Legality of eSignatures in Micronesia

Background

Electronic signatures facilitate international trade via secure online authentication, enabling secure contract execution and easier access to various services in the Federated States of Micronesia (FSM). These digital solutions facilitate the rapid, environmentally friendly completion of documents, contributing to reduced paper consumption and faster business dealings. However, grasping the essential components of implementing electronic signatures in Micronesia is crucial.

The use of eSignature in Micronesia is guided by the Congress Act, C.B. No. 24-23, which amended and created Chapter 11 of Title 33 of the FSM Code. The law states that an electronic signature cannot be denied admissibility in any legal proceeding solely on the basis that it is in electronic form.¹ Notably, some documents may still require a manual signature, and legal requirements may vary by region.

Ensuring the security of electronic signatures is paramount. Opting for providers that offer robust protection measures, including encryption, user authentication, and comprehensive audit records, to safeguard access and maintain the integrity of documents. Services such as BoldSign provide these security features, helping users meet regulatory standards and maintain high levels of security.

In conclusion, while eSignatures are increasingly accepted and offer numerous advantages, it is crucial to focus on legal conformity and security measures and choose a user-friendly platform that enables their smooth integration into Micronesia’s digital landscape.

Forms of electronic signatures

An electronic signature encompasses a variety of digital forms attached to an electronic document or procedure. These forms can be:

• Using app login credentials to give permissions
• Signing with a stylus or finger on a touchscreen device
• Entering a name into an email as a form of signing off
• Confirming agreement on a web page with a click post-verification
• Adding a digitized image of a handwritten signature
• Employing a spoken command to serve as an oral consent

Overview of electronic signature laws in Micronesia

In Micronesia, a contract cannot be denied legal effect, validity, or enforceability solely on the basis that an electronic signature was used for the purpose.² However, the parties involved should always show intent to sign and consent, and must ensure the use of proper service that protects the document’s integrity by preventing or detecting any alterations after signing.

The primary laws governing electronic signatures in the Federated States of Micronesia:

• Title 33 of the FSM Code, Chapter 11 – Electronic Transactions Act 2025.
• Congress Action, CB No. 24-23.

The Department of Transportation, Communications, and Infrastructure (DTCI), in adopting policies and standards, ensures consistency with recognized national or international standards to facilitate interoperability or ensure a common working relationship.

The amendment categorizes electronic signature into the following:

• Simple electronic signatures
• Secure electronic signatures
• Qualified electronic signatures

A simple electronic signature is any electronic sound, symbol, or process attached to or logically associated with other records that the signatory uses to show intent to sign a contract.³

A secure electronic signature is an electronic signature that meets the following set of requirements:⁴

• Uniquely linked to the signatory
• Capable of identifying the signatories
• Developed using means that the signatory can maintain control
• Linked to the data it relates to, so that any subsequent change to the data is detectable

Uniquely linked to the signatory

An advanced electronic signature must be connected to the person using it. The signature must be uniquely created using methods only the signer can access, like a private key and confidential info, to verify their identity.

Use and incorporation remain in the signer’s sole control

The person using the advanced electronic signature must have sole control over the means of creating the signature. Typically, this requires managing a key pair or two-factor authentication, with the signer exclusively holding the private key to prevent signature forgery.

Identify the signatory

The process used to create the signature must be capable of identifying the person signing. This may include using a biometric signature, a personal identification number (PIN), an email address, or a company registration number.

Track down alterations made after signing

It is essential to preserve the authenticity of the signed document. Modifications made to the document post-signature should be identifiable. This is commonly accomplished through an audit trail. Audit trails record the signer’s IP address, timestamps of key signing events, and location, providing proof of identity, timing, and signature place.

A qualified electronic signature, as defined in the law, is a highly secure electronic signature that is generated using a certified device for creating electronic signatures, and relies on an accredited certificate specific to electronic signatures.⁵

The following validation standards are to be met by a qualified electronic signature. These are:⁶

• A statutory compliant certificate at the time of signing
• A qualified trust service provider issued a valid certificate when signing
• Signature authentication data corresponds to the data provided to the relying party
• The unique data representing the signer in the certificate was correctly provided to the relying party
• The use of any pseudonym is relayed to the relying party if a pseudonym was used at the time of signing
• The electronic signature is of a qualified electronic signature creation device
• The integrity of the signed data/document has not been altered
• Meets the validity standards of an advanced eSignature

Summary analysis

Recognition of foreign electronic signatures

An electronic signature issued, created, or used outside Micronesia will have the same legal effect within the Federated States of Micronesia.⁷

The scope and limitations of electronic signature transactions

The use of electronic signatures for concluding transactions is not uniformly recognized as legally valid. As a result, certain types of transactions and applications are appropriate for electronic signatures, while others are not. An examination of this issue is presented below, along with a concise table outlining the relevant transactions.

Documents that can be signed

Electronic signatures can be employed to affix signatures and provide countersignatures on an array of documents, such as:⁸

• Issuance of permits, licenses, or other forms
• Approvals
• Payment of fees, charges, taxes, or other levies.
• Human resources
• Procurement
• Non-disclosure agreements (assuming they are contracts, not formal deeds)
• Software license agreements
• Insurance industry
• Sales agreements
• Non-disclosure agreements
• End user license
• Educational field, etc.

Exempted transactions

While widely accepted in business, eSignatures may not be valid for certain documents that require special notarized procedures in the Federated States of Micronesia. Some of these documentations are:

• Wills and testamentary documents
• Codicils
• Real estate documents, e.g., land transfers
• Negotiable instruments, e.g., promissory notes
• Bills of exchange, etc.
• Power of the attorney
• Family law documents, e.g., divorce and adoption documents.
• National judicial remit.

Summary analysis

To ensure the legitimacy of an electronic signature, it is advised to follow these best practices while also fulfilling all pertinent legal requirements:

• Authenticate the signatory’s identity and, in commercial transactions, verify their authority to act on behalf of the company in signing the document.
• Secure clear approval from the individual providing the signature, which should be documented within the contract or an associated legal document, to confirm their acceptance of using the specified electronic signature for the document.
• Protect the document from any changes after applying the electronic signature.
• Keep a comprehensive log of the signing process, capturing each step the individual signing performs.

How does BoldSign help

The following elements of compliance available within BoldSign can be used to comply with Micronesia’s electronic signature laws:

• Secure and unique signing link: A secure and unique link to sign a document is sent directly to the signer's email address. This ensures that the document is only accessed by the intended signer and cannot be tampered with.
• Password protection: Senders can specify a password that needs to be entered before viewing and signing a document. This adds another layer of security to the signing process.
• Audit trail: The IP address of the signer and timestamps for all significant events in the signing process are recorded in an audit trail. This provides a record of who signed the document, when, and where.
• Digital signature: The final document is digitally signed with an AATL-compliant certificate. This ensures that the document cannot be tampered with without invalidating the signature.
• Consent: Signers are asked to confirm their intent to sign electronically and informed that they could opt out. This ensures that the signer is aware of the implications of signing electronically and has given their consent.
• Custom terms: Get your signers to agree to a custom set of terms. This can be useful to ensure additional security or that the signer understands the terms of the document.

Disclaimer: The information on this page is intended to help businesses understand the legal framework of electronic signatures for this particular country.

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