Digital and e-signatures in the Netherlands

Being in the 21th century and especially in this time of COVID-19, it is important that we are able to assist you in all aspects of electronic signing and in completing transactions remotely. One of the most obvious means by which you can do so is by using e-signatures to enter legal documents. However, you do have to be careful with signing electronically since not all electronic signatures are treated the same under applicable law; electronic signatures could present challenges for entities incorporated in, and contracts governed by, the laws of some jurisdictions.

What is a digital or e-signature?

The word digital or e-signature does not have a universally accepted meaning. It is used in many different situations. It can take several different forms, including (but not limited to):

• a person typing his/her name into a contract or into an email containing the terms of a contract;
• a person electronically pasting his/her signature (e.g. in the form of an image) into an electronic (i.e. soft copy) version of a contract in the appropriate place (e.g. next to the relevant party’s signature block);
• a person accessing a contract through a web-based e-signature platform and clicking to have their name automatically inserted (in a typed or manuscript-type font) into the contract in the appropriate place (e.g. next to the relevant party’s signature block); and
• a person using a finger, light pen or stylus and a touch screen to write their name electronically in the appropriate place (e.g. next to the relevant party’s signature block) in the contract.

Different e-signatures within the European Union

Within the European Union distinction is made between three kinds of electronic signatures:

• the standard electronic signatures (called SES);
• the advanced electronic signatures (called AES); and
• the qualified electronic signatures" (called QES).

The standard electronic signature

This form of signature means data in electronic form which are attached to or logically linked with other data in electronic form and which are used by the signatory to sign (e.g. an e-mail signature, a photo or scan of your handwritten signature that is attached to a PDF, etc).

The advanced electronic signature

The advanced signature should meet four cumulative requirements:

• be linked uniquely to the signatory;
• make it possible to identify the signatory;
• be created using electronic signature-creation data which the signatory can use with a high level of confidence, under his sole control; and
• be linked to the signed information in such a way that any subsequent changes afterwards can be traced.

For example, the electronic code created on your bank card reader when making use of online payment by your bank.

The qualified electronic signature

The qualified electronic signature is an AES with even more security and is associated with a qualified certificate.

This signature is created using configured soft- or hardware that is used to create the electronic signature. The certificate must be issued by a qualified trust service provider called a Trusted Third Party. The Radiocommunications Agency (Agentschap Telecom) of the Dutch Ministry of Economic Affairs supervises qualified providers of trust services. Examples of qualified providers in the Netherlands include KPN B.V., the Ministry of Defence and QuoVadis Trustlink B.V.

Legal effects of different types of electronic signatures

Legal effects of the qualified electronic signature

Within the European Union, a QES has the same legal effect as a handwritten signature.

This means for you, as a shareholder, director or manager, that if you sign an agreement or other documents (e.g. letter of intent, SPA, SHA, offer letter, etc.) with a qualified electronic signature, no additional proof of the authenticity of the signature under the relevant agreement or document will be required if the authenticity of the signature would be questioned in legal proceedings. It is, therefore, most welcome if all signatories to a contract have a QES at their disposal.

Legal effects of the standard and advanced electronic signature

The standard and advanced electronic signatures do not have the same legal effect as a handwritten signature. These electronic signatures would only have the same legal effect if the method of signature used - considering the purpose for which it is used and all other relevant circumstances - is “sufficiently reliable”. And parties could agree upfront in an agreement of evidence what they (mutually) consider to be “sufficiently reliable��� for the method of electronic signature and under which circumstances they accept an electronically signed document. Parties may also include in such an agreement, for example, that a scanned signature between them is regarded as “sufficiently reliable”.

Please be aware when using this form of signature, that the enforceability of such documents/agreements could be questioned, and different means of evidence may have to be used to prove that you have actually signed the document and to proof which exact content of a document you have signed.

Proxies, notarisation and notarial deeds

The above also applies in respect of proxies. However, when using a form of digital signature for the execution of a proxy, it is advisable to verify with the counterparty (or any other who is expected to rely on and accept the validity of the relevant proxy) if this form of signature is acceptable to it.

For certain transactions and registrations, the notarisation of the signature is prescribed, which notarisation is to be performed by a civil law notary or a notary public. Under Dutch law, it is not yet possible to have a SES, AES or even QES notarised by a Dutch civil law notary.

Under Dutch law, certain transactions (e.g. incorporation legal entities, transfer or encumbrance of shares, (de)mergers, transfer or encumbrance of registered property, etc) can only take place by the execution of a notarial deed. Such notarial deed must be executed in person (or by proxy) before a Dutch civil law notary and therefore the execution of notarial deeds by SES, AES or QES is not yet allowed. Whether a proxy for this purpose can be executed by SES, AES or QES depends on the specific transaction and will need to be verified with the relevant civil law notary who is instructed to implement the transaction.

What about the use of e-signatures in other jurisdictions?

Several EU countries use their own QES methods (e.g. Belgium, Germany, Luxembourg, Spain). On the other hand, there are still many gaps, with other EU countries that do not have a local QES method and even more countries worldwide. Subsequently, not all signatories you are dealing with will have a QES at hand, meaning, for many agreements or documents, you cannot make use of QES methods alone.

The use of e-signatures may also present challenges for entities incorporated in, and contracts governed by, the laws of some jurisdictions. Those jurisdictions include Canada, China, Germany, Kuwait, Russia and Turkey. Other jurisdictions (France, for example) require an additional DocuSign module called IDNow which associates a government ID with the electronic signature. This may need to be purchased for your jurisdiction for which additional time should be allowed. We have significant experience of advising on a broad range of issues arising from the use of e-signatures within financial services, and the legal and regulatory impacts of this.

What do we recommend?

When signing new contracts and documents we recommend using a QES or handwritten signature. Are you signing with another party who does not have a QES at their disposal? In that event, you could agree upfront signing electronically what you (mutually) understand to be “sufficiently reliable” with regard to the method of electronic signature.

For example, sharing scans of signed documents and each sending one signed original to the other party or rely on specific due diligence before entering into contracts and documents with your counterparty. You could also agree that signatures exchanged by pdf or other mutually agreed electronic means are accepted to the same extent as signatures handwritten on a document.

If you do not like the sound of the above-mentioned ways to sign documents, please be reminded that (except for specific circumstances) you could always use the SES or AES or even confirm by other (electronic) means. However, be aware that the enforceability of such documents/agreements could be questioned, and different means of evidence may have to be used to prove that you have actually signed the document and to proof which exact content of a document you have signed.