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Part 6: Signing in to the digital age
A promising foreign business economy, Indonesia is a country with interesting prospects for growing one’s business.
It’s important to note Indonesia’s political, cultural and social practices to properly conduct international business there. Foreign investment and starting a business in Indonesia comes with several legal requirements and it is good practise to read up on the processes to arm yourself with knowledge before starting out in a new country.
Electronic signatures are ideal for international business activities creating an efficient and accessible method for closing business deals, regardless of physical location.
Indonesia implemented the Electronic Information and Transaction Law in 2008 and adopts a tiered legal scheme.
Read on to learn more about the legal compliance for electronic signatures in Indonesia specifically and watch out for more in this series below on Southeast Asia, Hong Kong, China, New Zealand, Australia, UK, Cayman Islands, and BVI.
Indonesia’s Electronic Signature Requirements
A written signature is not always required for a valid contract under Indonesian law. It would be prudent to take note that the courts in Indonesia have been more hesitant than other countries in Asia to adopt e-signing technologies. In recent times, however, they have begun to accept electronically signed documents in court, often asking to verify through both seeing the softcopy on a laptop as well as a hardcopy document. Printing of e-signed documents is recommended.
The Rules
Contracts are generally valid if legally competent parties reach an agreement, whether they agree verbally, electronically or in a physical paper document, provided that the basic requirements of a contract under the Indonesian Civil Code are fulfilled:
i.e., (1) consent;
(2) competency;
(3) certainty
and (4) permissible cause (i.e., it does not contravene the prevailing regulations and principles of public order and morality).
The Law No. 11 of 2008 on Electronic Information and Transaction as amended by Law No. 19 of 2016 specifically confirms that electronic contracts are valid and acceptable.
Government Regulation 82 provides that there are 2 types of electronic signature namely (i) certified and (ii) uncertified. There is no mandatory requirement to have a certified electronic signature.
Applicability of an Electronic Signature
To prove a valid contract, parties may sometimes have to present evidence in court. Leading digital transaction management solutions can provide electronic records that are admissible in evidence under Article 44 of Law No. 11 of 2008 on Electronic Information and Transaction, to support the existence, authenticity and valid acceptance of a contract.
Use Cases for E-sign
Instances where e-signatures are generally considered appropriate:
- consumer agreements, including new retail account opening documents
- commercial agreements between corporate entities, including NDAs and sales agreements
- real estate documents, including lease agreements
Use Cases Requiring a Physical Signature
There are some cases where a handwritten or wet ink signature will be necessary. Examples include:
- HR documents
- corporate documents, such as articles of association, shareholders resolutions, share/asset transaction documents
- IP transfer documents
- real property transfer contracts and deeds (except lease contracts and other contracts related to real estate, which can be generally signed validly via any form of electronic signature)
- certain corporate documents, such as share/asset transactions documents
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:
Part 5: Macau
Part 4: China
Part 3: Japan
Part 2: Singapore
Part 1: Hong Kong
READ MORE: Is e-signing legally binding?
