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In Singapore, many businesses have gone digital. This has helped greatly in various manners, from cost reduction and increased efficiency to better recordkeeping and easier reference for both the business and clients.

What is an Electronic Signature?

An electronic signature is an alternative legal way to get consent or approval on electronic documents. One of the most common definitions of an electronic signature is “an electronic sound, symbol, or process attached to or logically associated with a record…adopted by a person with the intent to sign the record.”

In Singapore, the most common forms of electronic signatures are digitalized signings.

An e-signature can take the form of a click of an accept button on a website where the user accepts the terms and conditions, a facsimile or scan of a physical signature, signing on a touchscreen with a stylus, or agreeing to any terms and conditions using electronic communication such as e-mail, etc.

Electronic signatures can be used to replace handwritten signatures in virtually every personal or business process. Examples include, new hire onboarding forms, application forms, vendor onboarding documents and RFPs, change authorizations, nondisclosure agreements, and other contracts.

These electronic signatures can help businesses, especially small businesses, to reduce their business costs and stay competitive. With digitized proceedings, businesses no longer have to pay for paper printing and mailing services, and the storage of hardcopy documents can be reduced to the essential needs of the business. The business no longer relies on conducting sales where there are printers. Business can be conducted using portable devices like smartphones.

If your business is planning to move online, you should know about the taxation requirements on digital commerce. The tax system in Singapore is business friendly. However, not having a proper understanding of the requirements and not fulfilling these requirements, can lead to business failure. Therefore, a business needs to seek advice from trusted professional firms such as Paul Hype Page to advise them on these matters.

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The Electronic Transactions Act 

The use and regulation of electronic signatures are governed by the Electronic Transactions Act (ETA), which came into effect in 1998, and has been revised in 2011.  

Below is an extract from the ETA, specifying the provisions for the use of electronic signatures. 

Where a rule of law requires a signature, or provides for certain consequences if a document or a record is not signed, that requirement is satisfied in relation to an electronic record if 

 

aA 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
b

the method used is either :

  • 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
  • proven in fact to have fulfilled the functions described in paragraph (a) by itself or together with further evidence

Electronic VS Digital Signatures

Electronic signatures are different from digital signatures.

Electronic Signature

An electronic signature is an acknowledgment provided in an electronic format that a business can use to demonstrate acceptance by a party and can electronically be used to authenticate the party involved. Electronic records are valid and enforceable by law in Singapore.

Digital Signature

A digital signature is a type of electronic signature that adds a security layer using an asymmetric cryptosystem and a hash function. A digital signature is equipped with a Digital Signature Certificate (DSC) that contains the user’s identity details.

The user’s identity details include users’ email, address, name, certifying authority’s name, and date of the certificate was issued. Generally, digital signatures are used to liaise with government authorities. For example, when a company files a tax return or fill up forms with the Accounting and Corporate Regulatory Authority (ACRA), digital signatures will be applied.

What this means for businesses? 

E-signatures can drive efficiencies by helping all types of business, including accounting, legal, healthcare, finance, insurance and retail.  

Businesses save time and money by securely completing agreements in hours rather than days. This can shorten the time spent waiting for documents from clients and save costs as you do not have to physically witness signings.  

Electronic signatures reduce purchasing roadblocks by creating a seamless sales experience allowing the customer to sign immediately. Electronic signatures can be as simple as a button click, allowing for easier transactions, and reducing the hurdles for buyers. In the 21st century, convenience is king.  

SMEs are able to increase their flexibility and efficiency when dealing with larger enterprises. This means they can react to changes faster and are able to complete project requirements in a similar efficiency compared to the larger enterprises. This makes them viable options to competitors.  

For record keeping and audit purposes, it is possible to track documents digitally. This ensures they were received by the right person with the right signature. This also aids in any legal matters, as there will be a clear revision history to help trace any issues with authorization matters.  

What does this mean for businesses?

E-signatures can drive efficiencies by helping all business, including legal, accounting, healthcare, insurance, finance, and retail.

Businesses save time and cost by securely finalized agreements. An agreement can be completed in hours rather than days by using e-signatures. By using e-signatures, one does not have to physically there to witness signings, thus, it also helps business to save costs to travel.

Electronic signatures can effectively reduce purchasing roadblocks by creating a smooth sales experience. Customer can easily sign immediately if they want to close a deal. Electronic signatures can be as simple as a button click, allowing for easier transactions, and reducing the hurdles for buyers. In the 21st century, convenience is king.

When negotiating with larger enterprises, SMEs can increase their flexibility and efficiency by using e-signatures. SMEs can react to changes faster and can complete project requirements with a similar efficiency compared to the larger enterprises. This makes them viable options for competitors.

For record-keeping and audit purposes, it is possible to track documents digitally. This ensures they were received by the person in charge with the right signature. This also aids in any legal matters, as there will be a clear revision history to help trace any issues with authorization matters.

When can electronic signatures not be used?

Not every signature can be replaced by an electronic equivalent. Some exemptions are barred from using electronic signatures and will require the physical signature to be considered legally binding.

The Electronic Transactions Act provides an explicit list of documents that are not allowed to be signed electronically.

This excludes:

  • documents that appoint a beneficiary or claim the delivery of goods and the payment of a sum of money,  
  • wills, 
  • legal actions involving real estate. 
  • powers of attorney, 
Document when cannot use electronic signatures

Additionally, even if the law allows the use of an e-signature, you can agree with the other party to exclude it. This will need to be indicated in your contract.  

Conclusion 

Electronic signatures are an important tool for businesses attempting to transact online, or even just trying to reduce their internal administrative workload. Integrating the various electronic signatory platforms available are easy and customizing or creating one specific to your business needs is also possible. The legal requirements in Singapore allow for many different forms of signatures to be considered valid. This aids businesses as they do not have to conform to rigid systems and can instead select the best solution to their needs.  

If your business is in the process of implementing such digital innovation, and would like advice, contact Paul Hype Page. We have been at the forefront of innovation for years. After all, we can help incorporate your company in Singapore online without the need for physical signatures or electronic signatures.

Are Electronic Signatures legally binding FAQS

Are electronic signatures legal in Singapore?2020-11-06T14:21:04+08:00

Yes. Electronic signatures are legal in Singapore and they are governed by the Electronic Transaction Act.

Is a digital signature more secure than an electronic signature?2020-11-06T14:20:47+08:00

Yes. A digital signature is more secure than an electronic signature as it comprised more security features. 

Are electronic signatures less secure than wet signatures?2020-11-06T14:19:57+08:00

No. Electronic signatures are more secure than a wet signature because they will never be easily forged and tampered with. 

Does an electronic signature have to be done using a stylus?2020-11-06T14:20:03+08:00

No, you can use your finger to draw your signature on a touchscreen. Even actions such as button clicks can be considered electronic signatures, provided they meet the requirements of the ETA. 

2021-04-08T17:16:04+08:00August 5, 2020|0 Comments
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