SMSF trustees who may be reluctant to sign documents electronically can still execute paper documents, such as SMSF deeds, even if they are not in the same location, under a number of counterpart arrangements included in temporary measures announced earlier this year.
Smarter SMSF chief executive Aaron Dunn pointed out that while the federal government was looking to make the electronic execution of documents a permanent measure, having introduced it as part of its COVID-19 relief measures in May, trustees separated from each other were still able to execute documents using wet-ink signatures.
“The instrument allows for an execution both in electronic communication and by counterpart of a document done in physical form,” Dunn said during the opening session at the Smarter SMSF Virtual Day 2020 today.
“There are different ways this can occur and the first of these is split execution. This is where signatories can physically sign different copies of the same document.
“They will need the entire document at the time of signing and they must be sure each copy is signed appropriately.”
He added trustees could also use a modified split execution where a signatory prints, signs and scans the deed and sends that to the next trustee signatory to do the same.
The provisions, alongside the electronic signing of documents, run counter to a recent legal case heard in the South Australian Supreme Court – Adelaide Bank v Pickard (2019) – that found individuals were required to sign the same single static document, he said.
“This legislation [that is being proposed] will change that position in the Pickard case to ensure we can have documents being validly signed by way of counterpart signature,” he said.
“Under these changes, and in the context of the temporary measures, we can allow for the execution by counterpart or by electronic communication.”
The temporary measures, and their permanent implementation, would only apply to corporate trustees as the changes were being made to the Corporations Act and thus did not apply to individual trustees, he noted.
He said those trustees would have to refer to the arrangements in different states and pointed out that to date only New South Wales, Victoria and Queensland had enacted any measures for individual trustees, with Queensland’s measures expiring on 31 December and the two former states extending their arrangements into 2021.
“Hopefully these temporary measures will enable us to work through the changes the government are proposing on a permanent basis, but note the difference between a corporate trustee and individual trustee, because we are only seeing permanent changes applying via the Corporations Act,” he said.
“So, yet again, we have another example where a corporate trustee is going to outrank the benefits of an individual trustee.”
The temporary measures allowing counterpart arrangements and electronic signing were introduced by Treasurer Josh Frydenberg on 5 May for a period of six months, but have been extended to 21 March 2021.
They were designed to allow companies to convene meetings prescribed under the Corporations Act online and guarantee that when a company officer signs a document electronically, that document has been validly executed.