This DocuSign and eOriginal webinar highlights the five things you need to know to keep electronic docmuments legal and secure.
1. Know the law
2. Require the highest level of security in your document ecosystem
3. Understand electronic chattel paper
4. Understand eTransaction management
5. Implementation best practices
This webinar dives deeply into each of the five subjects and will help you understand the requirements for a secure electronic document platform
DocuSign eOriginal Webinar Top 5 Things You Need to Know to Keep Your Electronic Documents Legal and Secure
1. Top 5 Things You Need to Know to Keep Your
Electronic Documents Legal and Secure
July 16, 2013
2. Top 5 Things You Need to Know
1. Know the law
2. Require the highest level of security in your document
ecosystem
3. Understand electronic chattel paper
4. Understand eTransaction management
5. Implementation best practices
DOCUSIGN CONFIDENTIAL 2
4. More than 37M users growing to 60M
More than 63,000 users a day
Up to 5M pages a day
More than 65,000 customers
189 countries
DocuSign Network Taking Off
5. 1. Know the Law: UETA and ESIGN Overview
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6. 2. Require a Broad Set of Security
Certifications
DOCUSIGN CONFIDENTIAL
§ Data Privacy
§ Collection of Data
§ Use of Data
§ Data Requirements § Protection of Data
§ General Computing Controls Focus
§ Comprehensive Scope
§ Security Framework
§ Testing of Controls
§ Measures Effectiveness
§ Reliability of Service
§ Global Security Gold Standard: ISO 27001
§ Defines An (ISMS) Information Security
Management System
§ Requires Business Continuity
§ Streamlined process
for EU privacy law
compliance
8. Security Assurance Program Benefits
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Confidentiality
Customer documents and data are private, and access is
workflow controlled
Integrity
Documents, both in progress and completed, are tamper-
proof
Availability Critical service is accessible to customers 365x24x7
Authenticity
Third parties (such as courts) can rely on validity of
signers as well as documents
Non-Repudiation
Documents are technically, legally, and procedurally irrefutable
9. eOriginal
Certified Print®
TOLEC
Transfer Ownership
Destruction
Over 23 million
financial
transactions
managed within
the eOriginal
eVaults.
Over $1T of
transferable assets
under management
within eOriginal
eVaults.
OurVision
Enabling the post-execution management of
secure, legally compliant and enforceable
electronic eSignatures and transactions consisting
of high value assets or source records throughout
their lifecycle.
10. 3. Understanding Electronic Chattel Paper: Brief History
§ In 2000, Congress enacted the Electronic Signatures in Global and
National Commerce Act (E-Sign Act).
§ Its purpose was to facilitate the use of electronic records and signatures
and ensure the validity of electronic contracting.
§ In addition to the federal E-Sign Act, all but 3 states have enacted the
Uniform Electronic Transactions Act (UETA) -- and the other 3 states have
enacted similar laws over which the eSign Act is potentially preemptive.
§ The E-Sign Act did not do anything to change the basic rules of contract
law, preserves underlying consumer protection laws and the consumer's
right to receive certain information in writing.
§ Its purpose, as set forth in Section 101(a) of the E-Sign Act, was to make it
clear that a signature, contract, or other record could not be considered
invalid or unenforceable just because it was done in an electronic format.
§ Under Section 101(d) and (e), however, an electronic contract could be
invalid or unenforceable if the electronic record was not capable of being
retained and accurately reproduced for later reference.
11. § Contracts, Leases or other financial assets are often
securitized or pledged as collateral to lenders that provide
financing to different industries.
§ If the contract is "chattel paper," then the lender may
perfect by either filing or by taking possession of the
contract (with possession taking priority).
§ If the contract is created in an electronic format, then it
may be "electronic" chattel paper.
§ If the contract is electronic chattel paper, then the lender
may perfect by taking "control" of the contract.
§ Key to remember -- “control" is to electronic chattel paper
what "possession" is to chattel paper (in terms of priority).
3. Understanding Electronic Chattel Paper:
12. § So what does it mean to take "control" of electronic chattel paper?
§ Under Article 9-105 of the UCC, a secured party has “control” of electronic chattel
paper if the record or records comprising the chattel paper are created, stored
and assigned in such a manner that each of following six criteria are met:
1. A single authoritative copy of the record exists that is unique, identifiable, and, except
as provided below (in 4, 5 and 6), has not been altered;
2. The authoritative copy identifies the secured party as the assignee of the record or
records;
3. The authoritative copy is communicated to and maintained by the secured party or its
custodian
3. Understanding Electronic Chattel Paper: Legal Requirements
13. 3. Understanding Electronic Chattel Paper: Legal Requirements
4. Copies or revisions that add or change the identified assignee of the authoritative
copy can only be made with the participation of the secured party;
5. Each copy of the authoritative copy (or any copy of a copy) is readily identifiable as a
copy that is not the authoritative copy; and
6. Any revision of the authoritative copy is readily identifiable as an authorized or
unauthorized revision.
Note: The 2010 amendments to Article 9 -105, effective July 1, 2013, add a general
rule of control satisfied “if a system employed for evidencing the transfer of
interests in the chattel paper reliably establishes the secured party as the
person to which the chattel paper was assigned.”
The satisfaction of the six criteria above become a safe harbor for meeting
this general rule.
14. § That is what Article 9-105 tells us; what Article 9-105 does not tell us is how to go
about complying with each of these criteria
ü No guidance that says “If you do A, B or C, then you satisfy a certain
requirement”
ü Largely left to the marketplace to determine best practices
ü Little case law, even additional revisions to Article 9-105 offer little help
§ The "control" standard set forth in UCC 9-105 brings a level of order and certainty
to the process
§ In the near-term, expect that funders will treat electronic leases/contracts as
electronic chattel paper (regardless of whether they actually are) to ensure
accepted compliance
3. Understanding Electronic Chattel Paper: Legal Requirements
15. § An added incentive for complying with the requirements of Article 9-105 – because
it wants to create an additional comfort level for any subsequent buyer of those
electronic leases
§ Why? Because any buyer of contracts (whether paper or electronic) wants to
make sure that they are getting possession/control of the contracts and are buying
enforceable contracts
§ If a seller can adequately demonstrate that it has the necessary control
procedures in place, it will give the prospective buyer a much greater comfort level
in contracts being purchased
§ Acceptance of eContracts
ü Customers
ü Funding Sources
ü Counsel/Underwriters
ü Rating Agencies
3. Understanding Electronic Chattel Paper: Legal Requirements
16. § What is the role of Standard and Poor’s, Fitch’s and Moody’s in the
secondary market for eContracts?
ü What types of electronic transactions have been rated?
§ What differences, if any, are involved in rating a paperless transaction
vs. paper?
ü UCC 9-105 Control Opinions and System Descriptions
ü Electronic Collateral Control Agreements
ü Communicating with transaction participants
ü Counsel, underwriters, servicers, trustees, issuers, custodians
§ Start with the right tools and mindset for paperless transactions
4. eTransaction Management
17. 4. eTransaction Management
§ Facilitate Post Closing Environment Including:
ü Transaction Management
ü Integrity checks
ü Audited control of access (who, when?)
ü Evidentiary package, Certified Print®
ü Content media format, Paper Out® and Paper In®
§ Establish Control
ü Transfer of Control (Ownership), securitization and
collateralization, release
ü Restricting important actions e.g., deleting or transferring
eContracts.
§ Provide Insight/Transparency/Document
Retention Policies
§ Deliver Audit/Compliance
18. 4. eTransaction Management: Pledging as Collateral
Customers Originators Funding Sources
Custodians
Orginator
eOriginal
Vault
Collateral Control
Agreement
eDeposit
19. 4. eTransaction Management: Securitization
Customers Originators Funding Source
Selected pool
Funding Source
eOriginal Vault
Or
3rd Party Custodian
Internal
Orginator
eOriginal
Vault
Selected pool
Warehouse
SPV
Warehouse
Bank Lender
Term
securitization
SPV
Trust Indenture
Trustee
Or
3rd Party Custodian
Internal
eDeposit
20. 5. Best Practices & Implementation Tips
§ Overcoming Tradition in an Industry Based on Tradition
§ Obtaining Internal Buy-in
§ Obtaining External Buy-in from Vendors, End Users and
Syndication Sources
§ Focus on Business Efficiencies
§ Formulating the Appropriate Security Levels
§ Agreements to Contract Electronically
§ Important Role of Global Agreements
§ Acting Globally, but Thinking Locally
§ Getting the Various Business Units Up and Running
§ Special Concerns of Different Collateral Financiers
21. Summary
§ End to end digital transactions are becoming a standard for
modern financial service institutions
§ The world is evolving to electronic chattel paper
§ Utilize industry resources as you modernize!
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22. Thank You
§ For more information:
§ Call: +1-877-720-2040 or webinar@docusign.com
§ Website: www.docusign.com
§ Website: www.eoriginal.com
§ Thank you very much!
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