Are e-signatures legal in Singapore?
4 minute read
Singapore’s push for digitalization and being a digital-first economy includes encouraging businesses to make the shift from physical to the digital landscape. Although online transactions and communications are becoming mainstream, all agreements concluded virtually are not immediately legally binding in Singapore.
SleekSign is an online eSignature tool by Sleek to help businesses improve the efficiency of its corporate secretarial services. With SleekSign, anyone can execute digital signatures, free of charge. Using SleekSign to digitally sign your agreements avoids the dilemma of having to prove the legality of your agreement as all documents signed through our platform are legally binding.
Understanding the difference between electronic and digital signatures, and most importantly, their legal status, will help you to master online contract management systems and better manage your ongoing business needs.
Overview:
- What are electronic and digital signatures?
- Legality of electronic and digital signatures
- Mitigating risks: digital signatures to the rescue
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:
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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.
SleekSign ensures this preferred level of security as our contract management system uses digital certificates developed by Entrust and distributed by Netrust, the only Accredited CA in Singapore.
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 criteria.
For a digital signature to be categorized as a secure electronic signature, it must fulfill these two factors:
1. It was created during the operational period of a valid certificate, which makes reference to the public key listed in the certificate;
2. The certificate is treated as trustworthy due to the either one of the following:
- The digital certificate is being issued by an accredited certification authority.
- The digital certificate is being issued by a recognized certification authority.
- The digital certificate is being issued by a public agency approved by Singapore’s Minister for Communications and Information to act as a certification authority on such conditions as he may by regulations impose or specify.
- The parties have expressly agreed between themselves (sender and recipient) to use digital signatures as a security procedure, and the digital signature was properly verified by reference to the sender’s public key.
A secure electronic signature is comparable to a qualified electronic signature stipulated in the eIDAS Regulation, which is categorized as an electronic signature that provides the highest tier of security in the EU.
To summarize, digital signatures that use accredited digital certificates fundamentally help to ensure that the information sent has reached its recipients and prevents content from being intercepted by fraudulent third parties. SleekSign 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, under Singapore law for electronic transactions.
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 SleekSign 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. 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.
On 19 March 2021, the ETA was amended, enabling and recognizing electronic versions of transferable documents or instruments such as electronic bills of lading (eBLs) and bills of exchange. This has a big impact on international trade. In a post COVID-19 world, many transactions are now all contactless and virtual, and there is a need to ensure the way businesses transact are keeping up with these ever changing times.
Mitigating risks: digital signatures to the rescue
Concluding agreements virtually provides a multiplicity of benefits. Some examples include:
Saving on time and costs
Transacting digitally removes the need for your team to travel down physically to get documents signed by the other parties. This significantly reduces time spent on waiting for documents, and thus the salary costs that are saved due to reduction in manpower hours in waiting time.
Eliminating document delivery costs
Saving on the small but accumulative costs of paper, ink and even 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, digital transactions are even more cost-effective. Read more on how eSignature technology can benefit your business operations.
Achieving a quick turnaround
Digital signatures will enable speedier approvals from your clients and suppliers. They eradicate the need for time consuming back and forth delivery of documents; agreements can be concluded in a matter of minutes. This will reduce the average closing time of your sales team, and increase productivity as a whole. Explore our article on tips on how to close deals faster for your business.
Environmental benefits associated with going paperless
Prioritizing sustainable business is a growing trend. Digital transactions are an environmentally friendly alternative that serve your best interests, by helping you reduce paper usage while reducing paper and ink consumption. At Sleek, we even developed our very own eSignature tool as we saw an avenue in disrupting the traditional paper-centric corporate secretary industry, aiming to bring down paper and ink usage.
However, some might prefer pen-and-paper signatures fearing an increased exposure to security threats when shifting to digital operations. 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 a free online contract management system such as SleekSign eliminates additional financial costs whilst providing a secure means to conclude agreements virtually. SleekSign 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 is increasingly becoming digital-first, 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 SleekSign, enjoy this status. 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.
Next steps
Introducing eSignatures into your business is an easy way to streamline your business.
We use SleekSign to get companies up and running faster, daily.
Get in touch with our friendly team to find out more.
