The registry of companies: integration of QES into BAROS

In an increasingly digital age, the transition from traditional paper-based processes to electronic transactions has become ubiquitous. In order to facilitate the digital business process, the Malta Business Registry (MBR) has set out to incorporate user-friendly qualified electronic signatures (QES) within the new Business Automation Registry Online System (BAROS), in order to better enable a smooth transition to paperless submissions with the MBR.

Malta has transposed Directive 2019/1151/EU on the use of digital tools and processes in company law which was the first step towards digitalisation in the area of company law. The directive amended EU company law provisions to enable online formation, registration of branches and filing of documents for limited liability companies.

For this purpose, the former portal had to be significantly improved and the MBR launched BAROS, which will facilitate the transition from paper-based submissions to electronic ones.

The BAROS system enabled the MBR to digitise its workflows and adopt paperless practices, resulting in reduced paper consumption, storage costs and environmental impact, as well as facilitating the efficiency of internal processes of all online submissions.

One critical aspect of this transition is the acceptance of electronic signatures. Electronic signatures have revolutionised the way business transactions are conducted, offering convenience, efficiency and security. Under Regulation (EU) No 910/2014 on the Electronic Identification, Authentication and Trust Services (E-IDAS) in the EU, electronic signatures are classified into various types based on their level of security and compliance. These types include simple electronic signatures (SES), advanced electronic signatures (AES) and qualified electronic signatures (QES).

Each type offers different levels of assurance and legal validity, with qualified electronic signatures being the most secure and legally recognised form, providing the highest level of trust and integrity in electronic transactions.

Every notification that is required to be delivered to the registrar of companies for registration must be submitted with an original signature. Naturally, the registrar had to invest, and accept, electronic signatures that can only meet stringent requirements and provide for the highest level of assurance regarding the identity of the signatory and the integrity of the signed data.

QES are created using cryptographic techniques, ensuring that they are uniquely linked to the signatory, tamper-evident and capable of identifying the signatory with a high level of confidence. Therefore, the registrar accepts documents signed and filed electronically as long as QESs are used.

To facilitate this transition, the MBR invested in a QES that can be offered to anyone making use of BAROS, both shareholders or any officers  of the company or company service provider.

Despite being electronic in nature, QES carry the same legal weight and validity as wet signatures

Despite being electronic in nature, QES carry the same legal weight and validity as wet signatures do on paper documents. This equivalence is achieved through adherence to the regulatory frameworks of E-IDAS, which establishes the standards and protocols for electronic signatures. By meeting these standards, qualified digital signatures provide assurance to all parties involved in electronic transactions that confirm the signed documents are authentic, unaltered and legally binding.

Furthermore, the importance of maintaining confidentiality of QESs cannot be overstated, as it is integral to safeguarding the integrity and authenticity of electronic documents.

Confidentiality is a fundamental aspect of maintaining the integrity and trustworthiness of qualified digital signatures. Unlike wet signatures, which rely on physical safeguards to prevent unauthorised access, digital signatures rely on cryptographic keys and algorithms to ensure confidentiality. Therefore, the private key, which is used to create the digital signature, must be kept confidential at all times.

Any compromise of the private key could result in unauthorised individuals creating fraudulent signatures, which undermines the integrity of the digital signing process. Therefore, stringent measures must be in place to safeguard the private key, such as encryption, password protection and secure storage mechanisms.

Moreover, maintaining the confidentiality of qualified digital signatures extends beyond just protecting the private key. It also ensures the security of the entire digital signing process, including the transmission of signed documents and the verification of signatures. Robust encryption protocols and secure communication channels must be employed to prevent the interception or tampering during transmission, thus preserving the confidentiality and authenticity of the signed documents.

The MBR has invested a lot of time and resources in order to update both the legislative framework together with its IT infrastructure. BAROS and QES played a pivotal role in facilitating reporting with the registrar for all companies to adhere to the obligations imposed on them by the Companies Act and all subsidiary legislation.

At this stage it is important to also delve into the benefits of QES. Further to the legal validity and enforceability explained above, documents signed with QES and filed with the registrar are typically admissible as evidence in court proceedings without the need for additional authentication, thus reducing legal risks and ensuring the integrity of electronic transactions.

QES offer enhanced security features compared to other forms of electronic signatures. By leveraging advanced cryptographic algorithms and secure hardware or software-based tools, QES provides for a high level of assurance that the signer’s identity is authenticated and the signed document remains tamper-evident. This helps mitigate risks associated with fraud, forgery and unauthorised access, providing peace of mind to both signers and recipients of electronically signed documents.

In addition to this, implementing QES can lead to both significant efficiency gains and cost efficiency for organisations. By streamlining the document signing process and eliminating the need for physical paperwork, QES help reduce administrative overheads, minimises manual errors and accelerates the pace of business transactions.

One cannot fail to mention the global acceptance and interoperability of QES, which are designed to be interoperable across different systems, platforms and jurisdictions, enabling seamless electronic transactions on a global scale.

As QES adhere to internationally recognised standards and regulatory requirements, they are widely accepted by businesses, government agencies and individuals worldwide. This facilitates cross-border trade, e-commerce and collaboration, fostering a more connected and digitally inclusive economy. 

Therefore, in summation, the MBR has worked tirelessly in order to digitalise its processes via BAROS. By virtue of this, the MBR has also become one of the first public entities to accept and provide qualified digital signatures, thus, making the MBR a leader in this field. It is also further facilitating the widespread adoption of digital signatures in the modern digital economy.

Geraldine Spiteri Lucas is Malta Business Registry CEO and registrar.