Use of Electronic Signatures in Singapore
By Jeremy Tan, Yuet Ping Tai and Audrey Koh
The COVID-19 pandemic has compelled businesses to use electronic signatures, also known as e-signatures. This article addresses some frequently asked questions on the use of electronic signatures in Singapore.
Are electronic signatures valid in Singapore?
Electronic signatures are generally valid in Singapore. Section 8 of the Electronic Transactions Act (the "ETA") states that where a rule of law requires a signature, that requirement is satisfied in relation to an electronic record if the method used:
- identifies the person;
- indicates the person's intention; and
- is reliable.
Provided such requirements are met, electronic signatures would generally have the same effect as wet-ink signatures.
Are there documents where electronic signatures should not be used?
Most business contracts and agreements can be executed using electronic signatures; these would include non-disclosure agreements, software licensing agreements and consumer agreements.
Excluded matters under the ETA
However, section 4 read with the First Schedule of the ETA sets out a list of excluded matters where a wet-ink signature should be used. These particular documents are set forth below:-
"The creation or execution of a will;
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;
The creation, performance or enforcement of an indenture, declaration of trust or power of attorney, with the exception of implied, constructive and resulting trusts;
Any contract for the sale or other disposition of immovable property, or any interest in such property; and
The conveyance of immovable property or the transfer of any interest in immovable property."
That said, in 2019 the IMDA proposed in a public consultation to shorten the list of excluded matters to support the nation's vision to thrive in a digital economy and be in step with the global trend to allow electronic signatures to be used in more commercial transactions. For example, New Brunswick, Canada has removed its list of excluded matters entirely. To date, the list of excluded matters in Singapore has yet to be amended.
Parties may need to enter into a deed, for instance where the agreement has no consideration. There are common law requirements governing the execution of a deed, one of which is that it should be written on paper. While New South Wales has implemented legislations to allow the use of electronic signatures for deeds in certain instances, Singapore has yet to adopt the same approach. It is possible that the Singapore court may not rigidly uphold such common law requirements. However, the position has not been tested in Singapore. As such, it is advisable for parties to execute deeds using wet-ink signatures.
Can electronic signatures be used if the governing law of the contract is a foreign law?
With the rise in cross-border transactions, it is not uncommon for parties to enter into agreements with other parties outside of Singapore. In such case, parties should check with local counsel on the validity of electronic signatures under the governing law of the contract. The position of electronic signatures may differ depending on country.
Is electronic-witnessing valid?
While electronic-witnessing has been introduced for the solemnisation and registration of marriages, the Government has yet to release any official guidelines on the position of electronic-witnessing for commercial contracts in Singapore. Therefore, it is uncertain whether the electronic-witnessing of commercial contracts would be considered valid in Singapore. If the validity of electronic-witnessing for commercial agreements were to be disputed in the Singapore court, the judge may uphold the legal effect of electronic-witnessing as the courts have already allowed commissioning of affidavits by video-conferencing. Given the operational challenges in view of COVID-19 and uncertainty regarding the validity of electronic-witnessing, parties should remember that witnessing is not needed in most commercial agreements.
Is it necessary to apply the company stamp along with an electronic signature?
In Singapore, it is not uncommon for parties to affix their company stamp (a.k.a. company 'chop') to commercial documents. In view of COVID-19 where many documents are being executed electronically, there may be operational challenges in affixing a company stamp. Parties should remember that in most cases there is no requirement to affix a company stamp. While parties are free to do so, it is unlikely to make the agreement more or less valid.
What should be included in an electronic signature policy?
As the number of contracts that are being executed electronically increases, companies may wish to create an internal electronic signature policy. The purpose of an electronic signature policy is to practise good corporate governance and to address procedural constituents. As a guide, some of the key points to include are the scope of the policy (e.g. what country does it apply to), the list of authorised signatories, the types of documents that can be electronically signed, use of third party electronic signature platforms, custody and retention of documents, cybersecurity requirements, and the consequences of breach of the policy.
Will the laws change regarding electronic signatures?
With COVID-19 we have seen a much wider adoption of electronic signatures in Singapore as well as globally. We have also seen developments elsewhere (e.g. New Brunswick, Canada and New South Wales, Australia) allowing electronic signatures to be used in greater capacity. As such, we would not be surprised if the Singapore Government likewise allows electronic signatures to be used in more commercial agreements including deeds. Further, as technology advances and electronic signatures become more secure, the rationale that certain transactions still require a wet-ink signature to prevent fraud may no longer hold. For example, blockchain offers increased security and provides a tracing function through cryptographic hashing. The adoption of blockchain may thus significantly reduce the risk of fraud in electronic signatures. As countries continue to combat COVID-19 and employees continue to work remotely, electronic signatures are here to stay. Allowing electronic signatures to be used in a greater capacity is in line with Singapore's ambition to become a Smart Nation.
For more information on what to include in an electronic signature policy and other considerations, please listen to a recent podcast on electronic signatures.
This article does not constitute legal advice and is intended to provide general information only based on the currently available information. Please contact our lawyers if you have queries on any specific legal matter.
For queries or more information please contact Jeremy Tan or Yuet Ping Tai at Bird & Bird www.twobirds.com