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Part 1: Signing in to the digital age
The digital world seems to be synonymous with “convenience”. Stepping into the interconnectivity of businesses and organisations, digitalisation is key to communicating efficiently regardless of different time zones and places.
Convenience is also a major plus point for international business activities. With everything literally at your fingertips, doing business globally has never been easier. Transforming paperwork into accessible, on-the-go, electronic documents makes it convenient for everyone anywhere, anytime. But this level of convenience does not undermine the legality of any business agreement conducted digitally.
Don’t be fooled by the casualness of electronic agreements; know that your electronic signature holds equal weight compared to a written or “wet” signature. We all need to be signing into the digitalised age of Electronic signatures, or E-signing. Or as we like to call it at Zegal, Z-signing.
Read on to learn more about the legal compliance for electronic signatures in Hong Kong specifically, and watch out for more in this series on Singapore, New Zealand, Australia, UK, Cayman Islands and BVI.
Hong Kong Law
Under Hong Kong law, the Electronic Transaction Ordinance (ETO) confirms contracts cannot be denied enforceability on the basis that they are concluded electronically. Contracts are generally valid if legally competent parties reach an agreement, this include verbal, electronic or with a physical document. To prove a valid contract, parties may have to present evidence in court. Digital transaction management solutions can provide electronic records that will be admissible under Hong Kong law, to support the authenticity of a contract.
Use Cases for E-sign
Instances where e-signatures are generally considered appropriate:
- corporate secretarial filings
- HR documents, such as new employee onboarding processes including employment contracts, non-disclosure agreements, employee invention agreements, privacy notices, and benefits paperwork
- commercial agreements between corporate entities, including non-disclosure agreements, invoices, purchase orders, sales agreements and service agreements
- consumer agreements, including purchase orders, order confirmations, sales terms, services terms, invoices, shipment documentation, user manuals, and policies
- transfers of intellectual property (e.g., copyright assignments and patents)
- licenses for intellectual property, including patent, copyright, software and trademark
Use Cases Requiring a QES or Physical Signature
There are some cases where a qualified electronic signature (QES) will be necessary. An electronic signing document validates a QES. A QES is considered to be the same as a handwritten signature. Examples include:
- Government leases and grant conditions(Schedule 1 ETO)
- judgments, and lis pendens referred to in the Land Registration Ordinance (Cap 128) by which any parcels of ground tenements or premises in Hong Kong may be affected (Schedule 1 ETO)
- assignment or mortgage within the meaning of the Conveyancing and Property Ordinance (Cap 219) or any other contract relating to or effecting the disposition of immovable property or an interest in immovable property (Schedule 1 ETO)
- a document effecting a floating charge referred to in section 2A of the Land Registration Ordinance (Cap 128) (Schedule 1 ETO)
- oaths and affidavits (Schedule 1 ETO)
- statutory declarations (Schedule 1 ETO)
- judgments or orders of court (Schedule 1 ETO)
- a warrant issued by a court or a magistrate (Schedule 1 ETO)
- negotiable instruments (Schedule 1 ETO)
- employee termination notices
- the creation, execution, variation, revocation, revival or rectification of a will, codicil or any other testamentary document (Schedule 1 ETO)
- the creation, execution, variation or revocation of a trust (other than resulting, implied or constructive trusts) (Schedule 1 ETO)
- the creation, execution, variation or revocation of a power of attorney (Schedule 1 ETO)
- the making or execution of any instrument, including commercial agreements, which is required to be stamped or endorsed under the Stamp Duty Ordinance (Cap 117) other than a contract note to which an agreement under section 5A of that Ordinance relates (Schedule 1 ETO)
The Rules
Under ETO, Part III, Section 6:
Where an electronic signature of the first mentioned person satisfies the requirement if—
(c) The first mentioned person uses a method to attach the electronic signature to or logically associate the electronic signature with an electronic record for the purpose of identifying himself and indicating his authentication or approval of the information contained in the document in the form of the electronic record;
(d) Having regard to all the relevant circumstances, the method used is reliable, and is appropriate, for the purpose for which the information contained in the document is communicated; and
(e) The second mentioned person consents to the use of the method by the first mentioned person. (Replaced 14 of 2004 s. 5)
Applicability of an Electronic Signature
Admissibility of electronic records:
Without prejudice to any rules of evidence, an electronic record shall not be denied admissibility in evidence in any legal proceeding on the sole ground that it is an electronic record.
So, in a nutshell, you should consider anything you sign digitally to have equal weight to anything you sign on pen and paper in Hong Kong. For most of us living in countries with developed internet and communications infrastructure, electronic signatures will become a part of everyday life, if they haven’t already.
This article does not constitute legal advice.
The opinions expressed in the column above represent the author’s own.
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Read more from the E-Signature Series: Hong Kong, Japan, China
