eSignature Legality
in Malaysia
Malaysia has legitimized the use of electronic signatures on contracts since 1997, with The Digital Signature Act [Act 562] first and more recently, the 2000 Electronic Commerce Act.
Electronic and certificate-based digital signatures are widely used and accepted in the Malaysian business community, especially for e-commerce. Malaysian law makes a distinction between electronic and certificate-based digital signatures and both admissible and legally valid as traditional wet ink signatures, so long as they meet the legal requirements for validity.
Electronic signatures are now governed by the Electronic Commerce Act 2006 in Malaysia. It defines an electronic signature as “any letter, character, number, sound or any other symbol or any combination thereof created in an electronic form adopted by an individual as a signature”.
Paramount Conditions:
Under the ECA, a valid electronic signature must:
- be attached to or logically related to the electronic message;
- adequately identify the signer and adequately indicate the signer’s approval of the data to which the signature relates; and
- be as reliable as is appropriate for the purpose and circumstances during which it is required.
Under the ECA, an electronic signature is reliable and appropriate if:
- the creation data of the electronic signature is linked to and is in control of only the signer; and
- any changes made to the electronic document after execution of the signature is detectable.
Legal sanctity of electronic signatures and e-documents
All the contracts are by and large legitimate if legally competent entities reach a consensus, regardless of them agreeing verbally, electronically, or on a physical paper document (per the definition of Contracts Act 1950). ECA states that every agreements and contracts can’t be denied enforceability, validity, or legitimacy solely because they’re executed electronically. Leveraging solutions like eSignature software applications, parties can provide electronic documentation which can be permissible in evidence under the Evidence Act 1950, to support the authenticity and valid acceptance of a contractual agreement.
The Electronic Government Activities Act 2007 (EGAA) sets out regulations for legal recognition of electronic signatures in execution of contracts and documents between the government and and public entities. The EGAA provides that it’s not mandatory for an entity to use, provide or accept any electronic correspondence in dealings with the government unless the person consents to the using, providing or accepting of the electronic message. The requirements for electronic signatures under EGAA and ECA are same.
Use cases of electronic signatures in Malaysia:
- Employment contracts
- Benefits paperwork
- Commercial agreements between corporate entities
- NDAs
- Procurement documents
- Sales agreements
- Consumer agreements
- New retail account opening documents
- Real estate documents
- Lease agreements
- Purchase and sales contracts
- Other related documentation for residential and commercial real estate
The COVID-19 pandemic has radically changed our lifestyles and how one conducts business. Most non-essential companies have established completely remote work setups. This “new normal” has concentrated more attention on electronic means of transactions. The “new normal” in the age of Covid-19 proceeds to facilitate the use of eSignatures.
Documents that cannot be e-signed in Malaysia:
Several regulations in Germany specifically prohibit the electronic signing of the following categories of documents:
- Power of attorney
- The creation of wills and codicils
- The creation of trusts
- Share transfer forms or instruments giving effect for deal with real property (Currently being tested in court)
DISCLAIMER
Certinal is making available the information and materials in this article for informational purposes only and is meant to help companies understand eSignature’s application in a legal framework. Laws change rapidly, and Certinal makes every reasonable effort to keep the content of this article current; hence Certinal makes no claims or representations that the information contained in this article is true, accurate, correct, or current. The law is different from jurisdiction to jurisdiction, and even similar laws may be interpreted differently in different courts or other places. Since these factors differ according to individuals and businesses, Certinal is not liable for any consequence of any action taken by any third party relying on material/ information provided under this article. The contents hereof should not be construed as legal advice in any manner whatsoever. In cases you require any assistance, you must seek independent legal advice.
