Regulatory expectations for wet-ink signatures in light of coronavirus (COVID-19) restrictions
Expectations for firms when dealing with the need for 'wet-ink' signatures (i.e. signing a document by hand using a pen), are set out in this article.
Agreements
FSCA rules do not explicitly require wet-ink signatures in agreements, nor do they prevent firms from using electronic signatures in agreements. The validity of electronic signatures is a matter of law. Firms should consider the legal position themselves because we cannot give legal advice.
Electronic signatures have been legal in most countries for more than a decade now. But, many people and organisations are still reluctant to use them. This is often simply because they don't understand them. What is an electronic signature?
This lack of understanding is unfortunate, because electronic signatures have huge advantages over handwritten signatures – including:
- being faster
- being more secure
- letting you keep transactions electronic
- being environmentally friendly
However, people are unsure about the law or rules relating to electronic signatures. What counts as an electronic signature? What is an advanced electronic signature? When do you have to use an advanced electronic signature and when is an ordinary electronic signature sufficient? Does the law recognise them? Are they enforceable?
Using an ordinary electronic signature instead of an advanced electronic signature when the law requires you to use an advanced electronic signature could have serious consequences for your business.
Advanced electronic signatures are those electronic signatures which have ‘passed a test’ or been accredited. Think of this as a type of 'stamp of approval'. Without it, certain electronic signatures will simply not be considered good enough to be used to perform certain acts as required by law. In that narrow sense, they won’t be considered 'legal'. The law recognises all electronic signatures, while at the same time incorporating provisions for particularly reliable electronic signatures – those which have been “accredited' (and can be called 'advanced electronic signatures'). If you do not have accreditation you will still be able to provide legal electronic signatures or digital certificates, but not advanced electronic signatures.
Michalsons has released a guide to electronic signatures which can be read here.
The ECT Act in South Africa defines an electronic signature as data attached to, incorporated in, or logically associated with other data and which is intended by the user to serve as a signature. The ECT Act recognises the contractual freedom of parties to specify whether electronic signatures are required, and if so, the types of electronic signatures. The Act does not prescribe what type of technology must be used and remains technology neutral.
The Act also creates special type of electronic signature, known as an “advanced electronic signature'. Where a law (statute) requires a signature, only an 'advanced' electronic signature will be recognized. These signatures can only be provided by vendors whose electronic signature product has been accredited by the DOC. They involve face-to-face authentication. Some of these signatures rely on public key cryptography and to this extent, may be considered 'digital signatures'.
Forms
Regulatory authorities would accept electronic signatures for fund-related applications for instance and on certain type of other applications. The FSCA has previously stipulated that firms may use electronic signatures for all interactions with them.
However best to make sure first by contacting the relevant authority first.
Get an Advanced Electronic Signature (Michalsons)