Online onboarding of corporate borrowers and guarantors in Australia: Financiers will soon have additional comfort about due execution assumptions

As we outlined in our May 2020 Bulletin, last year the Australian Commonwealth Treasurer issued a determination which, among other things, had the effect of confirming that financiers could make certain due execution assumptions when companies used electronic methods to execute documents. That determination was originally in effect until November 2020, when it was extended for another 6 months. It expired on 21 March 2021.

The Australian Government is undertaking a final round of consultations – closing on 16 July 2021 – on a package of reforms in this area (those consultations also cover the use of technology for company meetings, which is not covered by this note). The package of reforms is contained in the Treasury Laws Amendment (2021 Measures No 1) Bill 2021 (March 2021 Bill) and the Exposure Draft Treasury Laws Amendment (Measures for Consultation) Bill 2021 (June 2021 Bill).

The proposed reforms

The March 2021 Bill was originally intended to provide temporary relief that was expected to lapse on 16 September 2021. However, the combined effect of the March 2021 Bill and the June 2021 Bill – if they are passed in their present form – is that the following reforms will be put in place permanently:

  • Electronic methods may be used to execute company documents, including documents executed with or without a common seal and documents executed as a deed.
  • The individual executing the document or witnessing the affixation of the common seal may sign a copy or counterpart of the document, rather than the same single static document signed by any other individual who needs to sign in order for a financier to be able to make the due execution assumptions. However, for this to be the case, the copy or counterpart must include the entire contents of the document (but does not need to include the signature of the other individual).
  • If electronic signing is to be used for a director or secretary, a method must be used to identify the individual and indicate their intention to sign the document. This method must be as reliable as appropriate for the purposes for which the document was generated, or proven in fact to have indicated the individual’s identity and intention.
  • For sole director proprietary companies in which the sole director is not also the company secretary, a third party like a financier may make the applicable due execution assumptions if the document is signed by that sole director, or if that sole director witnesses the affixation of the company seal. This is a long overdue reform that will be beneficial in the context of wet ink documents too, and it addresses a longstanding anomaly in the Australian Corporations Act.


The new reforms are facilitative, not prescriptive. So a company may still execute documents by wet ink signatures being applied to physical paper documents; or a combination of wet ink and electronic methods may be used. For example, one director may use an electronic method to sign a document while another director may sign a paper version of that document.


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This information and the contents of this publication, current as at the date of publication, is general in nature to offer assistance to Cornwalls’ clients, prospective clients and stakeholders, and is for reference purposes only. It does not constitute legal or financial advice. If you are concerned about any topic covered, we recommend that you seek your own specific legal and financial advice before taking any action.