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Want to have lesser physical contact? Is e-signing valid?

Updated: Jun 5, 2020

E-signing in Malaysia

1. Are e-signatures legally recognised in Malaysia?

E-signatures (i.e. electronic signature and digital signature) have been legally recognised in Malaysia since the enactment of the Digital Signature Act 1997 (“DSA”), followed by the Electronic Commerce Act 2006 (“ECA”).

2. What is electronic signature?

Electronic signature is defined under the ECA as “any letter, character, number, sound or any other symbol or any combination thereof created in an electronic form adopted by a person as a signature”.

3. What are the requirements for an electronic signature to be valid?

According to section 9 of the ECA, an electronic signature is legally enforceable if:

(a) it is attached to or is logically associated with the electronic message;

(b) it adequately identifies the person and adequately indicates the person’s approval of the information to which the signature relates; and

(c) it is as reliable as is appropriate given the purpose for which, and the circumstances in which, the signature is required.

An electronic signature is “as reliable as is appropriate” if— (a) the means of creating the electronic signature is linked to and under the control of that person only; (b) any alteration made to the electronic signature after the time of signing is detectable; and (c) any alteration made to that document after the time of signing is detectable.

In the case of Yam Kong Seng & Anor v Yee Weng Kai [2014] 4 MLRA 316, the court held that a simple SMS could fulfil the requirements of an electronic signature under the ECA as the sender was adequately identified with the telephone number from which the SMS was sent.

4. What is digital signature?

Digital signature is defined under the DSA as “a transformation of a message using an asymmetric cryptosystem such that a person having the initial message and the signer’s public key can accurately determine (a) whether the transformation was created using the private key that corresponds to the signer’s public key and (b) whether the message had been altered since the transformation was made”.

5. Is electronic signature the same as digital signature?

Electronic signature and digital signature are not exactly the same thing, even though many use the two terms interchangeably. All digital signatures are electronic, but not all electronic signatures are digital. Digital signature can be understood to be more complex and process-based. Rather than being a mere symbol affixed to an electronic document, a digital signature uses certificate-based digital IDs to authenticate each signer’s identity.

6. Should I use electronic signature or digital signature?

DSA initially provided for legal recognition of a technologically-specific type of e-signature known as digital signature to be as legally binding as a document signed with a handwritten signature, an affixed thumb-print or any other mark.

Subsequently, ECA provided more broadly for legal recognition of commercial transactions and contracts conducted or concluded by any electronic means. The ECA does not preclude the use of digital signature in electronic commercial transactions. As such, parties are free to choose to use a digital signature or an electronic signature in any commercial transaction.

However, if the law requires a seal to be affixed to a document, the requirement of the law has to be fulfilled by a digital signature as provided under the DSA.

7. What documents cannot be signed electronically?

(a) Power of attorney;

(b) Wills and codicils;

(c) Trusts;

(d) Negotiable instruments;

(e) Documents which require formal notarisation or attestation before a public notary or commissioner for oaths (e.g. statutory declaration);

(f) Documents which require physical wet-ink signatures (e.g. instrument effecting any dealing with real property under National Land Code).

On a practical note, where a document is required to be stamped, there may be issues in respect of the stamping of an electronically signed document as it is uncertain whether the stamp office will accept a document without traditional wet-ink signatures to be stamped.

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