ELECTRONIC SIGNATURES: COMPLETING TRANSACTIONS IN A TIME OF SAFE DISTANCING
Misa MITSUGI, Juen Yi FAN
Despite disruption to businesses owing to the COVID-19 pandemic, many businesses have been able to operate to some level of normality owing to a range of technological advancements in communication, document sharing and remote access capabilities. In particular, the use of electronic and digital signatures (collectively referred to as “eSignatures”) can offer flexibility and efficiency for parties to execute documents and complete transactions at a time when signatories may be required to sign documents remotely. Governed by the Electronic Transactions Act (Cap. 88) (“ETA”) and the Electronic Transactions (Certification Authority) Regulations 2010, eSignatures are valid and recognised in Singapore subject to certain conditions . This article will highlight the legality of using eSignatures under Singapore law and how businesses may carry out remote document signings during these times.
Electronic and Digital Signatures
The ETA does not have a set definition for the terms “electronic signature” or “digital signature”. However, it is generally understood to be the functional equivalent of wet ink signatures. The Infocomm Media Development Authority (IMDA) of Singapore notes that in determining whether something amounts to a signature, the court will generally look at whether the method of signature used fulfils the authenticating function of a signature, rather than whether the form of signature used is one that is commonly recognized.
Electronic Signatures are generally understood as an acknowledgement provided in electronic format which businesses may use to demonstrate acceptance by a party and that can electronically be used to authenticate the party involved. Such electronic signatures may take the following forms:
- clicking an acceptance button on a website to accept terms and conditions;
- facsimile or a scan of a physical signature;
- signing on a touchscreen with a stylus;
- agreeing to any terms and conditions by means of electronic communication such as email.
Digital Signatures, on the other hand, are a type of electronic signatures which have an additional security layer issued by trusted service providers. A digital signature is issued with a Digital Signature Certificate (DSC) which contains details such as the user’s identity, email, date the certificate was issued, and the name of the certifying authority. Businesses use digital signatures when transacting with government authorities for instance, when filing tax returns, or filing forms with the Accounting and Corporate Regulatory Authority (ACRA).
In general, where a rule of law requires a signature, the requirement of the signature will be satisfied by an electronic signature (pursuant to section 8 of the ETA) if:
- the method used is able to identify the person and indicate that person’s intention with respect of the information contained in the electronic record;
- the method used is as reliable as appropriate for the purpose for which the electronic record was generated or communicated, in light of all the circumstances, including any relevant agreement; or the method is proven in fact to have fulfilled the functions above, by itself or together with further evidence;
- where the electronic record is to be provided to a person, it is capable of being displayed to that person; and
- it complies with any additional requirements relating to electronic records specified by the public agency supervising the provision or retention of such records.
In addition, the ETA states that the eSignature itself should be:
- unique to the person using it;
- capable of identifying the person; and
- under the sole control of the person using it.
Businesses such as ‘DocuSign’ and ‘Adobe Sign’ provide services which allow users to both prepare documents with the inclusion of an eSignature and include eSignatures on documents. These services typically have in-built security features that inter alia allow for the identity of the person to be identified and the confirmation of the signor’s intent. It is therefore likely that a signature procured using one of these eSignature services will be deemed to suffice the legal requirements for an “electronic signature”.
Certain documents and transactions excluded from ETA
It must be noted that certain documents and transactions are expressly excluded from the scope of the provisions of the ETA (“Excluded Matters”) and such documents, pending any changes to the law, need to be signed in wet ink. These documents and transactions (listed in the First Schedule to the ETA) include:
- the creation or execution of a will;
- negotiable instruments, such as documents of title, promissory notes, bills of lading, consignment notes, warehouse receipts or any transferable document or instrument that entitles the bearer or beneficiary to claim the delivery of goods or the payment of a sum of money;
- the creation performance or enforcement of an indenture, a declaration of trust or power of attorney, with the exception of implied, constructive and resulting trusts;
- any contract for the sale or disposition of immovable property, or any interest in such property;
- the conveyance of immovable property or the transfer of any interest in immovable property.
For documents or transactions that fall within the Excluded Matters, it is recommended that parties ensure all signatures on such documents are signed in wet-ink and all other formal legal requirements (such as signing in the present of a witness) are satisfied.
Corporate Secretarial Documents and Transactions
Finally, the Companies Act (Cap. 50) currently allows the use of electronic communications for the serving of notices, meetings and documents. Additionally, as corporate secretarial documents (such as directors and shareholders resolutions) do not expressly fall within the Excluded Matters, such documents, if completed with an eSignature, would be legally valid provided that the conditions specified in the ETA to satisfy a valid eSignature are met. It should be noted, however, that the company’s constitution needs to specifically provide for such eSignature procedures and requirements.
Public Consultation by the IMDA
On a final note, the IMDA issued a consultation paper in June 2019 in order to seek views and comments from members of the public and industry on, amongst other matters, removing some of the documents and transactions from the list of Excluded Matters. We may very soon see new changes to the ETA. For more information, please read the resources set out here: https://www.imda.gov.sg/regulations-and-licensing/Regulations/consultations/Consultation-Papers/2019/Public-Consultation-on-the-Review-of-the-Electronic-Transactions-Act.
Flint & Battery LLC, as an international law practice and corporate services provider, is well placed to advise you in relation to specific transactions or onboarding digitisation programmes for your business. For more information about our services, please visit our website: www.flintbattery.com or write to us at firstname.lastname@example.org.