Are e-signatures legal in Singapore?
4 minute read
Singapore’s goal to emerge as the leading digital economy supports business interactions from making the shift from the physical to the digital landscape. Although online transactions and communications are becoming mainstream, all agreements concluded virtually are not immediately legally binding in Singapore.
Sleek Sign is an online platform that was originally developed by Sleek to support its corporate secretarial services. It now enables anyone to execute digital signatures, free of charge. Using Sleek Sign to digitally sign your agreements avoids the dilemma of having to prove the legality of your agreement as all documents signed through our portal are legally binding.
Understanding the difference between electronic and digital signatures (and their legal status) will help you to master online contract management systems and better manage your ongoing business needs.
What are electronic and digital signatures?
Electronic signatures are signatures that have been expressed in an electronic form. They do not need to manifest as an image of one’s handwritten signature but could also include a simple click of a button; accepting the terms and conditions of a website by clicking an ‘Accept’ button could amount to an electronic signature. The scope of what constitutes an electronic signature is broad. It could range from a simple tick box to a drawn signature with your cursor on an online platform.
Different types of electronic signatures offer varying degrees of security. For instance a scanned image of a handwritten signature would constitute an electronic signature but it does not provide the same level of security as an electronic signature completed through an online portal. There is no way of being certain that the scanned handwritten signature has not been forged by a third party before it was uploaded. Whereas, completing an electronic signature through an online portal verifies the identity of an individual. This verification could be done when the signatory is required to log in before accessing documents for signing.
Examples of electronic signatures:
Digital signatures are essentially electronic signatures with an added layer of security. They rely on a type of technology known as asymmetric cryptography, also commonly referred to as public key cryptography.
This technology is also used in many of our daily communications including instances where we send a message through Whatsapp or when we make a purchase on a secure website. Asymmetric cryptography relies on private and public keypairs, which are effectively strings of numbers and algorithms, that encrypt and decrypt, or rather lock and unlock, shared content between parties. The secure feature of this technology lies in the private keys of parties which remain undisclosed throughout the entire process; the interaction required to execute the digital signature takes place between the public keys of parties. Both private and public keys are imperative in generating a digital signature.
As the term ‘public’ implies, public keys are accessible by the public. This runs the risk of the public key succumbing to manipulation by fraudulent third parties. To circumvent this potential threat, an accredited Certification Authority (CA) is essential. The CA issues a digital certificate, to verify that the public key is associated with a specific party to a transaction. A digital certificate usually contains the verified public key and the CA’s information which adds this additional layer of protection.
The Electronic Transactions Act 2010 (ETA) recognises this added security feature offered through digital signatures, categorising it as a secure electronic signature if it meets specific criterion.
For a digital signature to be construed as a secure electronic signature:
1) it must be created with an operating valid digital certificate which makes reference to the corresponding public key, and
2) the digital certificate must be issued by an accredited CA. A secure electronic signature is comparable to a qualified electronic signature stipulated in the eIDAS Regulation, which is categorised as an electronic signature that provides the highest tier of security in the EU.
To summarise, digital signatures that use accredited digital certificates fundamentally help to ensure that the information sent has reached designated recipients and prevents shared content from being intercepted by fraudulent third parties.
Sleek Sign is a fully digital signature based online contract management system. This means that all signatures executed through our platform meet the secure electronic signature threshold under the ETA. Notably, both digital signatures and electronic signatures have varied legal treatment in Singapore.
Legality of electronic and digital signatures
The ETA considers most electronic signatures as substitutes for written signatures where it can be proven that the electronic signature has been executed in a reliable manner and that the signatory had the intention to agree to the terms in the document. The onus to prove that the electronic signature is legally binding would fall on the party seeking to rely on its authenticity. However, digital signatures that qualify as secure electronic signatures enjoy the presumption of authenticity. This means that individuals who have used Sleek Sign to sign board resolutions or share certificates do not need to submit additional evidence in proving that those documents are legally binding.
A list of transactions that currently fall out of the ETA’s scope are listed in the First Schedule and include documents such as wills and contracts for the sale of immovable property. However, it should be noted that there is an ongoing review by the IMDA looking to extend the applicability of the ETA, in line with Singapore’s growing digital economy. The burgeoning demand for online business interactions coupled with the confidential and high-stakes nature of some transactions indicates the need for a secure, efficient and legally binding means to execute agreements.
Mitigating risks: digital signatures to the rescue
Concluding agreements virtually provides a multiplicity of benefits. Some examples include:
Saving on travel time
Transacting virtually removes the need to catch a train or a flight to get your documents signed. This is a significant advantage considering the current restrictions on travel.
Eliminating document delivery costs
Saving on the costs of purchasing paper and postage fees is a more profitable alternative. Considering that delivery costs are likely to have risen with the demand for delivery surging due to global travel restrictions, virtual transactions are even more cost-effective.
Achieving a quick turnaround
They eradicate the need for time consuming back and forth delivery of documents; agreements can be concluded in a matter of minutes.
A sustainable alternative
Prioritising sustainable business is a growing trend. Virtual transactions are an environmentally friendly alternative that serve your best interests, by helping you save on excessive paper usage whilst meeting the best interests of the environment.
However, some might prefer to stick with pen-and-paper signatures fearing an increased exposure to security threats when shifting to the virtual landscape. We should not dismiss the fact that handwritten signatures also run the risk of forgery. Moreover, the manual nature of contract management also makes it arduous if not impossible to keep track of who has had access to specific documents which could pose a greater threat.This would also hold true if one were to rely on electronic signatures without the added layers of security offered through digital signatures. As both electronic and digital signatures could be considered as alternatives for pen-and-paper signatures in Singapore, opting for the secure alternative would be favourable.
Digital signatures, specifically those deemed as secure electronic signatures, are legally binding and provide the adequate level of security needed for concluding confidential and high-stake agreements. Although obtaining a digital certificate from an accredited CA could be an option, it would incur additional costs for your business. Using an online contract management system such as Sleek Sign eliminates additional financial costs whilst providing a secure means to conclude agreements virtually. Sleek Sign is also an unlimited service, meaning that you could upload as many documents as you need to execute secure electronic signatures without having to pay any fees.
As society increasingly relies on virtual interactions, the demand for companies to make the shift from the physical to the virtual persists. The ETA acknowledges this trend, by recognising both electronic and digital signatures as legal alternatives to traditional pen-and-paper signatures. However, electronic signatures are not presumed to be legally binding; only secure electronic signatures, including digital signatures created through Sleek Sign, enjoy this status. Sleek Sign is not only secure and cost-effective, but provides a convenient way to execute legally binding digital signatures to keep up with the shifting tides of the global economy. Considering the recognition of both electronic and digital signatures in Singapore, it is clear that digital signatures are the ideal alternative for business agreements and transactions.
For costing the same amount as a cup of coffee per week, introducing e-signatures into your business is an easy way to streamline your business. At Sleek we use e-signatures daily to get companies up and running faster. Get in touch to find out more.