Digital Signature: What is the state of Singapore's digital economy?

First, Singapore is a technology and business-driven country, which is why it offers investors and entrepreneurs a favorable and stable business environment. The Government’s “Smart Nation” initiative launched on November 24, 2014, aims to leverage Infocomm, networking, and Megadata technologies to create technology solutions. As a result, “Smart Nation” aims to drive Singapore’s innovation and sustainability.

In addition, Singapore has received global recognition for its development in many areas. As one of the most competitive economies and smartest cities in the world, Singapore is well-positioned to support progressive digital business practices.

What are the current laws regarding electronic transactions?

Firstly, in 1998, Singapore became the first country in the world to implement the UNCITRAL Model Law on Electronic Commerce by enacting the Electronic Transactions Act. Secondly, it was among the first countries to invoke the United Nations Conventions on the Use of Electronic Communications in International Contracts in 2005. As a result, this ensures that Singapore’s legal framework is aligned with recognized international rules, thereby increasing legal predictability.

As a second step, the Singapore Electronic Transactions Act 2010 was repealed and re-enacted with amendments to the Electronic Transactions Act.

As a third step, in 2011 further revisions to the Electronic Transactions Act (ETA) were implemented. Thus, the ETA provides a comprehensive commercial code for electronic transactions. As a result, the rights, and obligations of the parties to the transaction are clearly defined. The ETA states that “information shall not be denied legal effect, validity or enforceability solely because it is in the form of an electronic record” (ETA Article 6). Therefore, this means that, other than excluded documents, most documents are legally recognized as the functional equivalent of a paper document.

Finally, in 2021, the ETA was amended to adopt the UNCITRAL Model Law on Electronic Transferable Records which allows for the creation and use of transferable documents or instruments such as electronic bills of lading which are key documents for international trade. The adoption of electronic bills of lading will result in faster processing, reduced risk of fraud, cost savings, and enable innovative business models.

What have been the regulatory reforms?

On June 27, 2019, the Infocomm Media Development Authority (IMDA) launched a public consultation on the revision of the Electronic Transactions Act (ETA) to gather views on the revision of the ETA. The Infocomm Media Development Authority worked with 14 government departments and agencies and consulted with industry stakeholders. This consultation was designed to address several things:

➤ To the demands generated by the rapidly developing digital economy and technology landscape
➤ A United Nations General Assembly resolution recommending that United Nations member states consider adopting the UNICITRAL Model Law on Electronic Transferable Records
➤ To the objective of strengthening Singapore as a hub for electronic transactions

Therefore, this consultation focused on the following key changes to the ETA:

➤ Allowing more transactions
➤ Providing certainty on the use of new technologies such as Distributed Ledger Technology, Smart Contracts, and biometrics
➤ Updating the Certificate Authority to meet the latest international standards
Electronic Signature in Singapore

What is the status of electronic and digital signature in Singapore?

It is worth recalling that Singapore’s Electronic Transactions Act 2010 has recognized the use of electronic and digital signatures.

Firstly, it is important to know how to differentiate between electronic signature and digital signature. Indeed, an electronic signature is an acknowledgment provided in an electronic format that a company can use to demonstrate acceptance by a party and that can be used electronically to authenticate the party concerned. Thus, electronic records are valid and enforceable by law in Singapore. An electronic signature can take the form of a click on an acceptance button on a website where the user agrees to the terms and conditions, a scan of a physical signature, a signature on a touch screen with a stylus, or agreeing to the terms and conditions through electronic communications such as emails. In contrast, a digital signature is a type of electronic signature that adds additional security by using an asymmetric cryptosystem and a hash function. As such, a digital signature is issued with a digital signature certificate that contains the user’s identity details including name, address, email, date of certificate issuance, and the name of the certification authority. Businesses use digital signature in transactions with government authorities, for example, filing tax returns, filing forms with the Accounting and Corporate Regulatory Authority.

Secondly, a company can reduce its costs by using electronic signature as opposed to traditional handwritten signature. As a result, a document can be sent by e-mail and can be signed in just a few minutes. In addition, directors of companies registered in Singapore can approve a corporate resolution passed at a board meeting with their digital signatures. The signature will therefore display the date of the signature and is particularly convenient in cases where the company keeps all its records electronically.

Finally, the ETA gives electronic signatures and their use the same status as handwritten signatures. However, the law stipulates that the signature must be unique to the person using it, it must be capable of identifying the person and it must be under the sole control of the person using it. A digital signature must also meet the following criteria to be considered secure:

1. Created during the operational period of a valid certificate and could be verified by reference to the public key specified in that certificate.

2. The certificate must be issued by an accredited certification authority in Singapore or by a recognized certification authority. It may also be issued by a public body approved by the Minister for Communications and Information to act as a certification authority. In addition, the parties have expressly agreed between them to use a digital signature as a security process, and the digital signature has been duly verified by reference to the signatory’s public key.

Is it legal to use electronic signatures in contracts in Singapore?

The Infocomm Media Development Authority defines a digital signature as “an acknowledgment provided in an electronic format that a business can use to demonstrate a party’s intent (e.g., acceptance) and that can be used electronically to authenticate the party involved“.

As electronic signatures are recognized by Singapore’s Electronic Transactions Act 2010 (ETA), this gives them the same legal status as a handwritten signature. However, the digital signature must meet certain conditions to obtain this same legal status:

➤ The method of signature used must be capable of identifying the person signing and indicating the intention of that person concerning the information contained in the electronic record
➤ The method of signature used must be as reliable as appropriate for the purpose for which the electronic record was generated or communicated considering all the circumstances, including any relevant agreement

When are electronic or digital signatures not allowed to be used?

Electronic or digital signature may not be used for documents relating to the following matters:

1. The creation or execution of a will.

2. Negotiable instruments, documents of title, bills of exchange, promissory bills, bills of lading, warehouse receipts, or any transferable document or instrument entitling the bearer or beneficiary to claim delivery of goods or payment of money.

3. The creation, execution, or enforcement of a deed of trust, declaration of trust or power of attorney, except for constructive and executory trusts.

4. Any contract for the sale or other disposition of real property.

5. The assignment or transfer of any interest in real property.

Accordingly, the parties shall not use electronic or digital signatures for documents relating to the above categories and shall comply with their respective signature requirements.

Make your procedures more efficient with the implementation of an electronic signature

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