Digital Execution and Sealing: What’s The Latest?

A key benefit of ongoing technological advances is the growing acceptance of the digital execution of deeds and documents in the course of legal proceedings and transactions. The award-winning commercial and litigation lawyers at ParrisWhittaker are regularly called upon to assist commercial clients in the speedy finalizing and execution of commercial deeds and documents. 

What do businesses need to consider when utilizing digital methods of signing and execution? Historically, delays in legal proceedings and in preparing and completing contracts and corporate documents often hindered commercial operations. Recent legislation, along with formal confirmation of what is now acceptable, lifts some of the burden previously associated with the efficient progression of legal matters. 

Recent legislation

In December 2020, the Property (Execution of Deeds and Documents) Act 2020 (PEDDA) came into effect in The Bahamas. The key effect of the Act is that where a deed is to be signed by an individual, no seal is now required for an instrument to constitute a legal deed. 

PEDDA also expressly abolished all other statutory rules that had required a seal to make a deed valid as a legal instrument. 

Deeds signed by company

Provisions within the Companies Act 1992 and related companies law were also amended to reflect the lifting of legal requirements that an actual seal must be affixed to a deed signed by an individual. Now, an instrument can be executed “in any manner contemplated by the parties” (ie in paper or electronic form). It is sufficient for a single witness to attest to the individual’s signature in their presence; or two attesting witnesses where the document is signed at the individual’s direction.

The Act specifically allows for deeds that take the form of an electronic communication and are signed electronically. 

When a Bahamian company executes a deed, it must be made clear on the face of it that is intended to be a deed. The deed can now be signed by a director or other individual who has the company’s authority to sign on its behalf in the presence of an attesting witness. A company seal is no longer required but companies can choose to retain it if they want to. 

Powers of Attorney

Similarly, powers of attorney no longer need to be sealed. Before the Act came into force, a POA was only legally valid as a deed if it was signed and sealed by, or by direction and in the presence of, the donor of the power and witnessed by two witnesses. 

Property deeds

Until the end of 2020, property deeds had to be witnessed by at least two witnesses to be valid. Under PEDDA, one attesting witnesses is sufficient – making the property transfer process less cumbersome for many. However, they cannot yet be digitally signed and executed.

Digital signatures

Despite the relatively late arrival of PEDDA discarding the requirement for sealed legal deeds, electronic signatures have in fact been legally valid in the Bahamas since 2000 when the Electronic Communications and Transactions Act. There are exceptions, as you’d expect – most notably wills and trusts, and property transfers.

The loosening of requirements for seals and for ‘wet’ signatures is good for business and reflects the modern digital age in which we work and conduct business.  In particular, in a post-covid world, tech has been the necessary driving force behind flexible working practices and commercial operations, prompting high demand for more efficiencies around completing contracts and other commercial matters.

What’s coming?

A fast developing form of tech that forwarding looking businesses and lawyers are watching is the qualified electronic signature (QES). QES uses independent face-to-face electronic identity checks which does away with the risks typically associated with e-signatures. QES is also convenient as the signing parties and any witnesses can be in separate locations. 

What does this mean?

While there’s still some way to go, with testamentary dispositions and conveyances in particular, not yet within scope of electronic execution, the use of e-signatures and electronic forms of deeds and documents goes along way to ease the burden for many clients. 

But with the increased reliance on technology comes a greater risk of potential fraud and security risks. Robust due diligence of the tech platforms and software you may be considering is crucial to minimise the risks to business and their reputation. 

How can we help?

For specialist advice, get in touch with the award-winning team of commercial lawyers at ParrisWhittaker on Parriswhittaker.com or +1.242.352.6112