Electronic Signatures Explained

What they are and how to create one 

1.November 2022
Written by Admincontrol


In this post we look at the features, uses and benefits of electronic or e-signatures including: 

  • Types of electronic signatures 
  • How they are created and used 
  • The difference between electronic and digital signatures 
  • Are they are legally binding 
  • Their benefits 

Electronic signatures, also known as e-signatures, are almost exactly as they sound - an electronic version of your normal wet ink signature.  

Perhaps you’ve gone through the long-winded process of signing a blank sheet of paper, scanning and saving it to your computer as a jpg file, and then copying and pasting it into the signature field of a document. In effect, this is a very simple electronic signature. The process isn’t very slick and your identity as the signatory cannot be proven, so the recipient must simply trust that it is genuine.  

Unsurprisingly, technical development means things have moved on. There are now more sophisticated digital signatures that use complex algorithms to authenticate the identity of the signatory. This means an electronic signature can be legally binding. They also offer a more secure and convenient way of signing any document type and on any device. 

Are electronic signatures and digital signatures the same thing? 

It can seem confusing, but not all electronic signatures are digital signatures. Adding your name to an email, or copying and pasting it onto a PDF means you have electronically signed the document. Typically, this is fine for simple letters or internal documents and while this would be considered an electronic signature, it is not a digital signature.  

Digital signatures use complex encryption technology and authentication methods including audit trails to confirm the identity of the person. Some are also able to log where and when the document was signed. The technology can detect if any changes were made afterwards, identifying signatures that have been tampered with or those that may be fraudulent.

Types of digital signatures 

Digital signatures are broken down into different subtypes. Terminology for these groups can vary, but these are usually referred to as limited or basic, and advanced electronic signatures 

Limited electronic signatures 

Limited electronic signatures use two-factor authentication such as a one-time password, usually sent via an SMS to the user’s mobile device. This enables their identity to be authenticated by matching their details with the mobile phone number on record.  

Given the extra layer of security, limited electronic signatures are legally binding in most countries and territories, although it is important to check regulations local to you as there may be regional variations.  

Advanced electronic signatures 

Advanced electronic signatures involve more in-depth technical requirements and use additional technology such as cryptographic keys: an algorithm that encrypts or decrypts text to create a more advanced method of authentication. The signature can be shown to be uniquely attached to the signatory along with identifying where, when and on what device it was made. This type of electronic signature is considered as legally binding as a wet ink version.  

Methods of authentication of an advanced signature will vary by territory, but include BankIDs or other forms of identification that are unique to the signatory. There must be an undeniable and unique link between the digital signature and the person’s identity so that it cannot be transferred or altered in any way.  

Due to the advanced technology used in the authentication of an advanced signature, they are a more reliable way of signing documents that have compliance-based implications. Although frequently used in the financial, legal and healthcare sectors, digital signatures have benefits for any type of business or organisation. For senior management and board teams, an advanced signature can be used on governance and voting issues and for the approval of meeting minutes. They are also used on contracts and legal or compliance-based documentation, or partnership agreements including investment decisions or merger and acquisition paperwork.  

Electronic signature regulation  

Around the world there are specific electronic signature legal requirements meaning their creation and authentication are regulated and must comply with strict technical requirements.  

Within the EU, electronic signatures are regulated under eIDAS legislation, which explains how they are created and the authentication methods that are acceptable. Since Brexit, the UK government has adapted EU legislation for the UK market and although cross-border signatures are generally recognised if they are compliant with eIDAS requirements, we do recommend checking guidance based on the local law in your region. 

The benefits of electronic and digital signatures 

More secure 

The complex identity verification of limited and advanced signatures is perhaps the most obvious benefit to an organisation. The authentication of the signatory’s identity, the audit trail that is created, and the traceability of how the signature was made, means they offer security features that are superior to a wet ink signature.  

Cost and time-saving 

Electronic signatures require no paper or postal or courier services. Therefore, they are a more cost-effective alternative to a traditional ink signature. Since signing and submitting a document electronically is faster than mail or fax services, there are substantial time savings for a business too.  

Better for the environment 

Electronic signatures are environmentally friendly. They don’t require paper or ink and they don’t utilise fossil fuels in delivering the signed document to its destination. They eliminate stages and processes in a business process helping to reduce carbon footprint too.  

Productivity boost 

Some electronic signature tools enable users to sign multiple documents with a single authentication. This is especially helpful for board or senior teams who are frequently signing legally binding board meeting minutes or contracts and agreements. This saves time, boosts productivity and improves oversight and control of what is being signed and when.  

How to create an electronic signature 

To create an electronic signature that is legally binding, you’ll need to use some specific software. There are a number of different types of tools that help you to easily and quickly sign a document with a limited or advanced electronic signature.  

At Admincontrol we work alongside specialist electronic signature software providers to offer our clients the ability to create both a limited and advanced signature. The process is quick, simple and effective, and compliant with all eIDAS regulations. We offer two-factor and BankID authentication that are applicable across the European markets we serve.  

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