COVID-19 is a global health crisis. It has also caused considerable volatility and disruption to the financial markets, which will have a radical impact on the corporate landscape for a prolonged period.
In an effort to curb the spread of the virus, various governments have announced stringent measures encouraging people to stay at home, restricting personal travel and contact between individuals ("self-isolation" and "social distancing" measures).
From a business perspective, this has resulted in most companies deploying their business continuity plans and includes personnel working remotely in order to comply with these self-isolation/social distancing measures. This has presented some technological and operational challenges. These measures have also impacted the ability to host physical board meetings, which disrupts a company's or fund's ability to conclude transactions and / or launch new products (the implications of which are considered in our recent client update on Tax residence of Irish companies and Funds).
This update examines the specific impact that these restrictions will have on transactions/fund launches, in particular, the inability to execute material contracts with wet ink/original signatures and the use of electronic signatures in contracts generally. In addition, the filing obligations with relevant public bodies, which currently require the submission of original documentation are considered.
Electronic signatures have been legally recognised in Ireland since the Electronic Commerce Act 2000 (the "Act") (which implemented the Electronic Signatures Directive 1999/93/EC) was enacted. Section 13 contemplates the use of electronic signatures in contracts if each party consents to the use of an electronic signature by the other party. Regulation (EU) 910/2014 on electronic identification and trust services for electronic transactions in the internal market ("eIDAS Regulation") replaced the 1999 Directive from 1 July 2016, and further enshrined the principle in EU law that electronic signatures will not be denied legal effect or admissibility as evidence in legal proceedings solely on the grounds that it is in an electronic format1.
While there has been a historic reluctance to use electronic signatures in Irish law governed contracts, there are, in general, no legal impediments from doing so (noting that every transaction must be always be considered on its own facts). An electronic signature has the equivalent legal effect of a handwritten signature. However, it is recommended that contracts are updated to include a consent provision for the use of electronic signatures, or failing an expressed contractual provision, that the consent of the other party be received prior to the execution.
Central Bank Filings
The Central Bank has not required wet ink/ original signatures on material contracts for new AIF authorisations, approval of a new sub-fund of an umbrella UCITS and all post authorisation amendments for a number of years. All such applications are processed through the Central Bank's online system, ORION. The only fund authorisation process, which still requires wet ink signatures on material contracts (and the submission of original documentation), is for new UCITS schemes. It has not been confirmed yet if the Central Bank will relax or even change this requirement during the COVID-19 crisis.
The Companies Registration Office ("CRO") position is slightly more complicated. On 30 March 2020, the CRO announced that due to COVID-19 it could not process submissions currently. It has recommended that companies continue to submit documents through its online portal CORE but it has given no commitment as to when these documents will be processed. It has also relaxed its requirements for wet ink signatures for certain documents only (and in exceptional circumstances, on a case-by-case basis). The filing of a form C1 (registering the details of a charge), will remain unaffected, as these filings are made through CORE with a Revenue ROS signature.
Maples Group Response
We are closely monitoring the rapidly developing implications of the COVID-19 crisis for investment funds and fund management companies. We have launched a resource hub with relevant updates and information for our clients at www.maples.com/COVID-19.
If you would like further information, please liaise with your usual Maples Group contact or any of the team below:
1 Note that the valid execution of documents in Ireland depends on a number of issues, which include the type of execution required; legislative requirements; governing documentation of the company; and powers of the individuals/companies concerned.