eSignatures offer the same legal standing as a handwritten signature. They provide a fast, secure, and accurate identification alternative for signatures, all while keeping your important records compliant. This applies to nearly every legal document, including those circulated for board governance purposes.
Specifically for boards, there are many occasions when eSignatures prove vital to good governance, expediting the speed of business, and driving secure collaboration in the boardroom and beyond. Let’s see how eSignatures work, how they improve your workflow, and how OnBoard makes eSignatures easier than ever.
What is an Electronic Signature?
When defining “what is eSignature?” different countries may use different terminology for what is essentially the same legally binding process for signing and authorizing digital documents in an online format.
eSignatures, sometimes used as an umbrella term, may also refer to:
- Standard electronic signatures
- Digital signatures
- Handwritten signatures in an electronic format
Just like signing by hand with pen on paper, each electronic signature is unique to the person signing the document. Backed by software that authenticates, tracks, and stores the eSignatures, the signer’s IP address, along with the date and time they signed the document, can be found inside the encrypted data.
Many types of secure eSignatures also require signers to complete extra steps to confirm their identities. For instance, a digital signature may use Public Key Infrastructure (PKI) to create a unique digital certificate that guarantees its authenticity.
Are eSignatures Legally Binding?
Yes, signing board documents with electronic signatures represent legally binding documents, when all parties involved choose to sign digitally. In fact, eSignatures offer organizations a secure, if not markedly more secure, way to conduct board business and get things done.
However, laws governing eSignatures can vary from country to country. Here’s what you need to know about e-signatures in the United States, United Kingdom, Canada, and India:
eSignatures in the United States
Are eSignatures legal in the U.S.? Yes. The Electronic Signatures in Global and National Commerce Act (ESIGN) and the Uniform Electronic Transactions Act (UETA) allow for legally binding eSignatures.
These laws permit the use of electronic signatures for virtually all types of agreements, but exclude the use of eSignatures on property transfers, wills, and legally required consumer notices, among others.
To ensure eSignatures are valid, confirm the following:
- An intent to sign by all parties
- Association of signature with a record that reflects how the e-signature was created
- Agreement by all parties to use electronic records for the transaction
- Retention of electronic signature records for reference by all parties involved
eSignatures in the United Kingdom
Are eSignatures legal in the U.K.? Yes. The Electronic Identification and Trust Services regulation (eIDAS) makes eSignatures legal with prior consent.
Implemented in 2016 and applicable to the European Union, eIDAS made eSignatures and other verification services admissible in legal proceedings. The regulation sets forth varying levels of security standards for electronic signatures to qualify as the equivalent of a wet-ink signature.
Electronic Signatures in Canada
Are eSignatures legal in Canada? Yes. The Personal Information Protection and Electronic Documents Act (PIPEDA) provided eSignatures the same legal standing as wet-ink signatures.
The law requires:
- The electronic signature must be unique to the person using it.
- The person who e-signs the document must control the technology to attach the signature.
- The technology must be used to identify the person using the electronic signature.
- The electronic signature must be linked to an electronic document to determine if the document has been changed after the electronic signature was attached to it.
Electronic Signatures in India
Are eSignatures legal in India? Yes, with consent.
The Information Technology Act of 2000 provides e-signatures the same legal standing as wet-ink signatures. The law sets forth two levels of security standards for electronic signatures to qualify as the equivalent of a wet-ink signature.
How Electronic Signatures Work
How do eSignatures work? Can board minutes be signed electronically?
Yes, board minutes can be signed electronically, as the ESIGN Act makes all electronically signed contracts and documents legally binding.
For boards of all sizes and types, eSignatures can provide even better security than a wet-ink signature when backed by a full Software-as-a-Service (SaaS) solution like OnBoard, that authenticates, tracks, and stores the eSignatures along with all your electronic board documents.
To work securely, each unique eSignature follows a specific Public Key Infrastructure (PKI), which uses a mathematical algorithm to generate two long numbers. These numbers are referred to as keys, one public and one private.
When a person electronically signs a document, the software uses the signer’s private key to create the eSignature. A mathematical algorithm acts as a filter, creating data matching the signed document, and encrypts that data to produce a public key digital signature that includes the signer’s IP address, along with the date and time they signed the document. If the document changes after eSignatures are in place, the digital signature is invalidated.
Electronic Signature Benefits in a Corporate Governance Setting
In today’s business world, corporations move at lightning speed, and boards of Fortune 500 companies all the way down to mom-and-pop operations need to keep up. When following electronic signature best practices, companies can sign off on:
- Purchasing agreements
- Sales proposals
- Hiring and onboarding
- Tax filings
- Non-disclosure or Non-compete agreements
- Employee timesheets
- And so much more!
Approve Minutes in Seconds
eSignatures dramatically expedite the time necessary to sign meeting minutes. OnBoard streamlines the process by making signing as easy as a mouse click. No more page by page initials. Just real time-savings.
Sign Attendance Records
Most state laws and bylaws require attendance records to be signed by the company secretary and frequently the board chairperson. Each page must include initials, as well as a signature from everyone in attendance. With eSignatures, the whole process is streamlined. Instead of printing, carrying around record books, and seeking the signatures of directors, you can set up a simple workflow to achieve the same results. Using the attendance report built right into OnBoard, eSignatures allow you to seek an electronic signature and stay digital from end to end.
Take Action by Written Consent in Lieu of a Meeting
Organizations sometimes require sign-off from the board, but not necessarily a full meeting of the board of directors. When time is pressing, eSignatures are key.
For instance, here’s how the Indiana law works in practice:
If not explicitly banned by your organization’s articles of incorporation or bylaws, board actions may be taken without a meeting if the action is taken by all members of the board. The action must be:
- Evidenced by one or more written consents describing the action taken; and
- Signed by each director.
Examples of frequent actions taken without a meeting include:
- Amending the bylaws
- Electing or removing officers and/or directors
- Changing corporate policies/information
- Financial decisions or resolutions, such as approving loans and setting salaries for employees
- Issuing stock or approving share transfers
- Purchasing, leasing, or selling real estate/assets
- Appointing signing authority/power of attorney
- Hiring employees or contractors
With eSignatures, boards can quickly obtain written consent, improve record-keeping, and enhance security. The benefits of electronic signatures keep companies, nonprofits, higher education, and other organizations securely moving forward.
Improve Record Keeping
With the granular security provided by OnBoard, there’s an explicit grant of permission to sign any document. There’s always a ready reference. In the real world, you sign and often don’t maintain good referenceable records. eSignatures provide you a repository of everything you ever signed, and it’s always available for reference.
Keep Track of Time-Sensitive Materials and Transactions
Find yourself in a time crunch to obtain signatures from directors? State laws and bylaws often require executive appointments, granting loans, and stock option grants to be approved in writing, often within a narrow timeframe. Utilizing eSignatures provides direct and immediate written consent for any action that can be taken during a board meeting. eSignatures help solve the challenge of reaching remote and traveling directors for a fast response.
Monitor Progress in a Single Hub
Executive administrators can manage and track any document that needs a signature. Directly in OnBoard, the eSignature dashboard provides complete visibility into the process. You can see exactly where a document is in the workflow — who signed it, when they signed, and what signatures remain outstanding.
Enable Better Security
OnBoard’s secure eSignatures allow you to always verify the signature is from the intended recipient through the individual’s unique OnBoard ID. With our granular permission management, only those with the authority to view and sign documents gain access. Your directors’ secure eSignatures can be produced instantly and reliably.
Achieve Clear ROI
Your board’s last use of paper involved those aggravating instances when digital documents still required a wet-ink signature. Printing, signing, and mailing were all throwbacks to the pre-digital age. That’s now over.
If you’re already leveraging an eSignature solution for your board and management materials, outside of a board portal, you should consider a consolidated solution from OnBoard. We remove the middleman, and replace third-party eSignature software.
The OnBoard suite offers every tool necessary for effective governance, reducing your cost and reliance on other eSignature vendors. All with the advanced security and ease of use you expect from OnBoard.
Employing eSignatures doesn’t end when the board meeting’s over. Consider what happens when your CFO needs to sign a new contract. Without eSignatures, it might take them a full week to negotiate the deal, receive the contract by mail, sign it, and mail it back. With OnBoard, they can simply upload the document, apply their eSignature, and return the PDF within minutes.
How eSignatures Work in OnBoard
The eSignatures workflow in OnBoard is fast and streamlined. Administrators simply upload the document that needs a signature, then append it to indicate where the person needs to sign. Directors immediately receive a notification that a signature is pending, and with just one click they sign their name. That’s it. Directors receive a record of every document they signed, and administrators gain a simple workflow to understand what signatures remain outstanding and what’s been signed. Uniquely, we provide the ability to embed eSignatures directly into the board agenda.
It’s as easy as it sounds. The workflow offers a powerful benefit to all OnBoard users to securely enhance collaboration and board governance. Ready to see our eSignatures in action? Contact us today to learn more!
About The Author
- At OnBoard, we believe board meetings should be informed, effective, and uncomplicated. That’s why we give boards and leadership teams an elegant solution that simplifies governance. With customers in higher education, nonprofit, health care systems, government, and corporate enterprise business, OnBoard is the leading board management provider.
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