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What are Digital Signatures and What Businesses Need to Know

Businesses and individuals are increasingly using digital signatures to sign contracts and complete transactions, particularly in the context of COVID-19 in Vietnam.

While digital signatures have been gaining popularity for years, their usage has exploded due to COVID-19, as many companies have shifted to remote or hybrid work models and conduct most of their business electronically.

Vietnam Briefing looks at how Vietnam regulates digital signatures, and what steps companies should take when using them to complete contracts.

What constitutes a digital signature?

As per Vietnamese laws, digital signatures, also in electronic form, use a cryptographic system on a digital platform. Such digital signatures are generally electronically attached to the contract that needs to be signed. These types of signatures go beyond an e-signature in terms of providing security as it provides encryption.

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Typically, digital signatures are not often used for major and complex contracts but are usually used for custom forms, social insurance declarations, electronic invoices, or paying taxes online.

Decree 130/2018/ND-CP  (Decree 130) is the main legal authority that governs digital signatures. Vietnam recognizes digital signatures as per Decree 130, which states that a document can be digitally signed in place of a ‘wet’ or physical signature if it is secure.

As per Decree 130, digital signatures are legally valid if they are certified by certificate authentication service providers or a certification authority. These are:

  • Certification authority under the Ministry of Information and Communications (MIC);
  • The governmental specialized certification authority;
  • A public certification authority; and
  • Specialized certification authority of qualified agency or organization which is not for business purpose.

Under the third bullet point, the MIC has authorized 16 certification authorities which include, Viettel, VNPT, FPT, SAFE, CMC, Trust, MISA, Smartsign, and Newtel among others for certifying digital signatures.

While Vietnam is generally moving towards digital signatures, there are exceptions to them. For example, these involve specific administrative documents such as the notarization of documents where the signing of contracts must be done physically at notary offices. Other exceptions include agreements related to land, real estate, marriage documents, and so on.

What constitutes an e-signature?

It’s important to know the difference between an e-signature and a digital signature. An e-signature is part of the digital signature concept. As per Decree 130, e-signatures are established in the form of words, letters, numerals, symbols that are linked or associated with a data message that certifies the person who has signed the e-signature as well as the approval of the person to the contents of the document.

E-signatures can take several forms such as:

  • Digital signatures;
  • Scanned signatures;
  • Image signatures; and
  • Ticking a check box or clicking ‘I accept’ or I agree’ on an online form.

An e-signature is deemed legal and valid when it is certified by an organization that provides e-signature certifying services. While Vietnam’s laws have provision on e-signatures, Decree 130 is not clear on e-signatures and particularly scanned and image signatures.

Therefore, e-signatures are considered valid if:

  • The e-signatures identifies the signatories and indicate approval of contents; and
  • The method is reliable and appropriate for the purpose for which the contract was made and sent.

Digitizing Vietnam’s business environment

Vietnam’s government has consciously created a business environment that seeks to seamlessly integrate digital processes with minimal red tape. This involves moving several administrative procedures online, while also making a vaccination app and vaccine passports.

The government’s regulation on digital signatures falls in line with this priority, creating a legal environment that encourages the use of electronic transactions. These policies are also part of the government’s larger National Digital Transformation Programme by 2025, which aims to accelerate digital transformation in business and production activities and administration.

Nevertheless, while Vietnam makes changes, government entities and businesses still rely on physical paper contracts and signatures for certain transactions. In addition, some businesses are reluctant to use digital signatures for international transactions.

Although digital signatures are readily usable in Vietnam, businesses should take measures to ensure they are used properly and securely. This includes security measures to prevent outside actors from accessing copies of digital signatures, as well as internal controls to prevent employees from misusing other employees’ e-signatures. Moreover, businesses should take steps to create records of electronically signed forms in the event a digital form is altered by another entity.