COVID-19: signing transaction documents during social distancing

With many people currently working from home as a result of COVID-19 measures, our clients are asking how they can sign transaction documents at home.

The kind of transaction considered here is one run by law firms with a formal closing (or completion).

Execution methods

Corporate clients will be taking advice from their lawyers about what kind of execution method and process is permissible and advisable at this time.
In our banking and finance transactions, the most common method for virtual completions we use is "email exchange of signed documents". Electronic signature is different from "email exchange of signed documents", as it involves applying the signature electronically instead of by hand, and it can mean one of a number of methods.

Email exchange of signed documents
  • Execution versions (dated or undated) are circulated by email with instructions to print and sign each signature page and return a copy of the signature page together with a copy of the unsigned execution version.

  • Once returned, this electronic version is an original executed document (a soft copy original) and the parties can agree to create hard copy originals – but the "wet ink" signatures themselves are not originals.

  • So this method can't be used for documents where a hard copy "wet ink" original is required (for example to comply with formalities, filing requirements or for other reasons).
Electronic signature

The concept of an electronic signature can include methods as widely differing as:

  • A person typing their name in an email with the intent that it should operate as a signature.

  • A person electronically pasting their signature (in the form of an image such as a JPEG file) into an electronic version (such as a PDF file) of the document next to their execution block.

  • A person using an internet-based platform (such as DocuSign™) to access the documents securely and clicking to insert their name in a preselected font next to their execution block.

  • A person using a touchscreen to manually write their signature electronically next to their execution block.

  • A cryptographically assured, certified signature complying with the EU standard for a ‘qualified signature’
Electronic signature – legal and practical issues

"Email exchange of signed documents" is a tried and tested method, but relies upon individual signatories having printers and scanners or similar equipment at home. If that causes difficulties, some kinds of electronic signature (in particular, web signing platforms) may provide a viable alternative in some cases. However their suitability has to be carefully assessed for each type of document and their method of use carefully monitored and evidenced.

Electronic signature of English law governed transaction documents is often possible, but the suitability of each document for electronic signature, the chosen method of electronic signature and the validity of electronic signatures by each party does need to be considered on a case-by-case basis. In particular, in cross-border transactions, it will require analysis at the outset and each transaction will require a custom approach.

Whilst English law does not generally require prior consent for use of an electronic signature, for the kind of transaction in which a formal completion process is contemplated it is prudent to ensure that all parties are agreed in advance on the method to be used.

The legal issues can include:

  • Non-UK parties: For each non-UK legal entity, will the law of its place of incorporation permit the chosen electronic execution method for that party?

  • Formalities: Is there a legal formality to comply with when executing a type of document? For example under English law, the formalities for execution of deeds can include signing in the presence of a witness and always requires delivery by the parties.

  • Filings: Are complete "wet ink" originals required of any documents for filing purposes? For example, an original lease agreement or security document may need to be filed with the applicable authority.

  • Record-keeping: Is there another reason why it is desirable or necessary to have "wet ink" originals? For example tax or audit purposes.

  • Evidential: If necessary, how would it be proved, after the event, that a party did sign, when they signed, and what the signed document consisted of? Even if an informal method of electronic signature is in principle valid and admissible as evidence, it may be considered to constitute insufficiently weighty evidence.

The practical issues can include:

  • Method: Which method of electronic signature? For corporate or banking transactions, if electronic signature is under consideration as an alternative to "email exchange of signed documents" it is likely to be preferable to use one of the recognised web-based electronic signature platforms. This can help with the practicalities of execution and in providing evidential support (these platforms often produce a completion certificate).

  • Cost and responsibility: Who will lead the switch to electronic signature and bear any additional cost?

  • Flexibility: If the e-signature platform links the e-signature process to the individual name of a signatory, this may be less flexible than other methods if signatory availability is not known in advance or if documents are to be signed on short notice.

  • Remote witnessing: The current law does not allow for remote/video witnessing of deeds as the person witnessing has to be physically present. This and other formality requirements limit electronic signature of deeds and in practice, many law firms are cautious about allowing deeds to be executed using electronic signatures and platforms.

  • Witness availability: This could pose a problem for remote execution by signatories (using either method above) when they are required to stay at home due to COVID-19 measures. From a UK perspective a witness should be over the age of 18 and ideally (if only for optics) not a member of your immediate family. Social distancing measures may rule out your neighbours. Confidentiality should not be an issue as the witness does not need to view the whole document.

  • Counterparts clause: Check this remains fit for purpose.
Practical points for individuals signing at home

Individual signatories will follow the instructions of the lawyers who will have decided on the appropriate process. We have set out below a list of practical points for a signatory to consider when following the lawyers' instructions (and for lawyers designing closing procedures to bear in mind), and which the signatory may need to raise with the lawyers as to whether the process is suitable. The points are mainly relevant to the "email exchange of signed documents" procedure.

  1. Consider buying a small home printer and setting it up now. 

  2. Consider asking the lawyers to send PDF signature page packs to make your life easier (and save paper and ink).

  3. If you don’t have a document scanner at home, consider downloading a "pocket scanner" app on your smartphone and take photos of the signed pages (the app flattens the images as if scanned and collates to a single PDF). These can then be emailed.

  4. If there are documents to be executed in the presence of a witness, consider in advance which signatories in your team have appropriate witnesses at home. Video/remote witnessing is not compliant.

  5. If any "wet ink" originals are required, assuming you have a printer, consider in advance how you will deposit these with a courier whilst maintaining social distancing (there is no easy answer to this).

  6. If you are without a printer, and there is no alternate signatory, then you should raise this at the earliest opportunity with the lawyers, since it may not be possible to comply with a contemplated "email exchange of signed documents" procedure. The lawyers would then have to consider whether, for the type of document to be executed, an alternative process involving some kind of electronic signature would be acceptable - such as taking a photo of your signature using your phone, saving it to your computer, then (without otherwise modifying the execution versions) pasting the signature in the appropriate place. If a legal opinion is to be issued in relation to the document, the lawyers issuing the opinion may not be comfortable with this approach or will want to include appropriate assumptions.

  7. Finally, keep all spare copies of confidential documents in a safe place at home, so they can be taken into the office and disposed of confidentially at the next opportunity.

The information in this document concerning technical legal or professional subject matter is for guidance only and does not constitute legal or professional advice. Always consult a suitably qualified lawyer on any specific legal problem or matter. Bird & Bird assumes no responsibility for such information contained in this document and disclaims all liability in respect of such information. 

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