In the recent case of Bendigo and Adelaide Bank Limited & Ors v Kenneth Ross Pickard & Anor [2019] SASC 123 the Court considered whether a Loan Deed that was entered into by a corporate borrower, individual guarantor and corporate lender, was effectively executed. Pursuant to s127 of the Corporations Act 2001, a company is able to execute a document without the use of a common seal, if it is signed by two directors, or, a director and company secretary. The term ‘signed’ is not distinctly defined in the Corporations Act, however it excludes s10 of the Electronic Transaction Act 1999 which involves execution via digital signature. In the above case, evidence brought forward by the plaintiff demonstrated that an unknown person on behalf of the plaintiff affixed a digital signature of the directors to a digital copy of the document. Despite the fact that there existed a resolution of directors to accept such types of loan agreements, it failed to go into detail in relation to the authorised mode of execution. Furthermore, there was no other document (for example company minutes, or a different resolution) that authorised the electronic application of the directors’ signatures. As a result the Court concluded that the document had not been validly executed as the electronic signature was not a sufficient means of execution under s127. Furthermore, the Court reasoned that it was not sufficient for two signatures to appear on different counterparts or copies of the Deed as no one copy would have been sufficiently executed by the company under s127(1). This case raises a number of questions as to whether two directors will have validly executed a document under s127 if they have signed different copies of the same document, and particularly where a document is signed electronically without express authorisation to do so.

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