Legality of eSignatures in Sri Lanka

Background

Electronic signatures are transforming the traditional way of validating documents by introducing efficient and environmentally friendly alternatives. Their adoption is rapidly spreading throughout Sri Lanka and beyond, streamlining the signing process and drastically reducing paper consumption, thereby accelerating the completion of deals and agreements.

To use electronic signatures effectively in Sri Lanka, compliance with the Electronic Transactions Act No. 19 of 2006 (as amended by Act 25 of 2017) is essential for their legal equivalence to traditional signatures.¹ While they are widely recognized, consulting with legal experts is advised to navigate specific instances where regional laws mandate traditional signatures.

Ensuring robust security for electronic signatures is crucial. Implementing top-notch encryption, accurate identity verification, and detailed audit trails is essential to prevent misuse and preserve document integrity. Providers such as BoldSign are at the forefront of maintaining these security measures, guaranteeing legal compliance and user protection.

For Sri Lankan businesses, it is essential to embrace electronic signatures while paying close attention to their legalities, emphasizing security, and choosing user-friendly services. This will help them integrate electronic signatures into their workflow effortlessly, enhancing productivity and securing business dealings.

Overview of the regulatory framework

The use of electronic signatures in Sri Lanka is governed by:

• Electronic Transactions (Amendment) Act, No. 25 of 2017
• Electronic Transactions Act, No. 19 of 2006²

The law provides that where an applicable written law requires a communication or other document to be signed or to bear a person’s signature, that requirement is satisfied electronically, subject to the scope and application of the Electronic Transactions Act.³

Section 17 (a) of the Electronic Transactions Act gives electronic signatures legal validity. It provides that:

“If an offer and acceptance of an offer have been in whole or in part expressed using an electronic record, an electronic signature attached to, or logically associated with, such electronic record shall not be denied legal effect solely on the ground that it is an electronic signature.”

This gives the legal basis for contracting parties to use an electronic signature to execute their contractual undertakings.

Under Section 7 of the Act, which addresses the legal criteria for electronic signatures, the necessity for a signature on documents as stipulated by law is considered fulfilled for electronic documents and communications if the employed method:

• Clearly shows the identity of the user and their agreement to the terms
• Is dependable and suitable for the intended purpose of the electronic interaction, considering all factors, including any pertinent agreements.

It should be noted that, unlike many other countries, Sri Lanka has yet to develop a regulatory framework for electronic signature certification. This, by extension, implies that there are no categories of signatures. Parties to any such transaction are obligated to ensure the integrity of the data, identification of the user and their consent, and that the process is not breached by a third party.

Scope of limitation

Benefiting fields

• Human resources (H.R.): The H.R. division stands to significantly enhance its operational workflow through the integration of eSignatures. This technology is a game-changer for H.R. tasks, including onboarding new hires, policy acknowledgment processes, performance reviews, and offboarding employees.
• Healthcare: The implementation of eSignatures for patient-related paperwork, such as intake and consent forms, ensures a secure and efficient signing process.
• Education: Electronic signatures in educational institutions simplify the management of enrollment forms, parental consent, and other administrative paperwork.
• Retail and E-commerce: Electronic signatures can significantly enhance the management of sales agreements, purchase orders, and vendor contracts.

Other areas that directly benefit from the use of electronic signatures are:

• Legal opinions
• Public petitions
• Memoranda and internal correspondences
• Non-disclosure agreements
• Procurement
• End-user agreements, etc.

Exempted transactions

The use of electronic transactions in Sri Lanka is limited under Section 23 of the Act such that the following transactions cannot be completed with an electronic signature:

1. Creation or execution of a will or any other testamentary document
2. License for a telecommunication system
3. Bill of exchange
4. Power of attorney
5. Contract for sale of immovable property or any interest in such property
6. Any financial matter, such as:
   1. Transactions on a regulated exchange
   2. Foreign exchange transactions
   3. Inter-bank payment systems, inter-bank payment agreements or clearance and settlement systems relating to securities or other financial assets or instruments.
   4. The transfer of security rights in sale, loan or holding of or agreement to repurchase securities or other financial assets or instruments held with an intermediary.

Summary analysis

To enhance the reliability and legal adherence of electronic signatures, individuals should engage in best practices including:

• Verifying the signer's identity and authority: Ensure that individuals or entities signing documents are properly authenticated and authorized to enter into legally binding agreements.
• Securing explicit consent for electronic signing: Obtain informed agreement from all parties regarding the use and legal standing of electronic signatures before implementation.
• Protecting the document's integrity during and after signing: Implement digital security measures to prevent unauthorized changes and preserve the document's enforceability.
• Keeping a comprehensive record of the signing process: Maintain a detailed audit trail with timestamps, IP addresses, and authentication methods to substantiate the signing event's validity.

How does BoldSign help

The following elements of compliance available within BoldSign can be used to comply with Sri Lankan eSignature 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 are 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 and that the signer understands the terms of the document.
• QES compliance: BoldSign offers fully compliant qualified electronic signatures (QES) that are simple, secure, and legally binding across Sri Lanka. QES guarantees that essential documents are protected with the highest level of eSignature security, giving peace of mind in digital transactions. Using BoldSign, users can confidently manage important documents while ensuring compliance with Sri Lanka’s regulations.

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

However, Syncfusion’s officers, directors, stockholders, affiliates, attorneys, accountants, employees, or agents cannot provide legal advice. You should consult your personal attorney regarding your specific legal questions. Laws and regulations are subject to frequent changes, and the information may not be current or accurate. To the maximum extent permitted by law, Syncfusion provides this material on an “as-is” basis. Syncfusion disclaims and makes no representation or warranty of any kind with respect to this material, express, implied, or statutory, including representations, guarantees, warranties of merchantability, fitness for a particular purpose, or accuracy.

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