An electronic guarantee by the director of a company: is it valid?

When you sign a credit agreement as a director of a company, the bank often asks for a personal guarantee. The question arises whether such an electronically signed guarantee is legally valid and what probative value it has. Two judgments, one from the Dutch-speaking Court of First Instance in Brussels of 19 January 2024 and one from the Court of Appeal in Ghent of 11 September 2024 offer clarity on this issue. It is a topic of great importance for both banks and directors, as it affects the validity of their security in a situation of high financial risk.

The facts and legal context

In both cases, a bank (plaintiff) held a director (defendant) of a company in default for repayment of a credit extended to the company. The company had gone bankrupt, which led the bank to hold the director liable on the basis of an electronically signed personal and solidarity guarantee.

The directors contested their liability with two main arguments:

1. The guarantee would be void because a personal surety, according to Article XII.16 of the Code of Economic Law (CEL) cannot be closed electronically.
2. The electronic signature would not meet the form requirements of Article 8.21 of the Civil Code, which requires that the sum be expressed in full in letters, and therefore are not sufficiently reliable.

The decision

The judges ruled in favor of the bank and rejected the directors' arguments.

1. Validity of an electronic guarantee:

• The judges noted that a guarantee can be concluded electronically and that Article XII.16 CEL does not necessarily preclude it.
• This article defers the possibility of electronic signature only if there are "practical obstacles" to fulfilling the legal form requirements.
• Since the credit agreement and the guarantee were signed at the same time and in the same manner, and the director did not dispute the validity of the credit agreement, the directors could not show that such practical obstacles existed in their case.

2. Formal and evidentiary requirements:

• The judges confirmed that the electronic signature was valid even though it was a "regular" electronic signature.
• The guarantee complied with the requirements of Article 8.21 of the Civil Code, even if the amount was not expressed in full in letters. The fact that the director himself affixed the notice "read and approved for [amount]" met the law's standard purpose of making the person aware of the unilateral commitment.
• The Ghent Court of Appeal added that the electronic signature, even in disregard of the form requirement, could serve as a beginning of proof by writing . This evidence could be supplemented by other evidence such as factual presumptions.

Legal analysis and interpretation

These rulings strengthen the creditor's position in electronic legal transactions. The case law confirms that the electronic signature, provided an adequate signing process, is sufficient to create a legally valid guarantee.

It is crucial to emphasize the distinction between the negotium (the legal act) and the instrumentum (the evidence). The courts ruled that the absence of a sum written in full in letters affects the probative value of the instrumentum with relative nullity, but leaves the validity of the guarantee as negotium unaffected. This partially shifts the burden of proof to the guarantor, who must show that the process did not express a desire to personally commit.

These rulings demonstrate a functional approach to law. They look to the true intent of the legislature: to protect and make the guarantor aware of his commitment. The digital statement "read and approved before..." serves this purpose just as well as the handwritten version, and is perfectly compatible with the flexibility of electronic communication as recognized in Article XII.15 of the Code of Economic Law.

Furthermore, it is up to the court to rule on the imputability of the electronic signature. In the case before the Ghent Court of Appeal, the evidence was decisive: the log data and the signing process in the banking application showed that the director had given separate signing instructions for the credit contract and the guarantee. The electronic signature on the guarantee, without the capacity of director, clearly indicated the will to enter into the commitment in personal name. This was further reinforced by the de facto presumption that a corporate surety for itself is legally impossible and thus can only bind the director personally.

What this specifically means

For the creditor (e.g., a bank): You may feel strengthened by this case law. The electronic guarantee is a powerful tool and, in principle, legally valid. However, to facilitate proof, it is advisable to work with a signing process that is as transparent and reliable as possible. Ensure that the director clearly signs in two capacities (as an organ of the company and as a natural person). Requiring an advanced or qualified electronic signature (such as with Itsme) minimizes evidentiary risks.

For the director of a company: Be extremely careful when signing documents electronically. Actions in the banking application, such as entering an amount, can be conclusive evidence of your personal liability. If you wish to sign solely in your capacity as a director, make sure this is explicitly and indisputably evidenced by the deed. Counter-evidence is difficult to provide in practice, as the court may rely on log data and factual presumptions.

FAQ (Frequently Asked Questions)

Is an electronic signature worth as much as a handwritten signature?
Not always. A qualified electronic signature (e.g. via Itsme or eID) has the same legal validity as a handwritten signature. The probative value of an ordinary electronic signature is left to the discretion of the court, which considers, based on the circumstances, whether the signature is imputable to the signer and expresses his will.

Can a corporation guarantee itself?
No, a company cannot legally guarantee its own commitments. Indeed, a guarantor presupposes a tripartite relationship between the creditor, the debtor and a third-party guarantor. If a director believes he or she is acting as guarantor on behalf of the company, this may be recharacterized by the court as a commitment by the company to have its director act as a personal guarantor, which, if refused, may result in personal liability of the director.

Can an electronically signed guarantee that does not meet the legal form requirements still be valid?
Yes, the lack of a sum expressed in full in letters leads to a relative nullity of the evidence document, not of the guarantee itself. The document can then still serve as a beginning of written evidence, which the creditor can supplement with other evidence, such as factual presumptions.

Conclusion

The case law is clear: the electronicguarantee is a valid legal instrument. Directors who sign a guarantee via an electronic banking application should be aware of the potential personal consequences. It is no longer enough to dispute that the signature was made in a personal capacity or that the strict formal requirements were not met. The court will thoroughly analyze the facts, including the intent and circumstances of the signature.