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Shared & Halved – IHL series: Corporate compliance

Using Electronic Signatures to deal with issues caused by COVID-19

As part of our series of webinars to support in-house lawyers during the current pandemic, on 29 April we hosted a webinar looking at the impact on corporate compliance, specifically using Electronic Signatures to deal with issues caused by COVID-19.


The IHL series of our COVID-19 webinar programme covers bite-size topics designed for a half hour coffee break and focuses on practical tips for in-house lawyers. This was our fourth session and focused on corporate compliance. The key takeaway points are set out below:

Has there been much change in respect of electronic signatures recently?

  • No change in the legal position but big change in the thinking and how keep business moving in uncertain times, especially with no access to printers/scanners and how to get over the 2-metre rule.

What can a company use or rely on as an electronic signature?

  • The Law Commission confirmed that an electronic signature is capable of validly executing agreements and deed as long as (i) the person signing the document intends to authenticate it; and (ii) any formalities (such as in relation to deeds) are complied with.
  • The courts have interpreted the concept of the signature widely to include things such as:
    • typing a name into a contract;
    • using a e-signing platform to insert an auto-created or drawn signature;
    • ticking a box;
    • inserting a pdf copy of your signature into a document;
    • printing out a document to sign it in “wet-ink” and then scanning this to the other party; and
    • a thumbprint.
  • Look for a signing method that provides the most certainty and comfort. We therefore would recommend avoiding relying on email chains. An e-signing platform may provide the most certainty.

Is there any particular authority that companies need in order to be able to sign documents electronically?

  • Don’t need authority but ensure not prohibited.
  • Check companies’ ability to enter into contracts electronically – check no restrictions in the articles of association. If the articles of association don’t mention anything then the company can sign the document electronically.

What can you do if the other party will not accept electronic signatures?

  • This is often one of the biggest hurdles faced. Get to the bottom of why they don’t want to do this early on and think about what could be done. If security is a concern look at two stage authentication process or password protect the document or just agree to a call to confirm who has signed the documents.
  • If someone in the past has not been happy to do this then ask the question early on to understand any commercial concerns which can be fixed.
  • We have still seen a very mixed approach from the banks with some now accepting it and others still refusing to use electronic signatures for something as simple as a drawdown notice.

Are there any documents that cannot be signed electronically?

  • Documents that require registering may not be able to be executed electronically -  the Land Registry are still requiring wet ink signatures. We generally advise against signing property documents electronically.
  • There are also additional restrictions that apply to the execution of Wills.
  • Currently HMRC and Companies House have relaxed the requirements but this is being billed as a temporary measure so is something to be kept under review.

What about executing deeds?

  • Deeds can be executed electronically but there are additional factors to bear in mind with social distancing as the witness must be physically present and see the signing party execute the deed.
  • Signing over video link would not be acceptable.
  • The recent Bioconstruct v Winspear case does not affect the ability to use the option 1 completion method (where the entire deed is emailed together with a separate signature page that is signed and returned). The issue in the Bioconstruct case was that the signature page was taken from an old copy of the agreement and applied to the final version and this was not upheld as binding when it was later challenged.

Can a family member witness a deed?

  • Companies are relaxing their requirements around this and allowing a family member to act as the witness.
  • There is no restriction on them being a family member unless they are also a party to, or interested in, the agreement. We would also want them to be over 18.

Decision making and electronic communication during lock-down

  • Directors still need to make decisions quickly but social distancing means it has to be conducted remotely.
  • Decision making for Boards hasn’t changed but they need to operate differently so mindset change needed.
  • Think about whether a decision can be taken by way of written resolution or can a board meeting be held in reduced capacity.
  • Consult company articles to see what is permissible and consider any changes that may be required to the articles.
  • Remote board meetings best practice:
    • choose right comms channel - telephone conference call may be best;
    • ensure participants have proper joining instructions
  • If Directors outside UK then there could be tax implications.
  • Clear agenda is important for remote meeting and Board papers to indicate where decisions need to be made.
  • Be mindful of data breeches – a secure portal may be better than emailing documents.
  • ICSA has published a useful, and quite lengthy guide, to what it considers good practice.

What if directors just reach a decision without formally passing a resolution?

  • Relying on ratifying decisions after the event is not good practice as people may change their mind.
  • Once decision made it should be followed up by written resolution.
  • If a public company, you will need to hold a general meeting. There has been guidance issued about holding AGMs, and the same guidance applies to regular general meetings.
  • Guidance indicates that for the foreseeable future, general meetings, will be held in person. Physical meetings will need to be held with two people attending and reliance on proxy attendance and voting.
  • Legislation should be introduced to temporarily extend greater flexibilities to AGM obligations, but there is no indication that will apply to general meetings more widely.
  • For Private companies, the stay at home measures apply and they should rely on the statutory written resolution procedure.
  • Copies of written resolution should be sent to all shareholders and be open for 28 days.
  • Members agree to decision and need 75% in favour.

Is there a change in the way that companies communicate with their shareholders?

  • More companies will be looking to communicate by email with shareholders.
  • Number of boxes to be ticked to allow electronic communication and need to get this authority in place.
  • If need to change articles then needs to be done by wet ink by post and encourage to do sooner.
  • Website comms only allowed if references in the articles.
  • Shareholder must consent to the comms by email and website and deemed to consent if doesn’t object within 28 days of being asked.


This information is for educational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given. © Shoosmiths LLP 2022.

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