by Tim Waghorn May-08-2020 in Banking & Financial Services, COVID-19

I have previously written about “virtual closings” and the importance of complying with the rules and processes around utilising scanned PDF signature pages to “virtually” complete on a transaction. That article can be viewed here

At certain levels within the banking sphere such an approach is common practice. In other areas there remains an affinity for original hard-copy documentation, although we are seeing some movement towards pragmatic approaches being adopted to facilitate signings and completions during the existence of COVID-19 restrictions.

Provided that an approach complying with guidance from case-law and practice is adopted, signing and circulating PDF documentation by way of “virtual closing” with the circulation of wet-ink originals later can be used to overcome logistical difficulties around the availability of original wet-ink signed documents as well as restrictions on the physical availability of signatories. This may be particularly helpful during the continuance of COVID-19 restrictions on movement and physical presence as well as potential logistical difficulties in the delivery of hard copies. Some points to bear in mind at the moment:

  • when adopting a “virtual closing” approach it is usually anticipated that wet-ink documentation will follow the exchange of scanned PDF signatures swiftly. In the current COVID-19 circumstances the practicalities of and time for delivery of these will need to be assessed.
  • where filings or registrations using original documentation are required within specified timeframes, specific arrangements may need to be agreed to ensure documentation is delivered in sufficient time to complete registrations.
  • many people, including signatories, are working remotely and consideration as to how they can return PDF signatures may need to be given (can mobile phone photographed pages be treated equivalently).
  • the approach set out in the signing instructions for a virtual closing, which will be based on the R v Mercury case and the Law Society guidelines1, will, as always, need to be followed carefully before the solicitor coordinating closing can confirm signing based solely on a “virtual closing process” and this could elongate closing day processes where COVID-19 restrictions make it more difficult to check and confirm (for example if a scan needs replacing or further confirmation).

It seems likely that the current circumstances will mean that parties that might not have previously been minded to adopt a virtual closing approach will, where they are minded to progress transactions, adopt a virtual closing approach. Taken together with moves towards wider use of e-signatures and electronic documents, this may be the start of either or both of these options becoming more of a mainstay and potentially remaining more widely accepted post-COVID-19 restrictions easing.

For further information on virtual closings, please contact Tim Waghorn or any member of our Banking and Financial Services Team.

1 The Law Society - Guidance on the ‘virtual’ execution of documents - click here

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