Project Finance is one of the best examples of a practice area where deals are cross-border, signatories geographically scattered, and physical signings often impractical. In recent times, with COVID-19 confining much of the world to their homes, it has also made it less possible for any physical signings to take place and has increased reliance on being able to use electronic signatures to circumvent difficulties presented by not having access to printers, couriers and other facilities. For this reason, we have set out a simple guide to English law requirements for signing documents – which should help determine the most practical way to deal with signings during the lockdown.
English Law and E-signatures
Are E-signatures Valid?
Where the law requires a contract to be: (i) in writing; and (ii) signed, a soft copy contract executed using an electronic signature will satisfy this requirement. It does not matter whether it is a wet-ink signature or an e-signature, the contract will be valid provided that the signatory has inserted their signature into the relevant signature block with the intention of authenticating the document. In theory, there is no requirement to follow up with a wet-ink signature hard copy of the document if the document has been executed by way of e-signature. However, not all contracts can be signed electronically, as we will examine later in this article.
What is an E-Signature?
There are many different methods for signing a document by e-signature, for example:
- the signatory may type their name into the “soft copy” of the document;
- the signatory may copy an image of their actual handwritten signature (by pdf) into soft copy version of the document;
- the signatory may sign the pdf copy of the document using a stylus pen; or
- a signatory may use a web-based e-signing platform, where the signatory will click to insert their name automatically in the signing block. Depending on the software used, this may either appear as the signatory’s name in text form or will upload a copy of the signatory’s handwritten signature.
Notwithstanding the different methods of e-signature, in order to organise a signing and ensure that proper signing rules are adhered to, we would always recommend organising an electronic signing where the actual signatory copies in an image of their handwritten signature or signs the execution version of the document with a stylus pen.
How is an E-signing different to a Virtual signing?
An e-signing is when a party uses an electronic signature (whether by way of an e-signing platform or whether by copying in a pdf of their actual signature or typing in their name in the signature block of a soft copy document) as described at above to affect a signing of the original document. That electronically signed copy becomes the “original” document.
A “virtual” signing is where individual signatories sign a hard print copy of a document in wet ink and then send a copy of that signed document (usually a pdf scan) by email to evidence signature.
Will I still get a legal opinion if I use e-signatures?
Yes – certain assumptions specific to the method of e-signing selected may need to be added to the extent they are not already captured in the scope applied for virtual signings, but a legal opinion can confirm the valid execution of an agreement governed by English law which has been signed by way of e-signature.
If I want to sign by e-signature, does everyone have to use e-signatures?
It is perfectly valid for some parties to use an e-signature, and for others to sign by way of a wet ink signature or virtual signature.
Overseas Companies – is it ok for non-English companies to use e-signatures?
This depends on your corporate rules and authority. English law provides that for an overseas company to validly execute a document, it will be effective provided that under the laws of the jurisdiction in which the company is established, its signatory is acting under the authority (express or implied) of the company – this authority includes whether the company may be bound by electronic signature.
When will I need to provide a “wet-ink” signature?
In project finance, it is quite possible that documents may be used in litigation where action will be required to be taken outside of England & Wales – and in emerging markets particularly, it is more than likely that in enforcing an English law judgment or decision overseas, the courts or enforcers may require sight of a duly executed original of that document with wet-ink signatures or a copy of the document being enforced which shows copies of proper handwritten wet-ink signatures.
Where documents require registering with authorities in the UK, they will normally require wet-ink signatures. By way of example, documents submitted for registration to HM Land Registry have to have been executed with wet ink signatures and the Inland Revenue requires the same for documents on which stamp duty is payable.
The same does not apply to documents required to be registered at Companies House – which is normally more relevant in the project finance context where charges may have been created against English domiciled companies. The Companies Act 2006 allows certified copies of a document creating a charge which have been signed by way of e-signature to be sued for registration purposes at Companies House.
English law Deeds – can I sign them by e-signature?
Deeds can be signed electronically, provided that the formalities for signing a deed under English law are still applied. Therefore, where an English company is executing a deed by the signature of two directors, a director and the company secretary, or a director and a witness, each signatory can sign the deed electronically either in counterparts or on the same ‘soft copy’ of the deed.
Witness signatures must follow the same proceed for any other e-signatory, and they may witness another’s signature by witnessing the signatory insert his or her electronic signature into the relevant signature block by whatever method is chosen by that signatory.
Over the last decade, Parties have become familiar with the “Mercury” signing rules which are required to be adhered to under English law before a document can be signed. Regardless of the form of signing, it is important to note that the guidelines regarding reviewing and approving the documents must still be followed even if you are using electronic signing procedures and are signing from home.
Signing at home
There are many practical limitations for signings when people are stuck at home in lockdown – technology can let us down, printers don’t work and you can’t go into the office and get a witness for your signatures in these days of social distancing. So, here is a little guide to get around the restrictions and still get your signings done.
Do I need a printer?
If you need a wet-ink signature then the answer will be yes. If you don’t have a printer– get someone with a printer to courier the document over to you. Consider whether you can do a virtual signing (if you are able to at least print off your signing page) and follow up with wet ink copies after lockdown.
If the document does not need to be filed with a registry or is not required in an original wet-ink form for any future potential litigation, then you can sign by way of e-signature – provided you have a scanned copy of your handwritten signature, or a stylus pen which will allow you to write on a pdf file, then you can do all this without printing out the document.
Virtual Signings – Do I need a proper scanner?
No – if you want to scan back a copy of a signature page or a document, then you can take a photograph on your phone and send it through on email to evidence your signing as you would do with a pdf for a virtual signing. Just make sure the photo documents are legible and you have captured the document ID number evidencing the identity of the document. Wet-ink signatures can be collected post-lockdown.
Who can witness my signature?
Ideally you should not use a relative as your witness, as it could cast doubt on the reliability of the witness– but in a lockdown world we appreciate that it may not be possible to find anyone else when you can’t leave home.
If you are in lockdown alone – then we would suggest it would be better to have deeds signed by two directors or a director and company secretary to avoid the need for a witness. As a witness should be physically present to witness an e-signing, we would not recommend holding a zoom or similar e-signing for the witness to view on screen as they do need to be physically with you when you sign.
Overseas companies may
not require witnesses to sign deeds as this is quite specific to English law –
so do check your company regulations for signing deeds.