Digital signing and e-filing of annual reports have been in use for years as effective alternatives to the traditional physical methods. The digital signature of annual reports has become a common practice at a European level, ever since the EU started to promote market and finance digitization through e-identification and e-filing - which is, by the way, mandatory (or otherwise accepted) in nearly all countries.
Despite the broad usage of these digital workarounds, some still have doubts about the legitimacy and legal compliance of signing annual reports electronically. So let's get to the point and try to clarify.
Is it legal to sign the annual report digitally?
In the EU and EEA, the digital signatures can be used with legal and binding effect in any case where a signature is required. Therefore, in principle, digital signatures of annual reports are legal, valid, and widely accepted.
However, each state remains free to decide on the type of electronic signatures (simple, advanced, qualified) required for a given situation and implicitly, the security level needed for that specific document-transaction. Below, we’ve provided an overview of the guidelines on signing the annual report digitally in Denmark, Sweden, Norway, Finland, and Belgium.
The Danish Business Authority (Erhvervsstyrelsen) administers the submission of annual reports, adhering to the framework laid down in the Danish Companies Act and the Danish Financial Statements Act. This establish that where a document is required to be signed, it can be done so by a personal signature, an automatically reproduced signature, or a digital or similar electronic signature. The documents have equal legal status, whatever their form. However, the authenticity of electronic documents must be confirmed by a digital or similar electronic signature.
The annual report must be submitted to the Danish Business Authority via Virk. The Danish Business Authority generally accepts the use of e-signatures if the program used to apply the e-signature requires a personal login with eID, which ensures that the e-signature can be linked directly to the individual signing. Therefore, the annual report can be signed digitally after authentication via the national identification system, NemID. The signed document must show a unique reference demonstrating the validity of the digital signature and the identity of the signers.
The Swedish Companies Registration Office - SCRO (Bolagsverket) directs the submission of annual reports in accordance with the Swedish Companies Act, the Annual Accounts Act, and the Economic Associations Act. These normative texts establish that the documents may be signed electronically with an advanced electronic signature.
The annual report may be signed electronically via advanced e-signature as stated in the Annual Accounts Act. It must be submitted to the SCRO together with a so-called verification page, informing that the signatures were made electronically, proving their validity, and linking the signatures to the documents signed. Such a page must include information such as the signers’ identities and the time of signature, and enable the verification of the validity and authenticity of the signatures.
However, some documents must always be hand-signed and submitted in original or via the SCRO’s e-service. Thus, the annual report can either be signed digitally and then printed and attached to the hand-signed confirmation certificates and notifications and mailed to the SCRO; or it can be submitted electronically via the SCRO’s e-service, by the board member or CEO who signs the confirmation certificate and logs in with their eID to review, sign, and send in the annual report.
Although Norway is not part of the EU, it is associated with the Union through its membership of the European Economic Area (EEA). The EU eIDAS Regulation was incorporated into Norwegian law through the Lov om elektroniske tillitstjenester that came into effect on 15 June 2018. Following the incorporation, e-signatures are allowed in Norway for almost all cases - with a few exceptions.
Annual reports must be submitted electronically via Altinn, a portal serving as a single access point for businesses to government reporting. As the Norwegian Companies Act is technology-neutral, both physical and electronic signatures are admitted. However, the minutes of board and shareholder meetings need to be hand-signed, or the documents need to be uploaded and electronically signed on the e-government service platform.
According to the Finnish Companies Act and Accounting Act, the annual report must be submitted to the Finnish Trade Register (Kaupparekister). Both e-signatures created via an e-signature provider and scans of manuscript signatures are accepted.
Signing the annual report digitally can only be done using a qualified e-signature in place of a handwritten one. Therefore, the signature must be created by using a certificate-based digital ID issued by a Qualified Trust Service Provider. For the annual report filing, however, any valid eID may be used. All companies are required to file annual reports electronically to the National Bank of Belgium according to the predefined format determined by the Central Balance Sheet Office.
Using digital signatures in the different stages of the annual report process
Digital signatures can be leveraged across all the steps of the annual report process. Besides the approval of the annual report, they can be used to sign digitally any attachments and appendices, the audit report, the minutes of the AGM, and to send out notices of the AGM.
Below is an overview of the implementation use cases for the various documents involved in the process.
Before the Annual General Meeting (AGM): signing the annual report digitally
The annual report needs to be signed by all ordinary board members plus the CEO. With a digital signature solution you can create a custom signature flow so that the original document reaches the right people in the right order. The annual report can be sent out for signature along with its attachments and appendices. In this way, the signers only need to sign once to approve all the documents involved at the same time. You can monitor the progress status and see exactly who opened, viewed, and signed the document and when this happened.
Once all the signatures have been applied, the signed annual report is then automatically received by the auditor. The auditor can review the audit trail of the document and see all actions performed and the signatures affixed.
The auditor can digitally sign the audit report and attach it to the annual report. Concurrently, the auditor can add his statement on the annual report and digitally sign it.
The notices to attend the AGM can be sent to the board members via the same digital signature and document management solution. In this way, it’s possible to verify that each entitled recipient has received, opened, and read the AGM notice.
Annual General Meeting: signing the AGM minutes digitally
The Annual General Meeting takes place following the mandatory items on the agenda: election of chairman and person/s responsible for checking the minutes after the meeting; establishment and approval of electoral roll; verification on whether the meeting has been duly summoned; and approval of the agenda. The annual report and the auditor’s report are presented. Decisions are made on the company financial statement, profit-and-loss account, balance sheet, and other items included in the agenda.
The minutes of the AGM can be digitally signed by the chairman and secretary/s and attached to the annual report. If required by the relevant national authority and laws, the minutes can be hand-signed and then attached to the e-signed annual report.
Submission of the annual report to the relevant national authority: E-filing the digitally signed annual report
The original digitally signed documents can be submitted to the relevant national authority via their e-filing services.
If national law requires the separate submission of certain documents, the annual report can be submitted digitally via the e-filing services by the CEO or board member that logs in with their e-identification and signs and submits the separate document to be filed.
The benefits of automating the annual report process
Speed: Digitization means no more printing, scanning, and mailing. No more time wasted looking for documents or waiting for them to be sent and received back. The automation of the annual report signing process accelerates the completion of various steps, allowing to submit the annual results to the national authorities within the deadlines set by law.
Efficiency and accuracy: Like for any other business process automation, minimizing human interaction and manual efforts reduces the likelihood of mistakes. The right documents are signed in the correct order with no room for errors. Auditors and accountants can effortlessly handle multiple annual reports processes for several clients at the same time in a single platform, enhancing productivity and cost-effectiveness.
Control and security: Audit trails, time-stamps, and all the other security features offered by Penneo improve internal and external transparency and enable full oversight of the process status and progress. Data and documents are handled through end-to-end encrypted channels, stored safely off-site, and protected according to GDPR. No unauthorized access is possible, nor can changes be made undetected.
Compliance: The digital signatures via eID made through Penneo provide absolute certainty on the signers’ identities and comply with eIDAS requirements for advanced electronic signatures. In addition to securing the content integrity of the digitally signed document and preventing its repudiation, the signature via eID assures the safest authentication possible, as it refers to SSN or similar public identification numbers.
User experience: Digitizing the company annual report means allowing the signatories to read and sign when they prefer, from any location. The digital signatures can be applied with a few clicks, even from mobile devices, enhancing flexibility and improving all parties’ experience. After the document has been signed, it immediately follows its route, until the process is finalized in minutes instead of weeks.
Automate Annual Report Processes with Penneo
Penneo’s focus on the audit and accounting sector translates into a major specialization in the field that resulted in Penneo becoming the Nordic market leader for auditors. 60% of all annual reports filed with the Danish Business Authorities in 2019 were signed and facilitated by Penneo.
Penneo can simplify, accelerate, and secure the signing of the annual report. But that’s not all. Because we can help both in the initial phase of preparation and in the final stage of secure storage.
1. Preparing the annual report
Integration with your accounting software: Penneo’s list of partners and integrations include many of the most used accounting solutions. Furthermore, Penneo allows for integration via API to let you work across multiple platforms and complement the programs you already use. You’ll be able to handle the entire process in one place, with just a few clicks. You can create the annual financial statement in your existing program and import it directly into Penneo when it’s time for signing. You can access contacts, roles, and email addresses to send the annual statement to board members, management, auditors, thus minimizing the time spent on data entry and the risk of error typing.
Collaboration across departments: The annual report is the result of joint efforts from finance, marketing, and management. The subjects involved must have immediate access to the documents from any place and device. Moreover, they need to rely on secure channels of communication throughout the whole preparation period to ensure finalization by the deadline. Penneo enables you to share information and collaborate with colleagues regardless of their location, in a secure and compliant way.
Permission settings and versioning: You can provide access to the documents and regulate users’ permissions, to establish who can view, comment, or edit the document. Multiple users can access and operate simultaneously. This will not only save time but also provide you with visibility of the edits made and overall transparency. For effective multi-handed editing coordination, the resulting file will show the various markups added by each user. Such a history monitoring is provided through audit trails that let you track edits and recover old versions if needed.
2. Signing the annual report
Custom signature flow and progress overview: Once the correct order of signatories has been established, Penneo is responsible for routing the document properly. The platform offers a managerial overview for real time-tracking to monitor the progress status. Penneo lets you see how far your annual report is in the signature process, including who has signed - and who is missing. Moreover, our multi-signing capabilities allow you to combine multiple documents into a single operation so that they can be all signed at once.
Mobile access and automatic reminders: Both you and all the document’s recipients have access to it from any devices at any time. Signatories are free to decide when to sign and it only takes a few seconds as they can even do it on the go from their smartphone. You can schedule automatic notifications to remind recipients to sign the document and ensure you’re meeting your deadlines.
Audit trail and content integrity: The identity of the signers is securely verified whenever they access the document. Every action they make is logged - so you can see who opened, viewed, and signed the document and when this happened. Moreover, documents cannot be altered and any attempted modification is detected and prevented. Each signature is time-stamped, embedding all technical and legal characteristics to certify its legal validity and compliance.
3. Storing the annual report
A single original document: The annual report must be prepared in original. This is why, when missing a digital signature and document management software, the annual report can't be scanned and emailed back and forth and must be handled by post. The original documents signed digitally via Penneo can be directly submitted to the relevant national authority via their e-filing services.
Secure storage and backups: After the corporate annual report has been completed, signed, and submitted, Penneo takes care of its safe retention. The annual report, its attachments, the audit trails, and all the data related to the signers and the signatures are stored in the system. It all can be easily recovered the following year when the whole process begins anew. Penneo performs regular automatic backups to ensure no data can be lost. All documents and information are stored offsite, in the cloud, and in data centers in multiple locations within the EU (in GDPR compliance).
Encryption and data deletion: Documents and data can be encrypted to add further security. Penneo's encryption system is built on NIST AES256, which provides the strongest form of encryption that is virtually impenetrable. The software follows user-defined retention and deletion policies so that you can also set up a date for the documents to be deleted if required by industry regulations. Moreover, you can easily find and erase customers’ data after their rightful request under GDPR.
Given the benefits of automating the annual report process, we can likely expect that remote AGMs and digitally signed annual reports will become the permanent alternative for all businesses.
Find out how we can help improve the annual report process!
DISCLAIMER: The content provided on this website is intended to help understand the legal framework of e-signatures and not to serve as legal advice. Penneo disclaims all liability with respect to this material, expressed or implied, to the maximum extent permitted by law. If you have specific legal questions about any of the information on this site, you should consult with a licensed attorney in your area.