COVID-19: Virtual Completions

In a previous article concerning signatories and execution clauses in light of COVID-19 (found here), we highlighted the current legal position and guidance for electronic signatures and how they can be used to overcome the challenges posed in the current climate.  Following on, we discuss the idea of virtual completions at a time when many companies and organisations, that are continuing their business, are reliant on their employees’ ability to work from home.

Recently, the Government has begun easing the Lockdown and restart the economy by allowing retailers and other commercial organisations to resume their normal business routines.  While this is an encouraging development, many people are understandably cautious about the measures to restart the economy.  Until people are confident that the COVID-19 threat is no longer a significant, it is reasonable to assume that employees and sole traders may continue to work from home.

Remote signing by way of electronic signatures remains a valid way to execute documents, provided that the signatory can insert their signature in an appropriately-placed execution clause and that it has the ability to authenticate its intention to sign the document under any required formalities and applicable legislation. Thus, electronic signatures will have the same effect as a “wet-ink” version of a document.

However, remote signing becomes complicated when the document is to be executed as a deed.  Under current legislation and guidance, a deed is defined as a written instrument, which is executed with the necessary formalities, and will pass an interest, right or property, or confirm a binding obligation upon a person.  It also worth noting, under the Limitation Act 1980, the limitation period to bring a claim under a deed is usually 12 years, (although it remains six years for claims relating to arrears of rent and interest under a mortgage).

Simply, a deed has additional formalities that make it enforceable, even in the event where there was no consideration.  The formalities usually revolve around the requirement of a witness to attest to the signature, which prove difficult under current circumstances

The joint working party of the Law Society Company Law Committee and the City of London Law Society Company Law and Financial Law Committees has provided guidance in this instance, announcing that witnessing documents by way of video call may be acceptable.  However, the position remains that it best practice for the witness to be physically present when signing a document.

Businesses should also be mindful that where a document is not governed by English law, or where there are non-English parties to a document, then the requirements of the relevant jurisdiction must be reviewed in respect of the validity and capacity of electronic signatures.

In the EU, under the eIDAS Regulation, a qualified electronic signature will have the same effect as a wet ink signature.  Currently, qualified electronic signatures are rarely used in documents that are governed by English law, although a number of specialist software do facilitate the use of qualified electronic signatures.

The information contained in this article should not be taken to be legal advice. For further advice on virtual completions and signing documents remotely, please contact Arvin Bissessur, Solicitor in Axiom Stone’s Corporate and Commercial Department on 0203 827 6122 or akb@axiomstone.co.uk.