The Business Laws (Amendment) Act, Number 1 of 2020 (the Act) came into force on 18 March 2020 and its overarching objective is to facilitate the ease of doing business in Kenya. In seeking to fulfil this objective, the Act has amended certain laws. 

This is the first part of a series highlighting the key changes to the law, occasioned by the Act, which focuses on the use of electronic signatures and the move to digitize certain legal processes. 

Status quo prior to the enactment of the Act

Electronic signatures are not a new concept to Kenyan law, as they are already provided for under the Kenya Information and Communication Act No. 2 of 1998, as amended (the KICA). 

However, whereas previously the application of electronic signature provisions under the KICA was not clearly tied in with certain Acts of Parliament, the Act now seeks to align the use of electronic signatures to processes under other laws. 

What is an “electronic signature”?

The term as defined under the KICA (provided below) aids in understanding the implications of the changes brought about by the Act:

1. an electronic signature is 
   • “data in electronic form,
   • affixed to or logically associated with other electronic data, 
   • which may be used to 
   1. identify the signatory in relation to the data message and 
   2. indicate the signatory’s approval of the information contained in the data message”
2. an advanced electronic signature is an electronic signature that is: uniquely linked to the signatory; 
3. capable of identifying the signatory; 
4. created using means that the signatory can maintain under his sole control; and
5. linked to the data to which it relates in such a manner that any subsequent change to the data is detectable

What the Act amends, and what this means for you

We summarize below the specific amendments (under the Act) to existing laws, which incorporate (or are affected by) the above definitions. 

The Law of Contract Act, (Cap 23 Laws of Kenya) (the “LCA”)

• Where previously the LCA only provided for a physical signature, the Act now,
  • incorporates the above definition of an advanced electronic signature under the LCA, and
  • amends the definition of ‘signing’ to include signing by way of an advanced electronic signature.
• This aligns the LCA to the provisions of the KICA, thus giving parties to a contract added leeway to choose to sign their contracts electronically. 
• This welcome move addresses the need to ensure that parties stay aligned with advances in new technology that provide for remote editing and signing capabilities.

The Registration of Documents Act (Cap 285 Laws of Kenya) (the “RDA”)

• The Act amends the RDA to include the definitions of advanced electronic signature and electronic signature (as defined under KICA). Previously, all documents presented for registration at the Registrar of Documents must have been signed in ‘wet’ ink.
• Separately, the Act also amends the RDA to grant, 

1. the Registrar of Documents the power to establish and maintain the Principal and Coast registries in electronic form; and
2. transacting parties the option of filing documents in electronic form.

• By expanding the above definitions and allowing for electronic filing, this lays a more definite path for the propagation of digital registries; a venture which the Land Registry has been undertaking.

The Survey Act (Cap 299 Laws of Kenya)

• The Act amends expands the definition of signing/ signature under the Survey Act to include electronic and advanced electronic signature as well.
• The Survey Act now allows:
1. the Seal of the Survey of Kenya to be processed electronically and bear the prescribed security feature;
2. surveyors to execute and deposit any survey plans, field notes and computations with Director both physically and digitally.
3. the Director of Survey to authenticate the above documents both physically and digitally.
• This means that parties will now have the added option to
  • proceed with the survey process digitally in a move to transition from a manual to a digital system; and <
  • track the status of their applications on the digital system.

The Stamp Duty Act (Cap 480 Laws of Kenya)

• The Act:
  • expands the definition of “stamp” under the Stamp Duty Act to include a mark embossed or impressed by electronic means; and
  • amends section 119 of the Stamp Duty Act to permit the Cabinet Secretary for for National Treasury to make regulations with respect to electronic stamping, to give effect to the provisions of the Stamp Duty Act.
• The above changes seek to migrate the stamping process (as required under the Stamp Duty Act) to a digital platform, and reduce the hassle of physical stamping. This is subject to the enactment of the regulations that will provide additional guidance on e-stamping. 

The Land Registration Act, (No. 3 of 2012) (the “LRA”)

• Definitions under the LRA have been modified by the enactment of the Act. The LRA:
1. has now adopted the definitions of advanced electronic signature and electronic signature (as defined under KICA);
2. expands the definitions of ‘signatures to include electronic signature; and
3. expands the definition of an “instrument” to include the documents listed electronic form (not only physical) and introduces the concept of an electronic seal.
• The Act also expands how documents may be executed by introducing section 44 (3A) of the LRA. This provides that a document processed and executed by way of an advance electronic signature by a person consenting to the document is valid.
• The Act also amends Section 45 (3) of the LRA to allow for electronic processing and execution of documents (if both parties give their consent).
• The amendments are in line with the Government policy to ensure the digitisation of land transactions.

The Kenya Information and Communication Act (Cap 411 A Laws of Kenya)

The Act deletes section 83B(c) of the Kenya Information and Communication Act, which prohibited persons from using electronic signature to sign documents of title. This restriction no longer applies.

Conclusion

These forward-facing amendments will improve the ease of doing business in Kenya as the world shifts towards a digital approach to transactions. Costs of transacting and lead times will also likely fall as these measures are implemented and the country’s registries go fully digital.

On the use of electronic signatures, although the law provides for their use, the provisions of KICA require certificates (issued by duly licensed or recognized certification service providers) to support such signatures. The licensing or recognition of certification service providers is undertaken by the Communication Authority of Kenya.