Publish in Perspectives - Wednesday, April 8, 2020
COVID-19 restrictions prohibits personal meetings during the emergency period, which ends April 30, 2020. (Photo: City of Guadalajara)
Raúl Fernández-Briseño, Jan Boker and Jessica Solis -- all attorneys in Mayer Brown’s Mexico City office.
Signing procedures for closing transactions during Covid-19 restrictions.
BY RAÚL FERNÁNDEZ-BRISEÑO, JAN BOKER AND JESSICA SOLIS
In the wake of the COVID-19 pandemic, in-person meetings and human interactions in closed spaces have become prohibitive in the global environment. As it is customary in Mexico to hold a meeting with the parties in a conference room, the new reality impacts usual procedures for closing transactions.
Electronic signatures and “wet” signatures (under the below mechanics) are two possible solutions when in-person meetings are not possible.
ELECTRONIC SIGNATURE (E-SIGNATURE)
Under Mexican law, parties can grant consent verbally, by written form, by electronic means, by optical means or through other technology, among other forms. All of these means for granting consent have the same legal effects to a ”wet” signature. Some types of agreements require certain additional formalities to be enforceable, such as notarization, but most agreements do not require additional formalities to be valid as long as there is consent. Commercial transactions which require by law that the formality of agreements be executed through a “wet” signature, the Commerce Code permits the use of electronic means, identified as data messages and e-signatures in the Commerce Code.
Mexican law recognizes different types of e-signatures, some of which more sophisticated than others. Among the e-signatures, we have the simple e-signature and the advanced e-signature. The simple e-signature has some complementary features such as biometric or geolocation data, to be able to identify the signing party and is used in commercial transactions. This kind of signature is used from personal devices and accounts. The advanced e-signature consists of the application of a mathematical algorithm to a graphic representation of the name of an individual or entity. The process is developed by a program or software that performs various validations and grants legal validity to the legal performed using such signature. These types of signatures are usually controlled or administered by governmental authorities. However, implementing complex e-signatures as it is the case of the advanced e-signature, or asking for certifications, could be troublesome and not cost-efficient.
As a preferred alternative, the following are the essential requirements for an e-signature to be considered valid:
From a litigation standpoint, e-signatures: (i) are admissible as evidence in court, as long as electronic data contained therein or in a data message attached thereto can be logically associated by any technology, and (ii) are capable of evidencing that the signatory approves the information contained in the data message. The Federal Code of Civil Procedures and the Commerce Code both accept that electronic agreements have evidentiary value in a litigation procedure.
E-SIGNATURE IMPLEMENTATION WITH DOCUSIGN
Recognizing the fact that some signatures at a pre-closing or closing stage are requested via electronic means (e.g., email) and that the process for returning these (print, sign, scan) in most cases is manual, an acceptable option may be to use DocuSign or other web-based application. Mayer Brown encourages parties to use these tools. DocuSign is a cloud-based workflow tool that enables to streamline the gathering of signatures by electronic means that works as follows:
Mayer Brown will upload the agreement(s) that are to be signed through the DocuSign platform and will send them to the signing parties. The signing parties, will receive the document in their inbox and must accept the platform terms. DocuSign will display the agreement(s) and will indicate the place where the signature is required. Then, the platform will show a proposed signature (name of the signatory) to be accepted by the signing party. After that, the signing parties must click accept to the proposed signature and then the platform will require the signing party to include a password and place of residence. Once that is carried out as set forth above, the signing party must click the send button.
Examples of agreements that may be signed through these electronic means are purchase agreements, agency agreements, equipment lease agreements, services agreements, promissory notes, among others. In addition, Mayer Brown has developed legal language to be inserted in the companies’ charters in order to allow certain corporate acts, such as Board meetings and shareholders’ resolutions, to be approved by electronic means. In any case, we recommend to include in such agreements a special clause allowing the parties to sign and exchange signature pages through these electronic means.
In the event it is not possible to use the electronic means referred above, Mayer Brown has put into practice the following mechanics for obtaining the original signature pages during the contingency period:
Raúl Fernández-Briseño is a partner in the Corporate & Securities practice based in the Mexico City office of Mayer Brown. Jan Boker is counsel in Mayer Brown's Mexico City office and a member of the Banking & Finance practice. Jessica Solis is an associate in Mayer Brown’s Mexico City office and a member of the global Energy group and the Banking & Finance practice.
Romina Fernández, an associate at Mayer Brown’s Mexico City office, also contributed to this article.
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