# ESIGN Act

## What It Is

The Electronic Signatures in Global and National Commerce Act (ESIGN Act, 15 U.S.C. 7001-7031) is a federal law enacted in 2000 that gives electronic signatures and electronic records the same legal validity as handwritten signatures and paper documents. California has a parallel state law, the Uniform Electronic Transactions Act (UETA, Cal. Civ. Code 1633.1-1633.17), which works alongside ESIGN.

## How It Applies to Palace Fund

Palace Fund uses subscription agreements, side letters, capital call notices, and distribution notices with Korean investors. All of these can be executed electronically under ESIGN/UETA, which eliminates the practical barrier of collecting wet signatures from investors in Korea.

Key documents that can be signed electronically:
- Subscription agreements and investor questionnaires
- Operating agreement (LLC agreement)
- Side letters
- Capital call notices and acknowledgments
- Transfer or withdrawal documents
- Amendments to fund documents

## Requirements for Valid Electronic Signatures

For an electronic signature to be enforceable under ESIGN:

1. **Intent to sign** -- the signer must intend to sign the document (same standard as a wet signature)
2. **Consent to electronic transactions** -- the signer must affirmatively consent to conduct business electronically. This consent must:
   - Be provided before the electronic transaction
   - Inform the signer of the right to withdraw consent
   - Specify the types of records covered
   - Describe how to withdraw consent and any consequences
   - State hardware/software requirements to access records
3. **Association** -- the electronic signature must be connected to the specific document
4. **Record retention** -- the signed document must be stored in a form that can be accurately reproduced

## Consent Disclosure for Korean Investors

Because Palace Fund's investors are in Korea, the consent disclosure should be:
- Written in both English and Korean
- Clear about what "electronic signature" means
- Specific about which documents will be delivered electronically
- Explicit about how to withdraw consent (and that withdrawing consent may delay investment processing)

## Recommended Platform

Use an established e-signature platform (DocuSign, HelloSign, PandaDoc). These platforms automatically satisfy ESIGN requirements by:
- Capturing signer intent (click-to-sign workflow)
- Recording consent to electronic transactions
- Creating an audit trail (IP address, timestamp, email)
- Retaining the signed document with tamper-evident seal
- Providing a certificate of completion

## Limitations

ESIGN does not apply to:
- Court orders or notices
- Cancellation of utility services or insurance
- Wills, codicils, or testamentary trusts
- UCC transactions (other than 1-107 and 1-206)

None of these exceptions are relevant to fund operations.

## Cross-Border Considerations

Korean law (Electronic Signatures Act, 전자서명법) also recognizes electronic signatures. However, Palace Fund's subscription agreements are governed by California law, so US ESIGN/UETA is the controlling framework. The fact that Korean law also recognizes e-signatures provides additional comfort but is not legally necessary.

If an investor's Korean bank or tax authority requests a "wet" signed document, Palace Fund can provide a printed copy of the electronically signed document with the e-signature platform's certificate of completion.

## Action Items

1. Choose an e-signature platform and set up a fund account
2. Draft an electronic consent disclosure in English and Korean -- include in the subscription agreement as a standalone section
3. Build subscription agreement workflow in the e-signature platform with proper signing order (investor signs first, fund manager countersigns)
4. Retain all signed documents and audit trails for at least 7 years (consistent with fund record retention policy)
5. Include a clause in the operating agreement authorizing electronic delivery of all fund notices and documents