E-Signing?

What you need to know

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 INTRODUCTION

Electronic signatures on contracts have been legally recognised in

Malaysia since 1997.

Starting with the enactment of the Digital Signature Act 1997 (“DSA”), and
followed by the Electronic Commerce Act 2006 (“ECA”).

The use of electronic signatures (or E-signature) has become

increasingly popular due to the growth in electronic commerce.

The terms electronic signatures and digital signatures are often used
interchangeably; however, these are governed under two separate legal
frameworks: -

1. Electronic Commerce Act 2006 (“ ECA”)

2. Digital Signature Act 1997 (“ DSA”)

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 WHAT IS ELECTRONIC SIGNATURE
(E-SIGNATURE)?

E-signature is governed under the Electronic Commerce Act 2006 (“ECA”),

and e-signature is defined 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”.

an “e-signature” can be in various forms, including but not limited to a Digital

Signature, a SMS, a signature made electronica lly such as scanned version
of an actual signature, or a “tick” in a check box to indicate an acceptance of
terms and conditions and etc.

In order for the e-signature to be binding and enforceable, the following

requirements under Section 9(1) and 9(2) of the ECA must be met:

Section 9(1) - where any law requires a signature of a person on a document,

the requirement of law is fulfilled, if the document is in the form of an electronic
message, by an electronic signature which –

(a) where a e-signature is attached to or is logically associated with the

electronic message;
(b) adequately identifies the person and adequately indicates the person’s
approval of the information to which the signature relates; and
(c) is as reliable as is appropriate given t he purpose for which, and the
circumstances in which, the signature is required.

Section 9(2)- for the purpose of paragraph (1)(c), an electronic signature is

as reliable as is appropriate if -

(a) the means of creating the e-signature is linked to and under the control
of that person only;
(b) any alteration made to the e-signature after the time of signing is
detectable; and
(c) any alteration made to that document after the time of signing is
detectable.

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CASE LAW:

The Federal Court case of Yam Kong Seng & Anor v Yee Weng Kai [2014] 6
CLJ held that:

“Section. 8 of the ECA provides that where any law requires information
to be in writing, the requirement of the law is fulfilled if the information
is contained in an electric message that is accessible and intelligible so
as to be usable for subsequent reference. An electronic message such
as an SMS, with all the attributes of s. 8 being present, is as good
as in writing.”

“Signatures need not be written. Suffice if there be any mark, written

or not, which identifies the act of the party, perhaps in the form of
mark or by some distinguishing feature peculiar only to that person,
then the acknowledgement had been signed. The conventional paper
is substituted by the mobile phone, which holds a feature that can
preserve information or transmissions in the like of the SM S, with
the telephone number representing the caller or the sender of some
message.”

“Under s. 6 of the ECA, any information shall not be denied legal effect,
validity or enforceability on the ground that it was wholly or partly in an
electronic form.”

“Section 9 states that where any law requires a signature of a person

on a document, the requirement of the law is fulfilled if the document is
in the form of an electronic message (the SMS in this case) by an
electronic signature. For purposes of this appeal, the legal requirement
for a signature was fulfilled as, inter alia, the sender was adequately
identified let alone admitted by him. Under s. 5 of the ECA, electronic
signature means any letter, character, number, sound or other symbol or
any combination created in an electronic form adopted by a person as a
signature. The telephone number of the respondent from which the
SMS was sent confirmed that it came from the respondent ie the
registered owner of the telephone.”

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 WHEN CAN E-SIGNATURE BE USED?

T h e E C A a p p l i e s t o a n y “ commercial transaction ” which is defined as

“a single communication or multiple communication s of a commercial

nature, whether contractual or not, which included any matters relating to
the supply of exchange of goods or services, agency, investments,
financing, banking and insurance ”

Section 2 of the ECA, expressly excluded some transactions and documents

from the scope of ECA:

1. Power of attorney
2. Wills and codicils
3. Trusts documents
4. Negotiable instruments (i.e.documents guaranteeing payment of a
specific sum with the payer named such as promissory notes, demand
draft and cheques).

Section 7(1) of the ECA, provides for the formation of a contract to be legally
binding and effective if it is communicated via electronic means.

“In the formation of a contract, the communication of proposals, acceptance of

proposals, and revocation of proposals and acceptances or any related
communication may be expressed by an electronic message.”

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 WHAT IS DIGITAL SIGNATURE
AND
THE DIFFERENCE BETWEEN E-SIGNATURE AND
DIGITAL SIGNATURE

Digital signature is governed by the Digital Signature Act 1997 (“DSA”).

Both terms have often been used interchangeably however they are NOT THE
SAME. A digital signature is an e -signature but not vice versa.

What is Digital Signature? The definition of “digital signature” under the DSA
is-

“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.”

NOTE: For a digital signature to be valid, enforceable, it has to be certified

and validated by licensed certification authorities approved by the Malaysian
Communications and Multimedia Commission (“MCMC”) .

Presently, there are four licensed certification authorities listed in the MCMC
website are:

1. Post Digicert Sdn Bhd (457608-K);

2. MSC Trustgate Sdn Bhd (478231-X);
3. Telekom Applied Business Sdn Bhd (455343-U); and
4. Rafcomm Technologies Sdn Bhd (1000449 -W).

A digital signature is verified by reference to the public key listed in a valid

certificate issued by a licensed ce rtification authority

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DSA shall recognise a digital signature to be a legally binding signature
provided that such signature satisfies all the requirements provided by DSA as
set out in followings section of the DSA: -

Section 62 (1) of the DSA

“Where a rule of law requires a signature or provides for certain

consequences in the absence of a signature, that rule shall be satisfied by
a digital signature where-

(a) that digital signature is verified by reference to the public key

listed in a valid certificate issued by a licensed certification
authority;

(b) that digital signature was affixed by the signer with the intention
of signing the message; and

(c) the recipient has no knowledge or notice that the signer-

(i) has breached a duty as a subscriber; or

(ii) does not rightfully hold the private key used to affix the
digital signature.”

Section 62 (2) of DSA

provides that a document signed with a digital signature in accordance with

the DSA has the same legally binding effect as a document signed with a
handwritten signature, an affixed thumbprint or any other mark.

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 THE LIMITATION OF USE

The
Not all documents can be electronically signed.

Certain documents that must be affirmed or attested before a commissioner of

oaths or a notary public are not allowed to be electronically signed.

Section 4 of the ECA states that, ECA shall be supplemental and without
prejudice to any other laws regulating commercial transactions. The usage of
e-signature is still subject to the other written laws .

National Land Code requires all instruments / prescribed statutory forms to be

signed by wet ink. Government departments such as land office only accept
physical documents signed with wet ink.

Pursuant to Section 16 (2) (a) and (b) of the ECA , notice of default, notice of
demand, notice of show cause, notice of repossession, or any similar notices
which are required to be served prior to commencing of legal proceeding, and
any originating process, pleading, affidavit or other documents which are
required to be served pursuant to a legal proceeding , cannot be served by an
electronic means.

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WHETHER WITNESSING OF SIGNING CAN BE
DONE VIA VIDEO CONFERENCING TOOLS IN
MALAYSIA
&
THE RATIONALE OF WITNESSING

RATIONALE:

1. To eliminate forgery or to prevent identity fraud.

2. To ensure that the signatory has signed the agreement voluntarily and
not under duress as contract must be made by free consent and
voluntarily by the parties as specified in the Contract Act 1950 .

3. In the event of a dispute, a witness ma y be required to provide

evidence about the circumstances of the signing .

REQUIREMENTS:

1. To observe the signatory of the document that he or she is signing ,

to certify that they were present at the time the document was signed .

2. To attest or otherwise confirm the signature was witnessed by signing

the document or a copy of the document.

3. Be reasonably satisfied that the document that the witness signs is

the same document, or a copy of the document signed by the
signatory.

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Current Position :

There have yet to be any amendments on the law in Malaysia pertaining to the
witnessing signatures via video-conferencing tools. There has been little
guidance or development of law in Malaysia pertaining to this issue.

The Bar Council has released a circular which expressed their view that
witnessing signatures should not be done via video -conferencing to avoid risks
as witnessing a signature via video conferencing is uncertain.

A particular section of the circular is reproduced below :

Questions: Can a solicitor witness the signing of a document by video

conferencing?

Can I witness execution of documents remotely?

Answer: For the reasons stated below and to avoid the risks involved, the
view is that a solicitor should not witness signatures v ia video
conferencing.

The law on witnessing a signature via video conferencing is

uncertain. The law is silent as to the circumstances when this kind
of witnessing will be legally valid.

The primary purpose of witnessing the signature to a document is

to prevent identity fraud and to ensure that the signatory has
signed the document voluntarily as it cannot be absolutely certain
that the signatory is not under any duress of somebody hiding
behind the camera or outside the camera view.

In a majority of cases when witnessing the signature to a document,

the witness attests to being in the presence of the person signing
the document.
Watching someone sign a document on a screen when the person
signing is not in the same room as the witness, is unlikely to be
considered “in the presence of”.

It is difficult for the witness to be sure that the document that is

subsequently sent to him for attestation is the same document he
saw being signed on the screen.

Nevertheless, as the issue of whether the witnessing of a signature

via video conferencing will be legally valid is a matter of law, the
CPC suggests that any solicitor who wishes to witness a signature
via video conferencing should seek independent legal advice.

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REFERENCES TO CASE LAW:

Man Ching Yuen v Landy Chet Kin Wong First Tier Tribunal (Property
Chamber), 2020 (ref 2016/1089) UK

The First-tier Tribunal (Property Chamber) (“FTT”) considered more

specifically, what counts as ‘presence’ as required under section 1(3) of the
Law of Property (Miscellaneous Provisions) Act 1989 (LP(MP)A 1989) and the
FTT found that given the uncertainty in the current law in this area, the
physical presence of the witness was required.

Amir Muhammad Ilia Syahid Indra Zain Putra @ Jeffrey Jins & Anor v
Putera Hang Jebat bin Mohamed Jin & Ors [2020] MLJU 1948
HIGH COURT (SHAH ALAM)
CHOO KAH SING J

It was held that the meaning of “in my presence” could not be stated any
clearer to mean that – the person must be at the same time and same place
as that of the other person, and at such close proximity to see the other
person writing his signature or affixing his thumb -mark.

CONCLUSION:

The position of law in Malaysia is silent and unclear of witnessing signatures

via video conferencing. The closest guidance that we can get is the from the
judgement of Choo Kah Sing J in the Amir Muhammad Ilia case, which held
that the meaning of “in my presence” means the person must be at the same
time and same place, and video conferencing, therefore, is not considered as
“at the same time and same place”. The Bar Council ‘s Circular also point ed
out certain risks involved in witnessing the signing of documents by video
conferencing, to avoid the risks involved.

Notice:
This presentation does not constitute legal advice and its contents should not be relied upon as such. The
facts and circumstances of each and every case will differ and therefore will require specific legal advice.

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