All around the world, people are struggling to come to terms with a new way of life.
Covid-19, known colloquially as coronavirus, is having a profound impact on all facets of life, not least the corporate landscape.
Self-isolation and social distancing are becoming increasingly the norm, and official government “lockdowns” — people being told to stay at home except in case of emergencies — are transforming the way we work. It’s created many challenges for business continuity but has also presented us with new opportunities.
Workers of the world are having to find new ways of working, holding meetings, collaborating and executing deals without coming face to face with another human; as a result, we are seeing a greater shift toward the use of technology. Some of these technologies are emerging and some have been around for a long time, but they are providing the framework for our new way of doing business.
Related article: Virtual Meeting Toolkit
Day-to-day entity management when you can’t meet up
These new ways of working are presenting challenges for company secretaries and legal operations teams. In this shift toward technology, are we forgetting about those companies that use on-premises applications or legacy systems? Those whose access has been bound by being within the company’s network and on its owned sites?
While many organisations have been embracing the move to cloud-based technologies for entity management, there are still some lagging behind — and it’s those companies that are suffering the most right now. How can you get the signatures of directors on a contract when you’re not legally allowed to come within several meters of them?
Cloud-based entity management software, such as Diligent Entities and its related Governance Cloud ecosystem, is helping to drive business continuity for organisations that are locked out of the office. By storing entity information, documents, and organisational charts in a highly secure format in the cloud, legal operations teams create a single source of truth for the corporate record that can be accessed from anywhere at any time.
Of course, strict user permissions should be employed to ensure the corporate record is locked down to all with the exception of authorised personnel, but these systems mean that the legal operations, compliance and governance teams no longer need to be in the office to get their job done — which is good news in this time of social isolation and uncertainty.
Directors’ signatures can still be valid and secure without ink
But one of the big issues that have proved a sticking point with many CSOs and General Counsels is the question of signatures. How can you get things approved and signed if there’s no physical copy of the documentation? In most commercial transactions or procedures, documents are signed with “wet” ink — but what if that’s no longer viable? What if, say, the entire world is locked in their houses and you can’t physically get a director’s signature?
The answer to this conundrum is the use of electronic signatures, or eSignatures as they’re better known. These electronic signatures can be delivered in a variety of methods, all of which are valid, robust, and secure. Directors’ signatures can be obtained by a tick-box or scan, by making an actual signature on their computer, or backed by certificates.
These eSignatures are legally recognised in most jurisdictions. In Europe and the UK, the eIDAS regulations set out rules for electronic identification and trust services. The regulation aims to “enhance trust in electronic transactions between businesses, citizens and public authorities by providing a common legal framework for the cross-border recognition of electronic ID and consistent rules on trust services across the EU.” In the US, eSignatures have been valid since 2000 as part of the ESIGN (Electronic Signatures in Global and National Commerce) Act. This grants legal recognition to electronic signatures and records if all parties to a contract choose to use electronic documents and sign them electronically.
Business continuity through eSignatures
eSignatures have proven incredibly useful for business continuity, even before the Covid-19 pandemic crisis hit. Now, though, it’s helping to drive business continuity for governance, risk management, and compliance across legal operations.
Given the challenges facing global business right now, consider how you would get directors’ signatures in the following cases:
- Share purchase agreements or business transfer agreements during M&A activity
- TUPE documents
- Powers of attorney
- Minutes and resolutions
- Procurement contracts
- Onboarding and employment contracts
- Directors appointment letters
Without being able to physically hand these documents to the relevant parties, you’ll need to rely on mail — which is in itself disrupted due to the pandemic’s impact on labor — and that’s not to mention the security implications of needing to print, bind, seal and post confidential and secure corporate documents.
Electronic signatures work like digital fingerprints. The eSignature software embeds a coded message when a document is signed, securely associating a signer with a document in a recorded transaction. In this way, an eSignature can only be tethered to a human, not a corporate entity, which protects the audit trail. This process also brings many benefits to entity management and business continuity for organizations, including:
- Increased efficiency
- Cost savings
- Risk mitigation
- Elimination of manual errors
- Better security
- Creation of an audit trail
And, importantly, these efficiencies allow more time for strategic entity management. Legal operations professionals spend less time chasing signatures, and more time thinking about the bigger picture for entity management, spelling the end of reactive compliance and bringing in an era of proactive governance.
Integrating eSignatures with entity management software
There are many options for obtaining eSignatures, but it’s best practice — as well as more efficient — to use something that integrates seamlessly with your entity management software. In this way, you are helping to streamline legal operations while also increasing the security of the transaction. The end-to-end process becomes more efficient, more secure, more easily auditable and less risky.
Diligent Entities integrates with DocuSign, the market leader in eSignatures, helping you to manage and track signature requests and notifications centrally, with an audit trail automatically generated. With this integration, you can send documents from within Diligent Entities to anyone externally for sign-off — and they don’t even need a DocuSign account to provide their electronic signature. Check out an article by Docusign here for some more insight into eSignatures and real life business cases of its use.
Feel free to get in touch to request a demo to see how Diligent Entities and DocuSign can streamline the process of getting directors’ signatures, and enhance your business continuity planning in these challenging times.
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