Short Guide on Using the Electronic Signature

20

Aug 2018

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By using computers every day, either for private or business purposes, you are probably aware of the benefits brought upon by the use of electronic certificates and electronic signatures. On the other hand, as this field is not yet sufficiently known and accessible to the general public, we continue to perceive it as “that thingy” and sincerely hope that we won’t be in the position to need it.

Although electronic signature has existed for more than ten years in our legal system, the topic has come to life after the implementation of the new Law on Electronic Document, Electronic Identification and Trusted Services in Electronic Commerce (hereinafter: Electronic Document Act). For this reason, we will certainly be forced to use the electronic signature in the near future, as more and more businesses go “online”.

What Electronic Signature is NOT

Although it may seem obvious to some, let’s start with the fact that the electronic signature is not a scanned image of your handwritten signature in electronic form. It is only a display of your signature in electronic form. However, the scanned image does not have the same effect as a personal signature. The reason behind this is that it does not meet the level of reliability required in e-commerce (it is easily copied – falsified by third parties, it is not subject to graphological expertize, i.e., the establishment of signature authenticity, etc.)

The digital signature also differs from the stamp signature. Although visually may be seemingly alike, the most significant difference is in the level of reliability. To be specific, as the stamp signature essentially represents an image of a personal signature, it does not meet the required reliability features, and cannot be used as a substitute for a personal signature. Therefore, a stamp signature is not used when signing important documents which assign rights and obligations, but when the speed of work is required. Contrary to this, as the electronic signature replaces personal signature in all instances, it will be used when a high level of business reliability is required.

What Electronic Signature actually IS

Electronic (digital) signature is technology which enables authentication of signatures in e-commerce. It is guaranteed that the message or document from the sender to the recipient has arrived in the unchanged form.

It protects the integrity of the data that is transmitted electronically and the integrity of the signed electronic document. In addition, the electronic signature used once is not reusable. It serves as a guarantee that nothing in the signed document has subsequently changed. An electronically signed document transmitted online is as valid as a document signed in person.

Now that we cleared up what electronic signature is and what are the usual differences between the terms that lead to a mix up in practice, you are probably wondering how to create your electronic signature. Who should you turn to?

Procedure for Obtaining the Electronic Signature

In order to sign documents from your computer electronically, you first need to obtain a qualified electronic certificate from an authorized certification body, registered in the Register of Certification Authority.

Certification Authority (CA) is an intermediary, a “trusted third party” in electronic communication between you and the person you communicate with.

A qualified electronic certificate can be understood as an electronic identification “controller” that contains information about the issuer and the user of the certificate.

When our certification body issues a qualified electronic certificate and successfully installs it on your computer, an electronic signature adventure can begin.

Authorized certification authorities for issuing qualified electronic certificates to turn to:

– Certification authority of the Post Office

– Certification authority of the Chamber of Commerce and Industry of Serbia (PKS CA)

– Certification authority of the Ministry of Internal Affairs of the RS

– HALCOM BG CA

– ESS CA

– Certification authority of the Ministry of Defense and the Army of Serbia

Which specific certification authority you will choose is the subject of your preference, and the terms of use can be found on CA websites. Different certification bodies offer different benefits, so it’s important to get information about that as well. For example, every citizen of the RS who owns a chip ID card can create an electronic certificate in the Ministry of Interior, free of charge in less than 10 minutes (the time is scheduled on-line). On the other hand, the priority of the certification bodies of the Post and the Chamber of Commerce and Industry of Serbia is that they issue certificates to non-residents, i.e., persons who do not hold a Serbian ID or unique master citizen number, and they need a certificate before the Business Registers Agency. Also, there is the possibility of obtaining an electronic certificate carrier (medium) with these certification authorities – a smart card reader and a USB token.

What Happens in Practice?

In practice, how often will you be able to use the electronic signature, and for which activities will you have to carry a pen with you?

Regarding the use of electronic signatures in practice, we can divide the jobs into three “groups”:

  • those for which you cannot use an electronic signature,
  • You may – use is the convenience but not the necessity,
  • You must do it electronically, using an electronic signature.

Let’s begin with those activities where the electronic signature cannot be used. This is a reference list, i.e. this number of activities is not final, but only the ones that we most often encounter in practice.

These are all legal transactions for transferring property rights to immovables or establishing other property rights on immovables. So when you go to the Notary public to verify the sales agreement, e.g., for an apartment, expect an old-fashioned procedure.

Likewise, you will not be able to use the electronic signature for contracts in the field of inheritance rights: agreement on the allocation and assignment of property during one’s life, life care agreements, inheritance agreements, as well as the statements of the parties in the process of discussing the inheritance.

This category also includes agreements which govern property relations between spouses, as well as the agreements for the allocation of the property of a person who has been deprived of their ability to exercise their her business capacity.

A signature of the contracting party is necessary in order to conclude a deed of gift on the transfer of property, therefore, the electronic signature is not an equal substitute.

The use of a handwritten signature in documents on paper or a certified handwritten signature is also necessary for other legal affairs or actions, for which it is foreseen by a special law or pursuant to the law of the adopted regulations.

electronic signature

The “inter-category” includes those jobs that you can still undertake and submit paper documents, but electronic services have been introduced and their application is encouraged. This primarily involves the activities with the e-Government.

E-government is the most visible and, at the same time, the most important advantage of using electronic signatures. Imagine that your computer at home or at work is a counter of some administrative institution. Yes, that means that in the future, when we need a service, we won’t have to go to the counter and lose time and patience waiting in line before that. In this area, the use of electronic signatures is encouraged, and we witness the daily improvement and expansion of its application.

Thus, you can submit tax returns to the Tax Administration electronically, but of course, there are no obstacles to submitting paper documents. Electronic signatures shall also be used for the electronic issuance of building permits, for the access to the Internet counter of the Republic Agency for Electronic Communications and the Central System for electronic processing and storage of copies of certificates from registers in electronic form. You can also apply electronic signature in dealing with the Customs Administration, by submitting a report on the operations of issuers of securities. For the National Bank, bailiffs submit PDF documents signed electronically, as well as banks and other financial institutions of the XML document.

Finally, there is also the third category of jobs for which the use of electronic signatures is necessary. As of 2015, the financial statements have been submitted to the BRE in electronic form and provided with a qualified electronic signature of the legal representative.

Using Electronic Signature in Company Formation and Running a Business

While you are running your business, you will encounter different legal situations in which you will have the opportunity to use the electronic signature. On the other hand, some actions are still traditional, requiring physical presence and the obligatory pen and paper signature.

For example, during a company formation, the OP form is signed by hand on behalf of the legal representative of the company and their personal presence is required. In addition, the Notary public certifies this form. Also, for opening a company’s permanent account, personal presence and a handwritten signature of the legal representative shall be required.

On the other hand, as we have previously mentioned, the filing of financial statements while your business is running is mandatory in electronic form and has to be signed electronically, which is most often proxied to bookkeepers.

However, at the beginning of the year, the convenience of electronic registration of entrepreneurs was introduced. In addition, the Draft Law on Amendments to the Companies Act provides for the founding act be signed with electronic signature on the electronic document, indicating that the said convenience is not possible if the said document transferring rights to the immovable property. Such a solution is extremely convenient and stimulating for businessmen, because it facilitates not only the process of establishing a company, but also contributes to the subsequent simplification of administrative and bureaucratic procedures.

The draft also envisages obligation on part of companies to have a registered e-mail address.

Prospects for success

The use of electronic signatures in Serbia is progressing progressively, although not yet in full bloom in all spheres of business and private life. Incentives from the competent Ministry that the use of electronic signatures should be “popularized” accompanied by legal innovations, certainly are affirmative in terms of the wider application of electronic signatures.[1]

Citizens will find the most immediate benefits of using this “novelty” when it comes to their own convenience.

When talking on the application of electronic signature in Serbia, we would not turn to criticism and assess the situation as “doomed” before we give chance to secondary legislation, a draft of which is planned to come to life and explain in detail the application of electronic signatures in different areas of business and life. The plan is to draft a large number of secondary legislation with the purpose to further and more clearly clarify the application of electronic signatures in the various areas of business. This has been done so far regarding electronic invoices, since the competent Ministry issued an explanation at the end of 2017 regarding the issuance and recording of invoices in paper and electronic form without the use of stamps and signatures (401-00-4169 / 2017-16). Electronic invoices do not necessarily contain an electronic signature, but only the identification code of the person authorized to issue an invoice. The company, by its internal act, regulates which person is responsible and what is considered to be an identification mark.

New legal solutions, criticisms and praises, both in the general public and in professional literature, contribute to the spread of awareness on the importance of implementation of electronic signatures with the citizens of Serbia. On the other hand, businessmen are inevitably familiar with the procedures of electronic signing – obtaining electronic certificates and applying them in practice, due to the obligation to use the electronic signature before certain institutions.

The ultimate goal on the path of digitalization is to reduce the use of paper documents in line with the European trends, but also to improve the overall business environment in Serbia and create favorable conditions for foreign investors.

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