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Adopt the Electronic Signature in French Corporate Law

In France, it has been more than 20 years since the electronic signature was enshrined in Law No. 2000-230 of 13 March 2000 (Article 1367 of the French Civil Code), which defines it as "the use of a reliable identification process guaranteeing its link with the document to which it is attached".

In corporate law, this development was completed by the recent Decree No. 2019-1118 of 31 October 2019, which now allows commercial (and civil) companies to draw up or certify by electronic signature the minutes of the decisions of their shareholders and certain corporate bodies, as well as the digital keeping of the company registers in which the minutes are stored.

The COVID-19 epidemic provides an ideal opportunity to digitise corporate law documents, and to do so in a sustainable and secure way (see our previous Client Briefing in April related to the digitisation of corporate governance "from start to finish", including corporate books).

ELECTRONIC SIGNATURE IN CORPORATE LAW

Corporate law reform: the Decree of 31 October 2019

Until the end of 2019, the regulatory provisions of the French Commercial Code still required that the minutes of the decisions of shareholders and corporate bodies (and the registers on which they are stored) be drawn up on paper, except for the corporate form SAS for which the articles of association could provide that they be recorded and signed in electronic form.

Decree No. 2019-1118 of 31 October 2019, which came into force on 4 November 2019, extends this possibility to the other commercial (and civil) companies by authorising the drawing up or certification by electronic signature of the minutes of the decisions of their shareholders and certain corporate bodies, as well as the digital keeping of the company registers in which the minutes are stored.
The legal basis: the legislation on evidence

Article 1367 of the French Civil Code defines the electronic signature as "the use of a reliable identification process guaranteeing its link with the document to which it is attached".

Article 1366 of the same Code establishes the principle that electronic documents have the same probative value as paper documents, provided that "the person from whom they emanate can be duly identified and that they are drawn up and stored in conditions that guarantee their integrity".

Article 1367 of said Code establishes a presumption solely in favour of the so-called "qualified" electronic signature as defined below: " the reliability of an electronic signature process is presumed, until proven otherwise, where that process uses a qualified electronic signature".
The different levels of security of electronic signatures

The European Regulation No. 910/2014 of 23 July 2014, known as the eIDAS Regulation (the "eIDAS Regulation"), only deals with electronic signatures at the technical level by defining 3 levels of security, presented below. French legislation on evidence does however not recognize the first level, the "simple" electronic signature.

1) The so-called "simple" electronic signature

The term "electronic signature" generally means "data in electronic form which are attached to or logically associated with other data in electronic form".

In practice, an electronic signature is considered "simple" if it does not meet the conditions of security level 2 ("advanced") or 3 ("qualified") specifically provided for in the eIDAS Regulation (see below).

A "simple" electronic signature may be a simple scan of a handwritten signature or any other process offered by an electronic signature service provider whose requirements for the identification of the signatory and/or the integrity of the signed document do not meet the requirements for levels 2 and 3 as indicated below.

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Simple electronic signatures are not admitted under French corporate law (and are generally not admitted by French case law under French legislation on evidence).

If such a signature is used, it is therefore recommended to ratify the document by a handwritten signature.

2) The so-called "advanced" electronic signature"

This level of security is based on the use of techniques verifying the signatory's identity, the security of the creation of the electronic signature (including time stamping), and the preservation of the integrity of the signed document.

The following conditions must be cumulatively met (Article 26 of the eIDAS Regulation):

  • the electronic signature is uniquely linked to the signatory;
  • it allows the signatory to be identified;
  • it has been created using electronic signature creation data that the signatory can, with a high level of confidence, use under its sole control; and
  • it is linked to the data associated with that signature in such a way that any subsequent modification of the data is detectable (i.e. the integrity of the signed document is ensured).
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This level of security is adequate for the whole business practice and for the signature of shareholders' decisions as indicated hereinafter, as well as for most contracts relating to the management of companies. French case law has recognised the validity of this signature for common contracts in the light of the abovementioned French legislation on evidence.

warning

Providers offer "certified" electronic signatures, which do not correspond to any legal concept and should not be confused (despite their commercial designation) with "qualified" signatures, which have a strong legal significance as explained below. Indeed, these "certified" signatures are only "advanced" electronic signatures, which have been enhanced in terms of identification of the signatory, but not in terms of the other criteria required for "qualified" signatures set forth below. Therefore, they do not benefit from the legal presumption regarding the burden of proof mentioned below, which is applicable only to "qualified" signatures.

3) The so-called "qualified" electronic signature

This is the highest level of security that must meet the requirements of Articles 28 and 29 of the eIDAS Regulation, as specified in Annexes I and II of said Regulation.

It is an "advanced" electronic signature (see above), but strongly reinforced by an additional level of security. In particular, security is enhanced with regards to the "creation device" of the signature, the securing of the documents and their encryption, and the addition of a specific certificate known as a "qualified certificate" issued by a service provider authorised by the competent national authority (the Agence Nationale de la Sécurité des Systèmes d'Information (ANSSI) in France).

The national lists and the European list of providers of qualified electronic signatures can be consulted at the following address:

https://webgate.ec.europa.eu/tl-browser/#/

warning

This level of qualified electronic signature can be complex to implement, in particular because of the high technical nature of the device used to create the electronic signature. In practice, this signature is not used for legal documents in the normal course of business such as corporate minutes.

It is however required for most public procurements, and it is mandatory for deeds of notaries and attorneys. Generally, this signature should be used for any document for which the risk of dispute and/or the commercial, legal or financial stakes are high.
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Despite its complexity, it is the only level of electronic signature that benefits from a presumption of reliability under the legislation on evidence (which is imposed by the eIDAS Regulation (Article 25) on all Member States and therefore included in French law by Article 1 of the above-mentioned Decree of 28 September 2017: "The reliability of an electronic signature process is presumed, until proven otherwise, when this process uses a qualified electronic signature.").

As indicated above, the qualified electronic signature should not be confused with advanced electronic signatures sold on the market under designations such as "certified" signatures, which do not benefit from the above-mentioned presumption under the legislation on evidence.
In practice: what level of electronic signature for corporate documents?

For the drawing up or certification of the minutes of shareholder decisions and decisions of certain corporate bodies, as well as for the digital keeping of the company registers on which they are stored, the aforementioned Decree of 31 October 2019 requires at least an advanced electronic signature.

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For the corporate forms SAS and SASU, this level of electronic signature is applicable as a supplement when the articles of association do not specify the terms and conditions of the use of electronic signature.

Documents drawn up or certified by electronic signature must be electronically dated by means of a time stamp that provides a guarantee of proof.

warning

If the location of signature of the legal document is important, for instance regarding registration taxes, electronic signatures should not be used, except in the case of voluntary registration.

Documents concerned for the corporate form SA
  • Attendance register for meetings of the Board of Directors or the Supervisory Board (Articles R 225-20 and R 225-47 of the French Commercial Code);
  • Minutes of the deliberations of the Board of Directors or the Supervisory Board and the register in which they are recorded (Articles R 225-22 and R 225-49 of the French Commercial Code);
  • Minutes of general meetings and the register in which they are recorded (Article R 225-22 of the French Commercial Code by reference of Article R 225-106 of the same Code).
Documents concerned for the corporate form SAS
  • Minutes of the decisions of shareholders (or of the sole shareholder of a SASU) as well as the register in which they are recorded (Article R 227-1-1 of the French Commercial Code);
  • Where applicable, the minutes of the deliberations of the collegiate corporate bodies provided for in the articles of association.
Risk of Evidence & Recommendations

The probative value of a written document depends on the probative value of its signature.

While the "qualified" electronic signature benefits from a presumption of reliability, it remains rarely used in practice because of its complexity (and this presumption remains, in any case, rebuttable).

The "advanced" electronic signature is sufficient to constitute evidence generally admitted in Court. Administrations such as the Commercial Registry, the Courts or the INPI (French National Institute of Industrial Property), have long admitted it. The tax authorities have also just admitted it.
On the other hand, the "simple" electronic signature, which generally corresponds to a scanned signature, is not sufficient evidence and is rejected by most administrations and courts. At best, it can constitute a "commencement of proof" that will have to be corroborated by other evidence to obtain probative value (Article 1363 of the French Civil Code).

Recommendations to enhance the security of a legal document signed by electronic signature:

  • Ratification of the legal document a posteriori by handwritten signature, which is indispensable in case of simple electronic signatures, and recommended in case of advanced electronic signatures, if there is a risk of dispute, or if the document is of significant duration.
  • Use of the advanced electronic signature for corporate law documents and formalities (and for all administrative formalities or contracts in the ordinary course of business).
  • Prior conclusion of an evidentiary agreement for the signature of any complex legal document (any legal document signed between opposing parties and/or any international legal document) in order to agree on the terms and conditions of the use of electronic signature between the parties. This agreement may be included in the articles of association or the internal regulations of corporate bodies for decisions that are subject to corporate law (such an agreement shall also be signed, in advance, for the electronic signature of complex contracts such as shareholders' agreements).

For more information, please contact:

Aline Poncelet
Associé, Paris
T +33 (0)1 44 94 31 55
E aline.poncelet @hfw.com

Jens Waldner
Of Counsel, Paris
T +33 (0)1 44 94 31 70
E jens.waldner@hfw.com

Diane Dusserre
Collaboratrice, Paris
T +33 (0)1 44 94 31 92
E diane.dusserre@hfw.com

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