Introduction

While disruption to business is inevitable in the wake of the spread of COVID-19, technological advancements have meant that businesses can still look to operate with a level of normality. From email communication and instant messaging to document sharing and remote access capabilities, employees can continue to work from home much as if they were in the office.

This article will therefore explore the use of “electronic signatures” under the Electronic Transactions Act (Chapter 88 of Singapore Statutes) (ETA) and how businesses can utilise the ETA’s legal framework for electronic transactions to assist in remote document signings.

What is an electronic signature and when can it be used?

The starting point is that the ETA provides for the legal recognition and use of electronic signatures and electronic records, thereby giving predictability and certainty to electronic transactions. For electronic signatures, this effectively means that, where the conditions in the ETA are met, an electronic signature will satisfy any rule of law requiring a document or record to be signed – electronic signatures are given recognition as the functional equivalent of wet ink signatures.

There are, however, certain kinds of documents and transactions, which are listed in the ETA, that are excluded from the scope of operation of the provisions in the ETA that recognise electronic signatures as the functional equivalent of wet ink signatures. This is explored further below.

While the ETA does not define the term “electronic signature”, it is generally understood as essentially an acknowledgement provided in an electronic format that a business can use to demonstrate the intention of a party (e.g., acceptance) and that can electronically be used to authenticate the party involved. The Infocomm Media Development Authority (IMDA) 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 recognised.

The conditions in the ETA that need to be met in order for the electronic signature to satisfy a rule of law that requires a signature, are as follows:

1. The method used must be able to identify the person and indicate that person’s intention in respect of the information contained in the electronic record.
2. The method used must be:

1. as reliable as appropriate for the purpose for which the electronic record was generated or communicated, in the light of all the circumstances, including any relevant agreement; or
2. proven in fact to have fulfilled the functions described in paragraph (1), by itself or together with further evidence.

As there is no set definition of what an “electronic signature” is, they can generally come in a variety of forms, provided of course that the conditions in the ETA are satisfied. At a very basic level, an email sent from a verifiable account may be considered to be an “electronic signature”. For example, an email sent from a corporate email account will usually contain a signature block that identifies the person (or the email sender will indicate his/her name at the end of the email). The email account will usually require the account holder to log in with a specific username and password chosen by the account holder. Thus, email correspondence has been deemed reliable enough to meet the requirements of an “electronic signature”.

There are businesses that provide “eSignature services”, such as “DocuSign” and “Adobe Sign”, which allow users to both prepare documents for the inclusion of an eSignature and include eSignatures on documents from mobile phones, laptops, etc. As these services usually have built-in security features that allow for, inter alia, the identity of the person providing the signature to be verified and a confirmation of the signer’s intent, it is likely that a signature produced using one of these eSignature services will be deemed to suffice the legal requirements for an “electronic signature”.

Can an electronic signature be used with any type of document?

As highlighted above, there are certain documents and transactions (Excluded Matters) that are excluded from the scope of the provisions in the ETA that recognise electronic signatures as the functional equivalent of wet ink signatures.

The Excluded Matters are as follows:

1. The creation or execution of a will.
2. Negotiable instruments, documents of title, bills of exchange, promissory notes, consignment notes, bills of lading, 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.
3. 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.
4. Any contract for the sale or other disposition of immovable property, or any interest in such property.
5. The conveyance of immovable property or the transfer of any interest in immovable property.

For documents or transactions that fall within the Excluded Matters, parties would be best served in ensuring that all signatures on documents are wet-ink signatures, and all other legal form requirements are satisfied (such as the need to sign in front of witnesses).

For documents or transactions not within the Excluded Matters, it is recommended that, in the process of preparing transaction documentation, should the intention be that such documents can be signed and executed using “electronic signatures”, a provision be included in the documentation to specifically reflect this. The provision can include what forms of electronic signatures the parties are willing to accept. This would go some way to evidencing the intention of the parties to use “electronic signatures”, although (as mentioned above) for transactions that fall within the Excluded Matters, one cannot rely on the provisions in the ETA to satisfy the legal requirements for signature.

For documents that are corporate secretarial in nature (such as director and shareholder resolutions), many companies are now moving towards the use of services such as DocuSign and Adobe Sign in order to provide the required signatures.

Since corporate secretarial documents do not fall within the Excluded Matters, it stands to reason that such documents can be signed using an electronic signature. This is of course provided that the conditions specified in the ETA are satisfied with respect to the electronic signature used. Additionally, where the intention is for members and directors to be able to sign resolutions in writing by using an electronic signature, we would advise that the constitution specifically provide for this to be acceptable.

Potential changes to the Electronic Transactions Act

The IMDA issued a consultation paper on 27 June 2019, in order to seek the views and comments from members of the public and the industry on, amongst other things, taking some of the documents and transactions out of the Excluded Matters. For the documents and transactions taken out of the Excluded Matters, the effect would be that the provisions in the ETA that support the legal enforceability of electronic signatures would apply to those documents and transactions.

The IMDA is mindful that Singapore’s legislative framework should continue to be facilitative and not hinder the development and adoption of practical and commercially viable electronic means of communications and transactions. In particular, IMDA proposes to:

1. remove wills from the Excluded Matters, on the basis that the safeguards in the Wills Act (Chapter 352 of Singapore Statutes) (Wills Act) will be maintained;
2. remove documents such as bills of lading, warehouse receipts, dock warrants or negotiable instruments such as bills of exchange, promissory notes or cheques from the Excluded Matters;
3. remove powers of attorney (POAs) for the enforcement of security interests and lasting powers of attorney from the Excluded Matters, but maintain all other types of POAs (True Agency POAs) in the Excluded Matters, given the potential for abuse;
4. remove indentures from the Excluded Matters;
5. remove testamentary trusts from the Excluded Matters on the basis that safeguards in the Wills Act will be maintained;
6. maintain declarations of trust relating to immovable property and dispositions of equitable interest in the Excluded Matters;
7. remove contracts for the sale or disposition of immovable property from the Excluded Matters, provided that a requirement be placed that only secure electronic signatures or digital signatures be accepted for property transactions conducted electronically, in order to ensure greater certainty, mitigate concerns of fraud and safeguard the vulnerable; and
8. remove the conveyance of immovable property or the transfer of any interest in immovable property from the Excluded Matters.

In summary, the IMDA is seeking to remove all the documents and transactions in the Excluded Matters for most “business related transactions”, while retaining personal or familial transactions, which could require greater safeguards. This would mean the removal of all items in the Excluded Matters with the exception of trusts relating to immovable property or dispositions of equitable interest and True Agency POAs. The IMDA also proposes the insertion of a requirement for the use of secure electronic signatures for contracts for the sale or disposition of immovable property.

As the consultation period closed on 27 August 2019, we are awaiting the result of the consultation, and we will provide an update on the outcome.

Dentons Rodyk thanks and acknowledges Legal Executive Sean Gallagher and Practice Trainee Ian Low for their contributions to this article.