ELECTRONIC SIGNATURES INTRODUCTION One of the major changes is the ability to do various things electronically. Valid meetings can be held by electronic methods. Resolutions and special resolutions can now be taken in writing without it being necessary to actually have a physical meeting. This means that the resolutions can be taken by electronic means. Directors can send out all the documentation and the shareholders can vote on this on an electronic basis provided the requirements of the relevant laws are adhered to. With an understanding of the requirements of the companies act 2008 and the Electronic Communications and Transaction Act 2002 (ECTA) one can convert many manual procedures to an electronic format. THE LEGAL POSITION It s important to understand how the Companies Act 2008 opens the door to do things electronically by referring to the ECTA. The New Companies Act has a definition for Electronic Communication the meaning is set out in s 1 of the Electronic Communications and Transactions Act 2002, (Act no 25 of 2002). electronic communication has the meaning set out in section 1 of the Electronic Communications and Transactions Act; Electronic Communications and Transactions Act means the Electronic Communications and Transactions Act, 2002 (Act No. 25 of 2002); I refer to s 6(10) of the companies act 2008 which says that if a notice is required or permitted to be given or published to any person it is sufficient if the notice is transmitted electronically directly to that person in a manner and form that such notice can conveniently be printed by the recipient within a reasonable time and at a reasonable cost. In terms of s 6 (11)(a) if a document, record or statement other than a notice contemplated in subsection (10) is required to be retained it is sufficient if an electronic original or reproduction of that document is retained as provided in s 15 of the Electronic Communication and Transactions Act.
The proviso is that as long as anything in an electronic format can be printed within a reasonable time and cost. Section 6 (10) If, in terms of this Act, a notice is required or permitted to be given or published to any person, it is sufficient if the notice is transmitted electronically directly to that person in a manner and form such that the notice can conveniently be printed by the recipient within a reasonable time and at a reasonable cost. (11) If, in terms of this Act, a document, record or statement, other than a notice contemplated in subsection (10), is required (a) to be retained, it is sufficient if an electronic original or reproduction of that document is retained as provided for in section 15 of the Electronic Communications and Transactions Act; or (b) to be published, provided or delivered, it is sufficient if (i) (ii) an electronic original or reproduction of that document, record or statement is published, provided or delivered by electronic communication in a manner and form such that the document, record or statement can conveniently be printed by the recipient within a reasonable time and at a reasonable cost; or (ii) a notice of the availability of that document, record or statement, summarising its content and satisfying any prescribed requirements, is delivered to each intended recipient of the document, record or statement, together with instructions for receiving the complete document, record or statement. Section 6(12) deals with the signing of a document. If a provision of this Act requires a document to be signed or initialled; a. By or on behalf of a person, that signing or initialling may be affected in any manner provided for in the Electronic Communications and Transaction Act. b. Deals with a situation where there are two or more persons who must sign a document and it talks about each person can sign the original or may sign as contemplated in paragraph (a) and a further part of this provision is that if each person signs a separate document then it will be taken as if all the separately signed documents are in fact one document.
(12) If a provision of this Act requires a document to be signed or initialled (a) by or on behalf of a person, that signing or initialling may be effected in any manner provided for in the Electronic Communications and Transactions Act; or (b) by two or more persons, it is sufficient if (i) (ii) all of those persons sign a single original of the document, in person or as contemplated in paragraph (a); or each of those persons signs a separate duplicate original of the document, in person or as contemplated in paragraph (a), and in such a case, the several signed duplicate originals, when combined, constitute the entire document. ELECTRONIC RESOLUTIONS Section 60 refers to the shareholders having an ability to take various resolutions in writing. The section does not specifically talk about electronic or digital signatures it basically says that a resolution to be taken could be sent to all the shareholders who are entitled to vote and the shareholders have to exercise their vote within 20 business days. If there is sufficient support for the resolution then this resolution will be adopted either as an ordinarily resolution or as a special resolution. It should be born in mind that resolution processed electronically will require a higher vote to pass. 60. Shareholders acting other than at meeting. (1) A resolution that could be voted on at a shareholders meeting may instead be (a) submitted for consideration to the shareholders entitled to exercise voting rights in relation to the resolution; and (b) voted on in writing by shareholders entitled to exercise voting rights in relation to the resolution within 20 business days after the resolution was submitted to them. (2) A resolution contemplated in subsection (1) (a) will have been adopted if it is supported by persons entitled to exercise sufficient voting rights for it to have been adopted as an ordinary or special resolution, as the case may be, at a properly constituted shareholders meeting; and (b) if adopted, has the same effect as if it had been approved by voting at a meeting. (3) An election of a director that could be conducted at a shareholders meeting may instead be conducted by written polling of all of the shareholders entitled to exercise voting rights in relation to the election of that director. (4) Within 10 business days after adopting a resolution, or conducting an election of directors, in terms of this section, the company must deliver a statement describing the results of the vote, consent
process, or election to every shareholder who was entitled to vote on or consent to the resolution, or vote in the election of the director, as the case may be. (5) For greater certainty, any business of a company that is required by this Act or the company s Memorandum of Incorporation to be conducted at an annual general meeting of the company, may not be conducted in the manner contemplated in this section. ELECTRONIC COMMUNICATIONS AND TRANSACTION ACT DEFINITIONS Data message means data generated sent, received or stored by electronic means and includes a) Voice, where the voice is used in an automated transaction b) Stored record Advanced electronic signature means an electronic signature which results from a process which has been accredited by the authority as provided for in s 37. Authentication products or services - means products or services designed to identify the holder of an electronic signature to other persons. s 13 of the ECT Act deals with signature and s 13 (1) says where the signature of a person is required by law and such law does not specify the type of signature the requirement in relation to a data message is met only if an advanced electronic signature is used. S 13 (1) says subject to s 13 (1) an electronic signature is not without legal force and effect merely on the grounds that it is in electronic form. S 13 (3) says where an electronic signature is required by the parties to an electronic transaction and the parties have not agreed on the type of electronic signature to be used, that requirement is met in relation to a data message if - a) Method is used to identify the person and to indicate the person s approval of the information communicated and;
b) Having regard to all the relevant circumstances at the time the method was as reliable as was appropriate for the purposes for which the information was communicated. S 13 (4) says where an advanced electronic signature has been used, such signature is regarded as been a valid electronic signature and to have been applied properly unless the contrary is proved. S 13 (5) says where an electronic signature is not required by the parties to an electronic transaction, an expression of intent or other statement is not without legal force and effect merely on the grounds that; a) It is in the form of the data message; or b) It is not evidenced by an electronic signature but is evidenced by other means from which such persons intent to other statements can be inferred. Section 14(1) deals with the requirement that original document is met by data message if then; a. The integrity of the information from the time it was generated in its final form as a data message or otherwise as past assessment in terms of subsection (2) and subsection (b), that information is capable of being displayed or produced to the person to whom it is presented. Subsection (2) for the purposes of Subsection (1)(a) the integrity must be assessed; a. By considering whether the information has remained complete and unaltered except for the addition of any endorsement and any change which arises in the normal course of communication, storage and display; b. In the light of the purpose of which the information was generated and; c. Having regard to all other relevant circumstances. At this point the definition of data message means data generated, sent, received or stored by electronic means and includes a voice, where the voice is used in an automated transaction; and d. A stored record.
Section 15 deals with the admissibility and evidential weight of data messages. Sub section(1) says in any legal proceedings, the rules of evidence must not be applied so as to deny the admissibility of a data message, in evidence; 1. On the mere grounds that it constituted by data message; or 2. If it is the best evidence that the person adducing it could reasonably be expected to obtain, on the grounds that it is not in its original form. Sub section (2) information in the form of data message must give due evidential weight. 3. In assessing the evidential weight of a data message regardless we have to; a. The reliability of the manner in with the data message was generated, stored or communicated; b. The reliability of the manner in which the integrity of the message was maintained. c. The manner in which its originator was identified and; d. Any other relevant factor. Sub section(4) A data message made by a person in the ordinary course of business, or a copy or printout of or an extract from such data message certified to be correct an officer in the service of such person, is on its mere production in his civil, criminal, administrative or disciplinary proceedings under any law, the rules of a self regulatory organisation or any other law or any other law or the common law, admissible in evidence against any person and rebuttable proof of the fax contained in such record, copy, printout or extract. Section 16 deals with the retention of a data message Subsection(1) where a law requires information to be retained that requirement is met by retaining such information in the form of a data message, if
a. The information contained in the data message is accessible so has to be usable for subsequent reference. b. The data message is in the format in which it was generated, sent or received, or in a format which can be demonstrated to represent accurately the information, sent or received; and c. The origin and destination of the data message and the date and time it was send or received can be determined. Subsection(2) The obligation to retain information as contemplated in subsection(1) does not extend to any information, the sole purpose of which is to enable the message to be send or received. Section 17 deals with production of document or information. Subsection(1) Subject to Section 28 where law requires a person to produce a document or information, that requirement is met if the person produces, by means of a data message in an electronic form of that document or information, and if; a. Considering all the relevant circumstances the time that the data message was sent, the method of generating electronic form of that document provided a reliable means of assuring the maintenance of the integrity of the information contained in that document; b. At the time the data message was sent it was reasonable to expect that the information contained therein would be readily accessible so as to be usable for subsequent reference. Subsection(2) For the purpose of Subsection (1), the integrity of the information contained in the document is maintained if the information has remained complete and unaltered except for
a. The addition of any endorsement; or b. Any immaterial change, which arises in the normal course of communication, storage or display. Section 18 deals with notarisation, acknowledgement and certification. 1. Subsection(1) says where a law requires a signature, statement or document to be notarised, acknowledge, verified or made under oath, that requirement is met if the advanced electronic signature of the person authorised to perform those acts is attached to, incorporated in or logically associated with the electronic signature or data message. 2. Where the law requires or permits a person to provide a certified copy of the document and the document exists in an electronic form, that requirement is met if the person provides a printout certified to be a true reproduction of the document or information. 3. Where a law requires or permits a person to provide a certified copy of the document and the document exists in paper or other physical form that requirement is met if an electronic copy of the document is certified to be a true copy thereof and a certification is confirmed by the use of an advanced electronic signature. Section 27 deals with acceptance of an electronic filing and issuing of documents. It talks about a public body which means; a. Any department of State or administration in the national or provincial sphere of government; or any municipality in the local sphere of government; or b. Any other functionary or institution when one exercising a power or performing a duty in terms of the constitution or a provisional constitution; or c. Exercising a power or performing a function in terms of any legislation; Section 27(1) says any public body that, pursuant to any law; a. Accepts the filing of documents that requires that documents be created or retained; b. Be issues any permit, license or approvals; or
c. Provides for a manner of payment, may not withstanding anything to the contrary in such law; 1. Accepts the filing of such document, or the creation or retention of such documents in the form of data messages; 2. Issue such permit, license or approval in the form of a data message; or 3. Make or receive payment in an electronic form or by electronic means. Section 28 deals with the requirements maybe specified. 1. In any case where a public body performs any of the functions referred to in Section 27 such body may specify by notice in the gazette a. The manner and format in which the data messages must be filed, created, retained or issued; b. In the cases where the data message has to be signed, the type of electronic signature required; c. The manner and format in which such electronic signature must be attached to, incorporated in or otherwise associated with the data message; d. The identity of the criteria that must be met by any authentication, service provider used by the person filing the data message or that such authentication service provider must be a preferred authentication service provider; e. The appropriate control processes and procedure to ensure adequate, integrity security and confidently of data messages or payments; and f. If any other requirements for data messages or payments. Sub section(2) For the purposes of Sub section(1)(d) the South African Post Office Limited is a preferred authentication service provider. The Minister may designate any other authentication service provider as a provider as a preferred authentic service provider based on such authentication service providers obligations in respect of the provision of Universal Act.
THE PROCESS The process will be initiated be person that will capture the details of the people that are required to sign the document. Once all the details are captured a SOAP call with the User Data will be sent to ADocs. ADocs will then automatically handle the workflow of getting the document signed by all participants. After the document has been signed by all participants the document status will be updated to reflect that. The document will now be ready for download via an API call or from the A Docs web portal.
2.2.2 Email The signers get an email telling them that they must sign the document. Clicking on the link will take the user to the ADocs web portal. 2.2.3 ADocs Web portal
Following the link would take the user to the ADocs portal where they must sign in. 2.2.4 Signing the document After signing in the user will be presented with a document to sign. An OTP will be sent to the user s phone. The OTP must be entered to sign the document.
2.2.5 The Signature By law the signature must be visible on the document. The look and feel of the signature is fully customisable.
2.2.6 Signature Validation Adobe Reader provides tool to validate the signature and proof that the document has not been tampered with.
15 Notes for Mark We need to relate the above laws to the Companies Act. Unfortunately the Companies Act does not talk of digital signatures but refers to the ETC Act as a whole and basically says in terms of Section 6(10) that where necessary the ETC Act will apply. One of the provisions in the ECT Act is that where nothing is said about the type of signature to be used as in the case in the Companies Act then it is a requirement that we need to use the advanced electronic signature. Now the difference between an advanced electronic signature and an ordinary electronic signature which the Act makes provision for is the accreditation of the service provider is accredited then the digital signature supplied will fall within the definition of an advanced electronic signature. The Act says that the shareholders have 20 days in order to cast their votes, but it does not specify how their votes are to be cast. One would assume that having this in mind the shareholder would print the resolution indicate their vote and fax it back to the registered office. The company then has an obligation within another 20 days to advise all the shareholders how the vote was passed by providing electronically all the details to the shareholders.