The medium of the internet has allowed business, retailers and entertainment companies to reduce the cost of doing business while reaching wider audiences. Nearly all business models include some form of internet presence and the push to move as much as possible online continues, especially in the wake of the Coronavirus pandemic. The continuing migration of business to the internet means that more and more transactions take place online. In most cases authenticating a transaction is straight forward; simply indicate that you accept the supplier’s terms and conditions and enter your credit or debit card details.
However, some transactions are not easy to authenticate and require something more rigorous than “click and pay” or a simple email response. Legal agreements and commitments have proved particularly challenging to deal with online. Traditionally they required a “wet-ink” signature which in turn may have needed a witness’s signature as additional proof, depending on the nature of the agreement.
Legal acceptance of electronic signatures:
Notwithstanding the difficulties of online authentication, it is now established that in UK law, documents signed electronically have legal force according to a report completed by the Law Commission. Furthermore, both the USA and the EU have passed legislation dealing with electronic signatures:
ESIGN-The USA passed the ESIGN act in 2000 to facilitate the use of electronic signatures to validate and give legal effect to contracts entered into electronically.
eiDAS-The European Union passed eIDAS (Electronic Identification and trust services) in 2014. The purpose of this act was to regulate electronic signatures and electronic transactions so that users could safely conduct cross border business online.
Different Ways to Sign Documents Electronically
Numerous forms of e-signatures can authenticate an e-document :
- A person can use a scanned image of his original wet-ink signature in the document.
- The signature box in a report or form can have the signatory’s name typed on it.
- Software such as “DocuSign” can be used for electronic signs.
- An individual can respond to specific security questions to demonstrate his identity on the web.
- The biometrics of the person can be used as a form of e-signature to validate its integrity.
3 Types of E-Signatures
An e-signature can be roughly classified under three main types :
- Simple- As the name suggests, it is a basic kind of electronic verification that includes a scanned signature or simple option related query (tick boxes). These are used for simple online processes where no monetary transactions are involved.
- Advanced- For more complicated operations, authorities ask for an advanced form of e-signature where proof of authenticity carries more weight than simple e-signatures. This type involves linked data along with the signature where any changes made can be quickly detected.
- Qualified- A qualified “Electronic Signature Creation Device” is used for rigorous online process or form filling, usually where financial transactions are involved. A qualified e-signature is backed by a qualified certificate (discussed below) for high-level security and surety. Platforms such as Docusign and Hellosign provide solutions for Qualified Electronic signatures.
Validation of E-Signatures through “Qualified Certificates”
The digital method of verifying a signature and data to a related person or legal entity comes in the form of a “certificate”. Qualified Electronic Signatures are based on a “Qualified Certificate” that validates it. It is an identification certificate provided by a qualified “Trust Service Provider”. A USA or EU Supervisory Body grants TSP (Trust Service Providers) the ‘qualified’ status! The TSP keeps all your data safe and secure, and it is responsible for any breach of security or theft of data.
Companies House Recognises And Accepts Electronic Signature.
Section 859A of the Companies Act 2006 approves the use of certified e-signature backed documents. Registration of new companies online are authenticated by security questions which makes company formation in the UK is faster than in any other jurisdiction. You can get started with your Company formation in the UK from any part of the world by simple form filling and submission of electronically authenticated documents! Registration can take place in a matter of a few hours!
For an already registered company, Companies House issues a six-digit alphanumeric code that is used to authorise all web-filing made by the company. This code is created by Companies House and mailed to the official address of the company within weeks of its incorporation. The code authenticates the submission by the company’s officers. If you use our service to form your company, Companies House will upload the six-character code to your account on our platform. To access your code simply log into your account with us.
FAQs
- Why should I use an e-signature?
- Does Electronic Signature have the same legal standing as a handwritten signature?
- What are Qualified e-signatures?
Electronic signatures provide a convenient means to conduct online processes, and they are verified and tested for authenticity. Thus the use of an e-signature makes online filing more straightforward and faster.
Yes, an e-signature is recognised in law and has the same legal standing, provided it remains within the legal guidelines. It has been made legal in the UK since 2000 under the Electronic Communication Act.
A Qualified e-signature verified by a Trust Service Provider and is backed by ‘Qualified Certificates’ and is a more secure form of this virtual identification.