E-signing legal documents when working remotely

Is it possible to e-sign contracts?

In this article, we look at the legal position of e-signing contracts under English, Singapore, PRC (which for the purpose of this article does not include Macau SAR or Taiwan) and Hong Kong SAR laws.

Under English and Singapore law, the signing of simple contracts using e-signatures should not be problematic. Similarly, under the laws of Hong Kong, contracts can generally be e-signed so long as the e-signing occurs by way of a reliable, appropriate and agreed method of signing by the recipient of the signature (though additional requirements may apply in the context of government contracts). In Mainland China, the signing of contracts using e-signatures is also generally acceptable provided that the parties to the contract agree to the use of e-signatures.

What about e-signing deeds?

Deeds are a creature of common law that can entail significantly more onerous signing formalities.

The legal considerations which relate to the use of e-signatures to execute deeds under English law are rather different.

In its recent report, the Law Commission concluded that, subject to certain requirements being met, an e-signature was capable in law of being used to execute a document (including a deed).

One such requirement is that when an individual signs a deed (whether on their own behalf or as the sole signatory on behalf of a company) they must do so in the ‘presence’ of a witness who attests the signature. Please see ’What about remote witnessing of deeds?’.

A different position is adopted under Singapore law. The legal enforceability of electronic records and e-signatures is governed by the Electronic Transactions Act (Cap. 88) (“ETA”). Whilst there is no prohibition in the ETA on the e-signing of deeds, the formality requirements for deeds require them to be signed by a director and the secretary of the company; two directors of a company; or a director of the company in the presence of a witness who attests the signature. It has yet to be tested in the Singapore Courts whether a witness may attest the e-signing of a deed. Further, certain matters are excluded from the application of the ETA and e-signatures cannot be used to execute deeds relating to these matters. For example, an e-signature cannot be used to execute a Power of Attorney by way of deed. Please see “When is e-signing not acceptable?”

In Hong Kong, certain types of documents which must be executed by way of deed (such as the conveyance of land) cannot be e-signed. Please see “When is e-signing not acceptable?” below. In addition, the e-signing of documents that need to be witnessed presents similar practical problems as those already alluded to above, as it is difficult to evidence the remote witnessing of an e-signature.

Execution by way of deed is not applicable in Mainland China under the Electronic Signature Law, as there is no such legal concept of a deed under PRC law.

What about remote witnessing of deeds?

Under English law, a witness to the signing of a deed must be present at the signing. The Law Commission’s view was that this requires the ‘physical presence of the witness’ and that the parties could not be confident that the current law allows for a witness to view the signing on a screen or through an electronic platform.

This means that a witness may still attest the e-signing of a deed but they would need to be in the same room as the signatory.

In Hong Kong, remote witnessing of deeds gives rise to the same concerns under the English and Singapore position. Hong Kong law does not specifically prescribe how execution of deeds by way of e-signature should be witnessed. However, as a matter of good practice, it is our view that the witness should physically sit with the signatory to attest the e-signing of a deed.

There has yet to be any official guidance in Singapore on the remote witnessing of deeds. However, the same concerns apply as to whether a witness will be able to verify the actions of the signatory.

Our advice is not to execute deeds where the witness is not in the physical presence of the signatory and that remote witnessing e-signing on a screen is not enough. If the attestation is invalid, then the deed will not have been validly executed and will not constitute a valid deed.

When is e-signing not acceptable?

Under English law, there are cases where e-signing may not be acceptable (for either contracts or deeds), including where:

• A document requires registration at H.M. Land Registry or the Land Charges Registry. However, as a result of COVID-19 H.M. Land Registry will, until further notice, accept for the purposes of registration specific types of deed which are completed on the basis of a scanned copy of a wet ink signature provided certain steps have been followed. Guidance can be found in Land Registry Practice guide 8
• Stamp duty is payable on a document - but HMRC will accept e-signatures while COVID-19 measures are in place, see guidance
• It is necessary to establish the precise physical location where a document has been signed (such as where there are legal reasons why a document should be physically signed outside of England and Wales)
• A document requires notarisation. A notary will generally require a ‘wet ink’ signature and for the document to be signed in the presence of the notary
• The laws of another relevant jurisdiction restrict or prevent it. Please see ‘What about using e-signatures in other jurisdictions?’

Under Singapore law, the following matters are exempted from the operation of the ETA:

• 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
• The conveyance of immovable property or the transfer of any interest in immovable property

Under Hong Kong law, there are cases where e-signing may not be acceptable (for either contracts or deeds):

• Trusts and powers of attorney
• Any instrument that is required to be stamped or endorsed with stamp duty in Hong Kong
• Any deed, conveyance or other written document by which any parcels of ground tenements or premises in Hong Kong may be affected
• Any assignment, mortgage or legal charge under Hong Kong conveyancing laws or any other contract relating to an interest in immovable property
• Oaths, affidavits and statutory declarations
• Negotiable instruments such as promissory notes or bills of exchange (but excluding cheques that bear the words “not negotiable”).

Under PRC law, e-signing is not accepted in the following cases:

• Documents involving personal relations such as marriage, adoption and inheritance
• Documents concerning suspension of water supply, heat supply, gas supply and other public utility services
• Any other circumstances as provided by laws or administrative regulations, which include for example governmental filings which require web ink signatures.

Can you offer us any practical tips?

For common law jurisdictions:

• There may be documents which don’t need to be deeds and which can instead be signed as contracts (i.e. where the consideration can be readily identifiable). Consider whether you have a choice of executing a document as an agreement or a deed. Remember that a contract has certain disadvantages when compared to a deed (for example, it has a shorter limitation period).
• Think about expanding the list of those who have power to bind and ensure that two of them are physically present at any offsite office – one to execute and the other to witness.
• Think in advance about appointing more attorneys and have the relevant powers of attorney executed well in advance of any remote working. Remember that all powers of attorney must be executed as deeds.
• It is best practice for a witness who attests a signature to be independent of the signatory.

Under PRC law, if an e-signature is challenged, there is a requirement to prove the e-signature in question is a reliable one. Although Chinese law does not limit the form of an e-signature or prescribe specific technologies that must be used for e-signatures, Chinese law does define what constitutes a reliable e-signature. Namely:

• The signature must exclusively belong to and be controlled by the signatory
• Any alteration made to the e-signature can be discovered by the signatory him/herself
• Any alteration made to the data message (via which a e-contract is signed) can be discovered by the signatory.

If these requirements are not met, the validity of an e-signature may be challenged in a Chinese court. Judicially, Chinese courts have held that digital signatures with public key cryptography technology are reliable ones.

Can board minutes and board resolutions be e-signed?

Yes. The e-signing of board minutes and board resolutions should not be problematic under English, Singapore and Hong Kong law. Under the PRC law, the e-signing of board minutes and board resolutions is also acceptable provided that the board agrees to use e-signatures on an ad hoc basis or the articles of association explicitly permits e-signatures.

What about notices?

Yes. Again, the e-signing of notices should not be problematic under English, Singapore, PRC or Hong Kong law but bear in mind how delivery is proved.

What about using e-signatures in other jurisdictions?

The use of e-signatures may present challenges for entities incorporated in, and contracts governed by, the laws of some jurisdictions. Those jurisdictions include Canada, Germany, Kuwait, Russia and Turkey.

We have significant experience of advising on a broad range of issues arising from the use of e-signatures within financial services, and the legal and regulatory impacts of this.

We have carried out a number of different cross-border regulatory surveys on this topic, including one covering all major financial centres (40 countries). This survey was made up of a large number of questions, covering:

• The basics of e-signatures, e-delivery, e-capture, e-upload and other similar solutions, and if they are permitted in each country
• Enforceability of those solutions against customers in each country
• Regulatory consents required to use these solutions
• Consideration of issues relating to cross-border use of these solutions
• Formalities to be dealt with in order to use e-signatures and other solutions
• Types of documents/agreements that can and cannot be e-signed
• Related data privacy issues
• Document retention requirements and how to interpret these in an e-signatures context

Other relevant considerations

There are a number of e-signature providers in the global market. In choosing one, commercial factors are likely to play an important role.

Relevant considerations will include cost, convenience, data security, compatibility with existing systems, the location of physical servers and the adequacy of recovery planning.

The choice of whether to enter into documents using e-signatures will involve legal and commercial considerations across a range of organisational sectors.

Full updates on how to navigate this period of global uncertainty can be found here.

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