Kimberley Sorbie discusses the use of e-signatures


Social distancing has made signing documents significantly more difficult for both businesses and individuals with more and more people now working remotely. In light of the current climate, more consideration is being given to electronically signing documents. An electronic signature (otherwise known as an “e-signature”), similarly to a wet-ink signature, simply shows the intention of the party signing to be bound by the document, although, e-signatures often involve an extra layer of intention, most commonly in the form of checking a box to confirm the signatory’s agreement to be bound by the document.



Many documents can be formalised by one signature, however, documents requiring multiple signatures or witnessing are proving far more difficult to sign electronically during the COVID-19 pandemic.



In the Isle of Man, under the Electronic Transactions Act 2000 (“the Act”), a document signed either wholly or partly using an e-signature will not be invalidated, thus authorising the use of e-signatures. The Act identifies that an e-signature is valid if: (i) a method has been used to identify the signatory, and the approval of their signature being added to a document; (ii) in the circumstances at the time of the e-signature, this method was as reliable as was appropriate for the purposes for which the information was communicated; and (iii) the receiver of the signed document consents to an e-signature being used and the particular method used.



The Isle of Man Financial Services Authority (“FSA”) has indicated that it accepts the use of electronic documents and e-signatures as identified in their Anti-Money Laundering and Countering the Financing of Terrorism Handbook (the “Handbook”). The Handbook allows client due diligence to be obtained electronically provided that the authenticity of the electronic documents are verified appropriately. For example, photographic identification documents should clearly show the person’s face and be submitted in a tamper-resistant format. This can then be verified by an authorised person who knows their identity, or by submitting a ‘selfie’ of the person holding their identity document which can be clearly identified in the photograph, along with a clear image of the document itself. Where electronic signatures are used, regulated entities should document the business and complete a technological risk assessment. Provided that the relevant guidance is followed, the FSA allows electronic formats of documents to be used.



Entry into a document by an Isle of Man company normally requires either one director to sign; or two directors to sign; or, a director and secretary to sign, depending on the type of company and the type of document. Many documents will already contain a clause that the document may be executed in counterparts or together. It is worth checking that this is included in the document, and if it is not, specifically asking for this to simplify the signing process in the current climate. By incorporating this clause, each party will be able to sign from their own home and send a copy via email, or post the original, and the physical document will not need to be handled by every party involved in the transaction. The document then becomes effective on the day that all of the parties agree to date their counterpart, normally upon the signature of the final party.



However, e-signatures will not avoid the problem that the signature of an individual may need to be witnessed, depending on the signing requirements of the document. An example of this would be a Deed to be entered into by an individual. The key principle of witnessing a signature, is that the witness must be in the “physical presence” of the signatory at the time of signing which may pose a problem with e-signatures. According to advice issued by the UK Law Commission, provided that the physical presence element of witnessing the application of an e-signature is met, then a Deed can be electronically signed, and effectively witnessed, by an individual (who should not be related to the signatory).



Please note that this information on e-signatures does not apply to Wills.



It is worth noting that each jurisdiction has different signing requirements. If you would like to know more about signing legal documents in the Isle of Man, either in general or during the COVID-19 pandemic, don’t hesitate to contact us.


 



E: ksorbie@longandhumphrey.com 




W: http://longandhumphrey.com/team/kimberley-sorbie/



Long & Humphrey, Advocates and Notaries Public, The Old Courthouse, Athol Street, Douglas, Isle of Man, IM1 1LD



Long & Humphrey offers services across a range of legal specialisms including: Corporate & Commercial, Employment, Employment-based and Points Based System (PBS) Immigration, Insolvency, Licensing, Dispute Resolution, Public law (including Doleance / Judicial Review), Private Client, and Property.



Long & Humphrey is the trading name of Long & Humphrey Advocates Limited, registered in the Isle of Man under Company Registration Number: 131896C