus. This has the effect of producing two soft copy originals – one represented by the final PDF version and signature page returned by email (as set out in Option 1 in the 2010 Mercury practice note) and the other by the compiled copy that has been prepared combining those two documents and into which the date has been inserted. There would also be a hard copy original resulting from any print-out. In each case any original would be a counterpart. Any composite version created by attaching all parties’ signature pages would be an evidential version only (see paragraph 6.5 of the 2016 electronic signatures practice note).

15.3 It is good practice for the parties to agree:

  • if multiple originals are to be produced and in what form; and/or
  • the creation of any evidential composite version.

16.1 You may consider it helpful to obtain additional evidence, but there is no legal requirement to do so: either execution formalities are met or they are not. In certain areas registrars may demand levels of evidence of the validity of electronic signatures that go beyond what they require for wet ink signatures. For example, the Land Registry specifies requirements that must be satisfied to make a change to the land register.

16.2 With financing transactions, some banks may insist on a greater degree of additional evidence of signing, such as completion certificates or certificates of authenticity of some kind. What will be required will depend on the bank, so it is worth finding out at the beginning of the process what is needed to satisfy all the parties involved.

Annex A

  • Edward Craft – partner, Wedlake Bell * chair of the Law Society’s Company Law Committee
  • Robert Adam – partner, Baker & McKenzie
  • Avril Forbes – knowledge director, Clifford Chance
  • Emma Grant – knowledge director, Browne Jacobson
  • David Hicks – partner, Charles Russell Speechlys
  • Juliet McKean – knowledge director, Clifford Chance
  • Lucy Reeve – counsel, Linklaters
  • Jessica Walker – knowledge director, Clifford Chance
  • Elizabeth Wall – head of know-how for the global corporate practice, Allen & Overy
  • Nick Denys – company and employment law policy adviser, the Law Society

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