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Electronic signatures are the future of business – we just need regulation to catch up
Tue, 25th Jan 2022
FYI, this story is more than a year old

Australian business leaders have endured enough uncertainty in the past two years without having to worry about whether their signatures are worth the paper they're printed on.

Yet, injected into the corporate chaos caused by COVID-19, has been deep confusion surrounding the status of documents executed with electronic signatures rather than traditional pen and paper.

To the Australian Government's great credit, at the onset of the pandemic, the Treasurer moved swiftly to provide Corporations Act relief to temporarily permit the electronic execution of business documents that would have ordinarily required a physical ‘wet' signature.

While welcome, the relief was only logical as businesses were forced to adjust to ever-changing travel restrictions and employees were confined to their spare rooms, studies and kitchen tables. Without this relief, how were businesses expected to execute a document when signatories and witnesses had no hope of gathering in the same room, let alone the same city?

During this period of strict COVID-19-imposed lockdowns, we learned that businesses were highly adaptable and that the corporate world could operate successfully in a wholly digital environment.

Research commissioned by Nitro Software at this time – known as the Future of Work Report – clearly illustrates the transformational shift that occurred in this new virtual business environment. Around the world, we saw a 108 per cent increase in electronic signature requests and a 61 per cent increase in digital signing. In Australia alone, the printing of documents decreased by 70 per cent.

We believe these changes can and should be permanent to improve workplace productivity and efficiency dramatically. However, in many markets, including Australia, a lot will depend on putting the appropriate regulatory settings in place.

When the Australian Government's temporary relief permitting electronic execution of documents expired in March 2021 – with legislation to extend the relief stuck in parliament – the uncertainty returned. Lawyers had no option but to recommend their clients go back to wet ink signatures.

In May, Nitro made a submission to the Senate Economics References Committee regarding its inquiry into the Treasury Laws Amendment (2021 Measures No. 1) Bill 2021. Nitro's submission supported the Bill's measures to extend the electronic execution of company documents, not just to a new temporary deadline of 15 September 2021, but permanently.

Nitro's submission was signed (electronically, of course) and supported by a who's who of homegrown Australian technology talent, including the founders of Atlassian, Canva, Catcha Group, SafetyCulture, NEXTDC and Freelancer. At the time, the signatories represented public and private companies with a market value of more than $100 billion; today, they are worth even more.

The submission argued that a return to mandated paper-based document execution risked leaving Australia as a digital backwater and outlier in global business practices. Since the submission, there have been a lot of moves in the right direction – but still no certainty.

Firstly, the Treasury Laws Amendment (2021 Measures No. 1) Act passed parliament in August, extending the temporary relief until March 2022. The Government also announced plans to make the reforms permanent sometime before they expire, noting “overwhelming stakeholder support”.

Now, the Government has embarked on a consultation process on the application of electronic signatures to deeds and statutory declarations as part of its deregulation agenda.

Nitro supports the principles underlying the consultation process; Specifically, when it comes to electronic signatures, there needs to be uniformity across borders and document types, and we must ensure, as the Government says, that “policy, regulation and legislation are fit for the digital age in order to better reflect and respond to current, emerging and future digital technologies”.

As the Government readily concedes, “Commonwealth and state laws have not kept pace with the way Australians engage with digital communications and technologies”. Any reforms should ensure that the execution of documents remains reliable, secure, consistent and accessible to all in a world where not everyone has easy access to technology. This would involve a technology-neutral approach that permits electronic document execution but still allows the continued use of wet signatures, including for different parties on the same document.

The gathering consensus around electronic signatures is great news for every company in Australia that values productivity and certainty, unless, of course, you're in the paper or pens business.

Article by Nitro Software co-founder and chief executive officer, Sam Chandler.