The world has come a long way thanks to the internet, and especially in recent years, many businesses have come to rely on digital communication to get their work done. While this poses a small challenge for people working remotely, the situation is much more complex when it comes to digital signatures and verifying identities for signing documents, deeds and trust instruments.
The valid execution of trusts and other documents is especially important for businesses that need to remain compliant with government bodies and rely on the strength of their binding agreements. Recent changes to Australian laws now allow for some forms of the trust deed to be signed digitally, making it much simpler to form and manage trusts on our shores.
What are Digital Signatures?
Just like the signature you sign with a pen and paper – also known as a “wet” signature – a digital signature is a personal mark that is designed to make a deed, trust, instrument or other document bindings. Because digital signatures are a relatively new development, not all types are considered binding in all cases, but the most common varieties are:
- Digitised (scanned) version of a wet signature
- Digitised fingerprint or biometric such as an iris or voice signature
- A typed name
- Clicking or ticking buttons such as “Purchase Now” or “I Agree”
- Digital signatures are encrypted and decrypted alongside a Public Key Infrastructure (PKI)
A PKI is a set of policies and software that governs digital certificates. The digital certificate you use for digitally signing documents is a unique identifier that you can use to communicate with other people securely. Your information is protected by encryption that makes it difficult to forge or copy your digital signature and ensures you can sign documents and prove your identity.
The Benefits of Digital Signatures
Digital signatures are intended to serve the same purposes as your wet signature:
- Identify the signer. Your digital signature is a unique identifier that is used to prove you are a real person and to prevent dishonest practices like denying that the signature belongs to the signer.
- Indicate consent and approval. Just like your wet signature, your digital signature proves your consent or approval to the contents of the document or trust deed.
- Ensure document integrity. In some cases, the PKI that protects your digital signature also protects the contents of the document against tampering or alteration.
Additionally, digital signatures offer much greater flexibility and convenience than wet signatures. Instead of having to send hard copies of trust deeds by mail, documents can be signed electronically and returned to the other parties for review.
Technology is one of the hurdles of implementing digital signatures for the signing of trusts, deeds and other instruments. As long as the relevant government body’s criteria for e-signatures are met, the rules surrounding the manner of signing are not specific.
For instance, a digital signature could be composed of a digitised version of a person’s wet signature. This type of signature may be acceptable for signing some types of documents, but it is less secure than an encrypted digital signature. Ideally, companies would all use the most secure forms of digital signing when doing business. Depending on what state you’re doing business in and the documents you are signing, you may be required to produce a certified digital signature for documents like trust deeds to become binding.
One of the main concerns when using digital signatures is their legal status. Some Australian legislation allows for electronic signatures in some circumstances. The Electronic Transactions Act (1999) allows you to sign documents digitally if you are required to:
- Give written information
- Provide a written signature
- Produce a hard copy of a document
- Record or retain information
It is important to note that there are several exceptions to these rules and that it is still advisable to seek legal counsel before signing any documents digitally.
Want to Establish an Australian Trust? Contact Australian Corporate Governance Today!
Establishing an Australian trust is an excellent way of protecting your assets, and legislation changes to allow some digital signings have made it easier than ever to carry out your business. Before signing any documents digitally, it is important to seek legal advice and check whether your signature will comply with government regulations. Our industry experts can work with you to ensure your documents are both compliant and binding. Get in touch with Australian Corporate Governance today for more information.