eSignature Legality in Malaysia

E-Signature Legality Summary

Generally, electronic signatures are recognized by law in Malaysia under the DSA and ECA.

Electronic signatures are governed by the ECA. Section 6(1) of the ECA provides that any information shall not be denied legal effect, validity, or enforceability on the grounds that it is wholly or partly in an electronic form.

An enhanced electronic signature, called a digital signature, is a type of electronic signature that is governed by the DSA. Section 62(2) of the DSA provides that a document signed with a digital signature in accordance with the DSA is as legally binding as a document signed with a handwritten signature, an affixed thumb-print or any other mark, and is deemed to be a legally binding signature. Digital signatures require, among other things, certification by a licensed certification authority. Therefore, only electronic signatures which meet the additional requirements under the DSA are classified as digital signatures.

Types of Electronic Signature 

Electronic Signatures: Section 5 of the ECA defines an electronic signature as “any letter, character, number, sound or any other symbol or any combination thereof created in an electronic form adopted by a person as a signature.”

Section 9 of ECA further provides that an electronic signature must:

• Be attached or logically associated with the electronic message;

• Adequately identify the person and adequately indicate the person’s approval of the information to which the signature relates; and

• Be as reliable as is appropriate given the purpose for which, and the circumstances in which, the signature is required.

Pursuant to section 9(2) of the ECA, an electronic signature is “as reliable as is appropriate” if:

• The means of creating the electronic signature is linked to and under the control of that person only;

• Any alteration made to the electronic signature after the time of signing is detectable (tamper evident); and

• Any alteration made to that document after the time of signing is detectable (tamper evident).

Digital Signatures: A digital signature is defined under section 2 of the DSA as “a transformation of a message using an asymmetric cryptosystem such that a person having the initial message and the signer’s public key can accurately determine:

• whether the transformation was created using the private key that corresponds to the signer’s public key; and

• whether the message has been altered since the transformation was made”.

Section 62(1) of the DSA states that where a rule of law requires a signature of a person on a document, the requirement is fulfilled by a digital signature provided that the digital signature:

• Must be verified by reference to the public key listed in a valid certificate issued by a licensed certification authority;

• Must have been affixed by the signer with the intention of signing the message; and

• The recipient must have no knowledge or notice that the signer has breached a duty as a subscriber or does not rightfully hold the private key used to affix the digital signature.

Documents That May be Signed Electronically

Section 2(1) of the ECA provides that electronic signatures are available to any commercial transaction conducted through electronic means including commercial transactions by the federal and state governments. For this purpose, commercial transaction under the ECA refers to single communication or multiple communications of a commercial nature, whether contractual or not, which includes any matters relating to the supply or exchange of goods or services, agency, investments, financing, banking and insurance.

Further Guidance

Section 2 and the Schedule of the ECA expressly prohibits the use of electronic signatures for the following documents:

• Power of Attorney;

• Wills and Codicils;

• Trusts; and

• Negotiable Instruments (e.g. promissory notes and bills of exchange).

Apart from the above which are listed under the ECA, certain documents cannot be executed using electronic signatures as there are additional formalities that must be complied with under the law. These include documents that must be attested by a Commissioner for Oaths or notarized by a Notary Public such as:

• Annual accounts. The financial statements must bear original handwritten signatures, as hard copies are required to be lodged with the Companies Commission of Malaysia and must be attested by a Commissioner for Oaths or notarised by a Notary Public; and

• Documents required to have a seal affixed (e.g. instruments dealing with real property, instruments of transfers, etc.).

Section 6(2) of ECA provides that an electronic message shall not be denied legal effect, validity, or enforceability where the information is not contained but merely referred to in that electronic message, provided that the information being referred to is accessible to the person against whom the referred information might be used. It must also satisfy the definition of electronic signature detailed above.

Case Law

The following case is an example of where Malaysian courts have addressed the validity of electronic signatures:

• Yam Kong Seng & Anor v. Yee Weng Kai [2014] 4 MLJ 478