Malaysia has recognized electronic signatures (or “eSignatures”) since 1997, first with the passage of the Digital Signature Act and later the Electronic Commerce Act (ECA) of 2006. eSignatures are commonly used in business transactions in Malaysia.
Under Malaysian law, a written signature is not required for a valid agreement or contract. Contracts are generally considered valid if legally competent parties reach an agreement, whether they agree verbally, electronically, or using a physical document.
The ECA specifically confirms that contracts cannot be denied enforceability just because they are created electronically. An electronic signature is recognized as valid under the ECA if the following conditions are met:
- It is attached to or logically associated with the document
- It adequately identifies the signer and their approval of the information within the document
- It is as reliable as is appropriate given the purpose and circumstances for which the signature is required
The minimum requirements to meet this reliability standard are as follows:
- The electronic signature is linked to the signer and solely controlled by the signer
- Any alterations to the signed document made after signing are detectable
- Any alterations the electronic signature made after signing are detectable
Common eSignature use cases
Use cases where electronic signatures are considered appropriate in Malaysia include:
- HR documents such as employment contracts, benefit paperwork, and other new employee onboarding documents
- Commercial agreements between corporate entities including procurement documents, sales agreements, and NDAs
- Consumer agreements including new retail account opening documents
- Real estate documents, including lease agreements, purchase and sales contracts, and other related documentation for residential and commercial real estate
Use cases where eSignature is not appropriate
Certain use cases are specifically barred from electronic processes or require formal notarization in Malaysia, making them incompatible with electronic signature. These include:
- Powers of attorney
- Wills, codicils, and trusts
- Negotiable instruments such as bills of exchange and promissory notes
- Instruments effecting any dealing with real property under the Malaysian National Land Code
- Statutory declarations
- Bills of sale
- Moneylending agreements
Technology standards in Malaysia
The requirements for electronic signature technology vary significantly between countries. Malaysia follows a tiered eSignature model, which recognizes different types of electronic signature. Similar to the EU’s eIDAS regulations, a simple electronic signature is sufficient for most use cases but may require extra evidence to support it if a dispute arises.
The information on this site is for general education and informational purposes only. It is not intended to provide and should not be considered legal advice. Laws pertaining to electronic signatures may change quickly, so Conga cannot guarantee the accuracy of any information on this site. Consult with a licensed attorney for answers to any specific legal questions on this topic.
Last updated: 09/09/2021