Are E-Signatures Legally-Binding In Business Documents For Companies In Singapore?

In today’s digital age, and especially on the back of COVID-19, obtaining handwritten signatures may have become more difficult or impractical. We look at electronic signatures or e-signatures and the circumstances permitting their use for businesses in Singapore.

Today, there is a range of ‘e-signature’ software tools that companies can use to manage documents and conduct transactions, including Adobe Sign, DocuSign, and Autograph+. 

What Is An E-Signature?

Simply put, an e-signature is a digitalised form of the traditional “wet ink” or handwritten signature. It is a way to get consent or approval on electronic documents or forms.

E-signatures can range from a signatory’s typed name to a scanned copy of one’s written signature. There are no specific restrictions limiting e-signatures to any particular form of digital signature.

Are E-Signatures Legally Binding In Singapore?

Since 2010, e-signatures have been legally recognised in Singapore under the Electronic Transactions Act (ETA). In particular, Section 8 of this Act states that where a rule of law needs a signature, that need for a signature can be satisfied by an e-signature if: 

  • A method is used to identify the person and to indicate that person’s intention in respect of the information contained in the electronic record; and
  • The method used is 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
  • The method is proven in fact to have fulfilled the functions described above, by itself or together with further evidence.

Read Also: Self-Employed Person Income Relief Scheme (SIRS) – Importance Of Filing Taxes And Having The Necessary Paperwork

Conditions Before Companies Can Use E-Signatures To Sign Documents

Businesses can use e-signatures for their contracts and agreements provided they fulfil Section 8 of the Electronic Transaction Act as described above. For example, they can use e-signatures when they deal with partners and customers while corresponding to the Singapore general contract law, communicate with Singapore government authorities, file business tax returns, or handle internal company issues (such as meeting discussions and employment contracts).

Signatories authorised to give their e-signatures on documents are required to clearly identify themselves, their companies’ information as well as any other additional information that indicates their authenticity. Moreover, signatories are to clearly state their intention to sign these documents, such as scanning a copy of their handwritten signature and attaching it to the relevant document to be signed.

Businesses should only transact with secured e-signatures and avoid using fax machines or other automatic reply systems because these systems make it difficult to prove signatories’ intent of signing relevant documents and thus make it hard for such documents to be legally enforceable as a result.

The general rule of thumb is that e-signatures are to be as personable as possible to mimimise areas of conflict. 

Excluded Situations When E-Signatures Cannot Be Used

Section 4(1) and the First Schedule of the Electronic Transactions Act states that there remain some “Excluded Matters” that draw the boundaries as to what documents can be legally signed and enforced with e-signatures and what cannot. 

Documents in which e-signatures cannot apply include but are not limited to deeds, wills, bills of exchange, bills of lading, consignment notes, warehouse receipts, promissory notes, documents of title, contracts for the interest in, sale of or other handling of immovable property as well as documents that transfer any interest (such as ownership) in immovable property.

“Excluded Matters” involve various subject areas and do not only relate to particular documents at hand. For more details, refer to Section 4(1) of the Electronic Transaction Act

Mitigating The Risks Of E-Signatures 

Given the heightened risks of forgery and meddling in electronic records, the use of e-signatures in business dealing entails inherent risks. For instance, businesses will be exposed to hackers who can copy legitimate e-signatures from a legitimate document and paste these copied signatures on other documents that the original signatory has not signed on.

Furthermore, gray areas have emerged as to whether the person (even if he or she has been clearly nominated to do so) issuing the e-signature has adequate authority to carry out the electronic transaction on behalf of the principal. To what extent can, say, a secretary, conduct electronic transactions on behalf of his or her busy boss even after the latter has given approval?

Businesses can first and foremost, instill transparency and accountability in indicating signatories’ intent in relevant electronic records while taking into consideration the relevant situations.

For instance, businesses can make use of company-specific encryption or other more elaborate technical sign-up methods to mitigate electronic risks before conducting such transactions.

Additionally, businesses should strive to be as specific as possible as to the documents they intend to sign as well as note the origin and destination of such documents in these transactions.

E-Signatures Are A Useful Tool For Businesses

Today, businesses can apply for a range of products and undertakings without the need for a handwritten signature. For example, if you want to submit your tax returns or apply for a Temporary Bridging Loan (TBL), the online application process can take less than 5 minutes when you connect to MyInfo (through SingPass) or MyInfo Business (through CorpPass). The approval can be granted within one business day.

As with any undertaking, businesses should use a calculated approach and weigh the risks involved in carrying out electronic transactions. Conducting due diligence and mitigating risks using reliable mechanisms will greatly reduce cyber-crime and electronic risks.

Read Also: Temporary Bridging Loan Programme: How It Works And What Are The Criteria For BUsinesses To Apply For It?

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