The commercial world is currently moving to greater levels of digitisation. Organisations are implementing automated and electronic solutions in an effort to improve efficiency and better the environmental footprint at the same time. The move to digitisation and electronic signatures prompted questions surrounding the legality of these documents. This article aims to highlight certain legal aspects of electronic signatures in both a general business environment and an audit industry environment.
Different types of electronic signatures
The Electronic Communications and Transactions Act, 25 of 2002 (ECTA) differentiates between standard electronic signatures and advanced electronic signatures. Standard electronic signatures include digital or scanned signatures. An example would be using an iPad to sign a document or merely printing, signing and scanning the document. Advanced electronic signatures are defined as electronic signatures which results from a process which has been accredited by the Authority as stipulated in Section 37 in the ECTA, for example, Quicklysign.
Standard electronic signatures are sufficient in most instances if and when the method of signing had not been agreed upon by the parties beforehand. Advanced electronic signatures are required for a suretyship agreement as well as signing as a Commissioner of Oaths (Section 18 of ECTA). Some documents are specifically excluded from being signed electronically (as per Schedule 2 of ECTA) for example:
- an agreement for alienation of immovable property;
- an agreement for the long-term lease of immovable property in excess of 20 years;
- the execution, retention and presentation of a will; and
- the execution of a bill of exchange as defined in the Bills of Exchange Act, 34 of 1964.
Electronic signature of financial statements
Stakeholders in the audit industry will be all too familiar with the challenges being posed by printing various sets of financial statements, only to be scanned again after signature. The industry seems to be one of those that will benefit from the efficiencies provided by electronic signatures but are these electronic signatures on a director’s and auditor’s report acceptable?
The Independent Regulatory Board of Auditors (IRBA) identified the increase in usage of electronic signatures on financial statements and audit reports and reported on the matter through the 2017 public inspections report. IRBA communicated that the following challenges are experienced by the practice of electronic signatures:
- uncertainty as to the identification of the final version of the auditor’s report and annual financial statements;
- uncertainty as to the approval by the company’s board of the exact final version of the annual financial statements; and
- the risk that the incorrect annual financial statements are published.
We are of the opinion that an advanced electronic signature service provider, as approved by the ECTA, will sufficiently mitigate the above-mentioned challenges identified by IRBA. Contact us in order to obtain more information as to how we can assist in finalising documentation efficiently.