Part 4: Signing in to the digital age
China has been fast ascending in the world of business, with technological advances that are said to rival Silicon Valley. With the booming business and growth in China’s Growth Domestic Product, foreign trade has accounted for nearly 40% of it.
With a growing, prominent global economy, China’s Electronic Signature Law has greatly increased the efficiency possibilities of business transactions. This cuts down on time and resources used to complete a business transaction, allowing trade to continue smoothly.
Since 2004, E-signatures have been legally recognised in China under The PRC Electronic Signature Law.
Read on to learn more about the legal compliance for electronic signatures in China specifically, and watch out for more in this series on Southeast Asia, Hong Kong, China, New Zealand, Australia, UK, Cayman Islands, and BVI.
China’s Electronic Signature Requirements
The use of electronic signatures is under the Electronic Signature Law. China adopts an open Electronic Signature legal model.
Use Cases for E-sign
Instances where e-signatures are generally considered appropriate:
consumer agreements, including invoices, purchase orders, order confirmations, sales terms, services terms, policies, shipment documentation, and user manuals
HR Documents, such as regular employment contracts, NDAs, privacy notices, employee invention agreements benefits paperwork and other new employee onboarding processes
commercial agreements between corporate entities, including invoices, sales agreements, distribution agreements, service agreements, NDAs, and purchase orders
Use Cases Requiring a Physical Signature
There are some cases where a handwritten or wet ink signature will be necessary. Examples include:
government-related filings, including application forms for registration or licensing and assignment of intellectual property rights
commercial and residential leases and real property transfer contracts
certain commercial contracts, including major transactions of listed companies
certain family law documents, ie. those pertaining to marriage, adoption, and succession
(1) the “electronic signatory” means a person who holds the creation data of an electronic signature and produces the electronic signature either in person or on behalf of the person he represents
Chapter III Electronic Signature and Certification
If an electronic signature concurrently meets the following conditions, it shall be deemed as a reliable electronic signature:
(1) when the creation data of the electronic signature are used for electronic signature, it exclusively belongs to an electronic signatory;
(2) when the signature is entered, its creation data are controlled only by the electronic signatory;
(3) after the signature is entered, any alteration made to the electronic signature can be detected; and
(4) after the signature is entered, any alteration made to the contents and form of a data message can be detected.
The parties concerned may also choose to use the electronic signatures which meet the conditions of reliability they have agreed to.
Applicability of an Electronic Signature
China’s legal model is different to a tiered one where Qualified Electronic Signatures are seen as a legitimate form of e-signature. In China there aren’t any conditions for electronic signature types. Chinese PRC law states that a traditional signature isn’t always needed for a contract to be viewed as credible. Contracts are seen as valid if legally able individuals reach an agreement (verbally, electronically or by physically signing). The E-Signature Law says that contracts can’t be refused for simply being electronic. Under Chinese Law, if called into question, these contracts may have to be supported in court with extra evidence.
By Celestine Loh
Founded in 2013, Zegal is the fastest growing LegalTech company operating across Asia Pacific and Europe. Today, business users and lawyers across the globe trust Zegal’s software to solve legal problems in an affordable and efficient way.
Zegal is led by a talented team of 60 employees and has offices in Hong Kong, Singapore, Nepal, Australia, New Zealand, and the UK.
Zegal has been featured in the New York Times, Forbes, and Huffington Post, and was recently recognised in the South China Morning Post as an emerging LegalTech company in the artificial intelligence space.