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 the password. So, you cannot use password protected PDF’s with Signicat services.