The Electronic Transactions Act
Singapore’s Electronic Transactions Act (ETA) was passed in the year 1998. The Act provides a legal framework that governs nearly all digital services such as ecommerce, electronic records, electronic contracts, signatures, etc. The ETA was amended in 2010 to bring the law in line with the United Nations Convention on the Use of Electronic Communications in International Contracts. Singapore was the first country in the world to adopt the UNCITRAL Model Law on Electronic Commerce. The government of Singapore encourages businesses to transact electronically, and maintain electronic records.
This article will discuss the important provisions of the ETA and its applicability to Singapore businesses. The main aim of this article is to highlight how a Singapore-based business can maintain electronic records, use electronic signatures, digital IDs and execute e-contracts within the legal framework of the Electronic Transactions Act 2010.
Key Features of the ETA
1 Electronic Records
The Act states that an electronic record is any record that is “generated, communicated, received or stored by electronic means in an information system or for transmission from one information system to another.”
This implies that any data stored in an electronic or digital form is an electronic record. Electronic records include e-mails, digital images, powerpoint presentations, websites, etc.
No record can be considered to be illegal solely on the ground that it is in an electronic form; in other words, the mere fact that some information was stored in an electronic form can never be used to invalidate that information in any manner. The ETA 2010 gives legal validity to all electronic records provided certain conditions are fulfilled.
Firstly, according to the rule of law, if any document or piece of information is to be presented in a written form, an electronic record will be valid if the information of the electronic record is such that it can be used by the business for reference purpose subsequently. In other words, the information should be durable and not transient.
Secondly, where the law specifically states that a record must be signed the record will be valid only if signed and any method used to identify a person and indicate his or her intention with respect to the information contained in the electronic record will be treated as a signature.
Use of Electronic Records in Singapore
The Companies Act in Singapore recognises the use of electronic records. Companies in Singapore can maintain records (such as the register of members) in an electronic form. The Act further prescribes that the company records can either be kept in a hard copy form or an electronic form.
Retention of electronic records
Where the rule of law requires electronic records to be retained, the electronic records are valid only if the following conditions are fulfilled:
- The information is accessible and can be used for subsequent reference,
- The electronic records are retained in the form in which they were originally generated, sent or received, and
- The records retain details such as the origin and destination of the records, the date and time when they were sent or received.
2 Electronic and Digital Signatures
The ETA 2010 of Singapore recognises the use of electronic and digital signatures.
Please keep in mind that electronic signatures are different from digital signatures. An electronic signature is an acknowledgement provided in an electronic format that a business can use to demonstrate acceptance by a party and that can electronically be used to authenticate the party involved. Electronic records are valid and enforceable by law in Singapore. There is no single unique definition of an electronic signature: and an e-signature can take the form of a click of an accept button on a website where the user accepts the terms and conditions, a facsimile or scan of a physical signature, signing on a touchscreen with a stylus, or agreeing to any terms and conditions by means of electronic communication such as e-mail, etc.
On the other hand, a digital signature is a type of an electronic signature which adds an additional security layer by the use of an asymmetric cryptosystem and a hash function. A digital signature is issued with a Digital Signature Certificate (DSC) which contains details of the user’s identity. This includes his or her name, address, email, date the certificate was issued, name of the certifying authority. Businesses use digital signatures when transacting with government authorities, for instance, filing tax returns, filing forms with the Accounting and Corporate Regulatory Authority (ACRA), etc.
A business can save cost by the use of electronic signatures as compared to the traditional handwritten signatures. A document can be sent by means of e-mail and can be signed in a few minutes. This is very useful for businesses that have a global presence.
The ETA gives electronic signatures and its use the same status as written signatures. However, the Act states that signature should be
- Unique to the person using it
- Capable of identifying the person and
- Under the sole control of the person using it
Electronic signatures in Corporate Documents
Directors of Singapore registered companies can approve a company resolution passed at a Board meeting by affixing their digital signatures to it. The signature displays the date of signing and is especially convenient in cases where the company maintains all its records electronically.
3 Electronic IDs for Government Interactions
The Singapore government recently announced the introduction of CorpPass, a single digital identity that businesses having a Unique Entity Number (which is an identification number issued to an entity to transact with the government) in Singapore can use for all interactions with the government. The CorpPass will ensure additional privacy and security and will replace:
- Singapore Personal Access (SingPass) – a digital ID used by Singapore citizens, permanent residents, EntrePass and Employment Past holders, etc
- EASY – e-Services Authorisation System (EASY) which allows businesses and companies to provide access to employees or to any third party for executing any e-services on their behalf.
Companies and businesses in Singapore will now have to use CorpPass as a single digital identity to access their business transactions. With the introduction of CorpPass the multiple logins through SingPass and EASY will no longer be necessary. Entities such as joint ventures, trust funds, individuals, etc that are not eligible to use CorpPass will continue using their SingPass accounts to transact with the government.
4 Electronic Contracts
Section 11 of the ETA explicitly states that contracts can be entered into electronically. This provision states that all electronic contracts are legally valid and enforceable by law in Singapore. The Contract Law in Singapore outlines the general rules for the formation of a contract such as an offer and acceptance of a contract, intention to create a legal and binding relation between the parties, etc. These rules are also applicable to e-contracts.
All businesses in Singapore must keep in mind that electronic contracts are legal provided they follow and apply the general contract laws and the specific rules related to electronic contracts.
Note the following provisions of the ETA when entering into e-contracts:
- Party Autonomy: The Electronic Transactions Act states that parties to a contract can exclude the use of electronic records, electronic communication or electronic signatures in any contract by agreement and the parties can impose additional requirements to the form or authentication of the contract or transaction by agreement.
- Dispatch and receipt of an electronic communication: An electronic communication is dispatched either at the time it leaves the sender’s information system which is under the sender’s control or at the time of receipt by the receiver (if it does not leave the sender’s information system e.g. in case of access to a file stored on the sender’s information system). The time of receipt is the time when the receiver can retrieve the electronic communication.
- A contract with or between automated message system(s): A contract between an automated message system and a natural person or between any two automated message systems is considered valid. The validity cannot be denied only on the basis that no natural person reviewed the contract.
Matters excluded by the Act
The ETA in Singapore does not extend to transactions such as the creation and execution of a will, negotiable instruments, power of attorney, real estate transactions, etc. The First Schedule of the Act outlines these exclusions.
Singapore’s Electronic Transactions Act 2010 is the law governing the use of electronic communications, contracts, electronic signatures, etc in the country. Singapore’s law is in line with the international practices pertaining to electronic contracts and transactions. Not only does the Act provide enhanced legal validity to e-transactions, but also encourages businesses in Singapore to adopt electronic communication and transactions in their day to day activities. In such a scenario it is essential for all companies and businesses in the country to comply with the Act and thereby help Singapore achieve its goal of transforming the country into a smart nation.
To learn how paperless document flow and storage architecture allows corporate services firms to provide fast, reliable and cost-effective service for clients, read our recent blog post E-signatures becoming essential for Singapore’s corporate services firms.
For general topics on how to plan and grow your startup, see our Startup Mentor section. For specific details of how to launch and manage your startup in Singapore, see our Launch in Singapore section.