Legal basis for digital signing in Europe
The eIDAS (electronic identification, authentication and trust services) regulation, tackling the electronic signature validity, defines the use of trust services and electronic identification in the European Union member states.
The eIDAS Regulation provides in particular for three types of electronic signatures
Standard electronic signature (SES): Ensures the integrity of the document by embedding a certificate that proves the time of signing and that it has not been changed since. It can be used for documents without formal requirements. Because it does not need a strong verification of the signer’s identity, it is very fast and frictionless.
Advanced electronic signature (AES): Provides unique identifying information that links the embedded certificate to its signatory, e.g. by verifying a passport image once. It provides higher legal security than the standard electronic signature.
Qualified Electronic Signature (QES): Provides, in principal, the same legal validity as a handwritten signature. It needs a strong authentication of the signatory, e.g. by a short video identification call during which the passport and person are verified.
Article 25 paragraph 1 of the eIDAS Regulation states that “an electronic signature shall not be denied legal effect and admissibility as evidence in legal proceedings solely on the grounds that it is in an electronic form or that it does not meet the requirements for qualified electronic signatures”.
Switzerland
Switzerland is not an EU member state, however, under Swiss law, the requirements for a valid document resemble the EU requirements.
In Switzerland, there is a distinction between statutory form requirements and contractual form requirements. Swiss law does, in principle, not require agreements to be entered into in a specific form. However, statutory law does contain specific form requirements for certain agreements, deeds, or other documents.
If no statutory form requirements apply, it is, in principle, possible to use standard or advanced electronic signature unless the document itself provides for a form requirement of personal hand-signature.
Where parties to a document agree regarding the form requirement on written form without further specifying the means that satisfy such requirement, it is legally not entirely clarified as to whether standard or advanced electronic signature do suffice. However, the issues associated with this remaining legal uncertainty is in most cases reduced to questions of evidence and therefore a risk that many parties are willing to take. Considering this, it is recommended to define in detail the method of signing directly in the relevant agreement in order to clarify the handling.
If a handwritten signature is required contractually or by statutory law, a qualified digital signature is deemed sufficient (subject, however, to any contractual or statutory provision explicitly excluding a qualified digital signature).
Examples of where the standard or advanced electronic signature is appropriate to use (taking into account the limited evidential value):
(Convertible) Loan agreements
Shareholders’ agreements
Investment and subscription agreements
Share purchase agreements (except the assignment of shares)
Term sheets
Regular employment agreements (except with regard to specific areas of the employment relationship, such as intellectual property rights in employee creations or non-competition clauses)
NDA, privacy notices
Amendments to the aforementioned documents
Examples of where the qualified electronic signature is appropriate to use:
Subscription form*
Application for the commercial register
Power of attorney (POA)**
Capital increase report
Transfer of existing non-certificated shares by way of assignment, e.g. as part of a secondary deal
*Many local notaries accept a PDF copy with a hand-written signature in case the subscription form includes an authorization of a person who will be personally present at the notary's meeting regarding the capital increase and this person signs the executed PDF copy.
**Many local notaries are flexible when it comes to powers of attorney that are not presented in original hand-written form. It is the responsibility of a board member to determine how many votes / how much share capital are/is present at the relevant shareholders’ meeting. Therefore, many local notaries do not verify the powers of attorney, but it is the responsibility of the board of directors to ensure that the correct statements are made.
Examples where electronic signatures are not allowed and statutory notarization requirements apply:
Resolution of the shareholders’ meeting in connection with an amendment of the articles of incorporation (e.g. capital increase, change of company’s name or relocation)
Resolution of the board of directors in connection with an amendment of the articles of incorporation (e.g. implementation of a capital increase or subsequent payments)