RULES FOR THE USE OF THE ELECTRONIC SIGNATURE UNDER HUNGARIAN LAW

7/Jun/2021

Due to the continuous development of technical possibilities and the pandemic situation, the use of various electronic services, including electronic signatures is becoming more and more popular.In our newsletter we provide information about the possibilities and conditions of validity of electronic signatures.

Due to the pandemic, travelling possibilities are restricted, and the restrictions are holding back the flow of business. An electronic signature can be of great help in bridging this problem. Its use can facilitate the daily business life, but there are strict conditions for the validity of a signature, as the signature technically is not linked to the person using it, so the provability that the electronic signature was actually placed on the electronic document by an authorized person is particularly important.

1. THE DEGREES OF SECURITY OF ELECTRONIC SIGNATURE BASED ON THE LAW

The uniform EU regulation defines (i) electronic signatures, (ii) electronic signatures with advanced security, and (iii) qualified electronic signatures. The three categories mean different degrees of security of the electronic signature, with different probative force. Thus, in the case of a document affixed with a qualified electronic signature, the courts presume that the document was signed by the person named in the signature, while in the case of a simple electronic signature, the document is only considered as a written instrument, but is not associated with the legal effect of a private document with full probative value. The reason for the differentiation is the usability in different situations; for example, an electronic signature with advanced security may be appropriate for issuing a statement within an organization, but the use of a qualified electronic signature may be required towards third parties.

In order to enable an executive officer of the company to sign on behalf of the company by an authorised electronic signature, it is necessary as a general rule to have a qualified electronic signature.

For the record of a qualified electronic signature in the company register, the preparation of a specimen of the electronic signature, which can only be made by a public notary. Based on this, at the request of the company, the company register may also contain the specimen of the electronic signature of the person entitled to sign on behalf of the company, which certifies that the given certificate is an authorised electronic signature of the representant. If the electronic signature of the given person is also indicated in the company register, the authenticity of the signature is certified by the registry excerpt of the company and no further certification is required to either a Hungarian or a foreign party.

In the framework of the uniform regulation of the European Union, a specific register lists the service providers that are mutually recognized by the Member States for cross-border authentication; thus, in the course of company registration proceedings in Hungary, even a qualified electronic signature provided by a trust service provider operating under the laws of another Member State may be used. The list of these service providers is available at https://webgate.ec.europa.eu/tl-browser/#/. In Hungary, three service providers provide qualified electronic signatures, these are NISZ Zrt, Netlock Kft and Microsec Zrt.

The registration of an electronic qualified signature of a company into the companies’ register requires three steps: 1. concluding a contract with the appropriate service provider; 2. preparation of an electronic specimen of signature certified before a public notary; and 3. conducting the registration procedure at the court of registration.

It is important to emphasize that an electronic signature with adequate security (qualified signature) is valid even if it is not registered in the company register, however, in this case the proof of authenticity may be required.

2. THE DEGREES OF SECURITY OF ELECTRONIC SIGNATURE BASED ON THE LAW

In addition to the above, an important alternative of signing with a qualified electronic signature is when the rules of signing electronically is regulated by the concluding parties in their contract or it is set out in the general terms and conditions. On this basis, an electronic signature can be endowed with the probative value corresponding to the qualified electronic signature, even if it is not meeting the necessary requirements regulated in the relevant provisions of law. If the use of any type of electronic signature is thus recorded in a paper-based contract, as a signature having full probative value between the parties, it has to be recognized by the courts in relation to the parties concerned, that the subsequent documents signed electronically are authentic and legally binding.

The possibility of electronic signatures and company signatures greatly facilitates the stationary case management and the uninterrupted course of the proceedings caused by the epidemic situation.

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This summary is intended to raise awareness and does not constitute legal advice.

Should you have any further question or need assistance in the company procedure concerning electronic signature, or the preparation of the relevant contractual clauses, please do not hesitate to contact us.