You may not use password protected PDF documents. Ideally, any PDF document used in an e-signature context should adhere to the PDF/A standard — a standard specifically created for documents that are subject to long-time archiving.
In PDF/A, encryption is not allowed. The standard dictates that the contents of the document must be available at all times, hence it cannot depend on access to a password. Therefore, you cannot use password protected PDFs with Signicat services.