Digital Signatures in Japan

The use of Digital signatures is in its infancy in Japan. For hundreds of years in Japan, individuals and businesses have been signing official documents using Hanko.

Hanko is a personal identification stamp, which means the signee has to go to a physical office to get it. This has become a major problem as businesses adopt remote working.

Japan to Adopt Digital Signatures in 2022 and Beyond

Electronic Signatures and Certification Business Act

That is now changing as Japan moves to adopt the usage of digital signatures widely. Under Japan’s Electronic Signatures and Certification Business Act, the use of digital signatures is legal.

The Act outlines the type of business that can offer digital certificates, as well as their terms of operation.

The Act defines a digital signature as a means of securing information that can be recorded using electromagnetic means. That is either electronic or magnetic or a similar form for computer storage, which humans cannot perceive using their senses.

The digital signature should be able to show that the creator of the information signed it, and the digital signature should be able to show when it has been altered.

The Act also supports the use of Accredited Certification Businesses (“ACBs”). Businesses can place the ACBs on the electronic certificate bearing the digital signature.

They can show that the digital signature indeed belongs to the user/business that signed it. And that such as user/business has obtained the ACBs accreditation.

Last year, lawmakers in Japan increased the number of documents that people and businesses can sign digitally. This move means staff can soon conduct many of the administrative government and business procedures more efficiently.

Documents that can Be Signed Digitally in Japan

Some of the documents that customers and officials can now sign digitally include:

Banking
Chattel Paper
Consumer Transactions
Corporate Resolutions
Documents to be Recorded
Documents to notarized
Education
Government Filings (some documents).
Healthcare
HR
Insurance
Lending
Life Sciences
NDAs
Procurement
Real Estate
Software Licensing
Technology sector

As per the law recognizing the use of digital signatures, a digital signature is an original if it meets these requirements:

The signer makes the digital signature by following the right codes and controls needed to create such a signature, and the controls and codes should make it possible for only that person to create that signature.
The digital signature secures the information in the electromagnetic record.

If a digital signature does not meet the above requirements, the signer may have to prove its validity if someone challenges the signature’s authenticity. They do so in any of the following ways:

Provide evidence of the signature's validity by providing a method to authenticate the digital signer of the signature.
They can also provide evidence that the document can display evidence of alteration and that no one has altered it.
The signer can also provide a log of all the actions the signer has undertaken so far.

Hanko vs. Digital Signing Services in Japan

Many businesses now see Hanko as a barrier that is making it harder to do business remotely full time. Japan adopted the use of Hanko as a simple identifier for the illiterate during the Meiji era, and it was a success.

But with the high literacy levels today, the stamps have been relegated to official government contracts. And that now acts as a bottle for businesses.

Large businesses have the right IT infrastructure to implement digital signatures. For them, switching to digital signatures is a welcome step.

However, small businesses do not have the right resources to switch to digital signatures. That is the second obstacle that Japan is facing in adopting digital signatures.

Solution for Adoption of Digital Signatures

Japanese consumers are risk averse, and many of them may not have the same faith they have in Hanko when getting their documents signed. They do not see them as expressing the company’s credibility.

Some have expressed that the use of digital signatures does not add the personal responsibility that comes about with using Hanku.

In that regard, companies offering digital signatures may need to explain to users how digital signatures work. They should also explain the various use cases of digital signatures and their advantages over Hanko.

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