Click here to go back to the website

Archive for the ‘Limited Companies - Deed Execution’ Category

Time is Running Out - Avoid Company Default

Friday, August 6th, 2010

Companies Act 2006 ss 155 to 159

Since October 2008 it has not been possible to set up a Company in England and Wales unless at least one of the Directors is a living human - a “Natural Person” - and not itself another Company.

Because this was not previously the rule, there has been a run-off period of grace allowed of two years.

This indulgence will expire on 30th September. On or after 1st October 2010, any Company in which all of the Directors are corporate entities will be in default and subject to being fined. Please note that even if the Company Secretary is a natural person, this will not comply with the Law if none of the Directors are natural persons.

If your Company is in this position – Time is running out

More on the Companies Act s 44

Thursday, February 4th, 2010

New Tins – New Worms (Authorised Signatories not authorised to sign)

I can make no apology for returning to the question which more than any other seems to cause problems and frustrations for UK companies in dealing with jurisdictions abroad.

It has been noted before, by both lawyers and Company Officers, that we do not seem to be on each other’s wavelengths! I fully understand that there can often be a conflict between the business man in a hurry and the lawyer advising that progress be made only cautiously with strict regard to the wording of the law. We lawyers are not trying to slow things down even though it may seem that we are.

I have previously set out section 44 of the Companies Act with regard to the requirements of valid Deed – and noted that a Company can only appoint an Attorney, by a valid Deed.

I have also blogged about the new s47 of the Act which enables a Company by Deed, to appoint an Attorney whose authority can include the Power to execute future Powers of Attorney by Deed all on his/her own (plus a signing Witness), even though that Attorney may not be a Director or Company Secretary or even an employee of the Company at all.

Still with me? Now for section 44 (3) which in typical fashion attempts to clarify the law and succeeds more often than not in confusing everyone
S44 (3) states that “The following are “authorised signatories” for the purposes of subsection (2)—
“(a) every director of the company, and
“(b) in the case of a private company with a secretary or a public company, the secretary (or any joint secretary) of the company. “

Where is the confusion? This means that the Company Secretary is authorised to sign Deeds and Documents on behalf of the Company, right? Well it would mean that, if the weasel words “for the purposes of subsection (2)” are overlooked. In every other Country in the World the expression “Authorised Signatory” is used and understood by lawyers and business people alike, to have its dictionary meaning. If I am your Authorised Signatory then my signature stands for yours doesn’t it? Perhaps it does, unless we are dealing with an English and Welsh Limited Company!

Because the proviso “for the purposes of subsection (2)” means that section 3 is merely a definition section to interpret s44 (2) which itself states
A document is validly executed by a company if it is signed on behalf of the company—
(a) by two authorised signatories, or
(b) by a director of the company in the presence of a witness who attests the signature.

So you might be an Authorised Signatory, but you cannot validly execute a Company document on your own if you are not a Director!

Do you find room in your heart to pity the poor Notary, who has to explain to the stressed out Company Secretary (who has perhaps been left to run the Company on his own in the factory with all the Directors abroad and who needs to get a Power of Attorney ready for use in Russia TODAY) that just because he is an Authorised Signatory of the Company, he certainly should not be under the impression that he is authorised to sign anything for the Company?

New Rules for Companies - Deed Execution by Attorney

Tuesday, December 22nd, 2009

New Rules for Companies – Execution of Deeds by Attorney

 

In an earlier blog I have referred to the difficulties that Company Directors often have when preparing documents for their foreign activities, in doing so in a way which complies with the relevant legal requirements. What is often overlooked, due usually to urgency and lack of time, is the fact that most foreign jurisdictions require that a Deed executed in the UK should comply with UK law as well as the law of their own jurisdiction.

 

Time and time again Directors of UK companies think that they can get their Company Deeds executed by an employee who is not one of the Directors, simply because the Company has passed a Resolution to do so. Just because a Company makes a Resolution, this does not in fact change the law! As I explain in my earlier blog, a Company Deed must comply with the law, and be executed by two Directors or by one Director and the Company Secretary either witnessing the affixing of the Seal of the Company, or by them signing on behalf of the Company. Another way is for a Director to sign as a Deed in the presence of a witness who also signs.

 

All of the above methods require that at least one Director is actually available to sign and of course this is often where the problems arise.

 

Now s.47 of the Companies Act has been brought into force since October 2009, and it can assist a prudent Company. What the section does is allow a Company to prepare a Deed of Power of Attorney (using one of the methods above) in favour of any person - who can be another Company, or an employee of the Company, or a lawyer for the Company - expressly including the power to appoint a sub-delegate.

 

Then, when an urgent need arises for a Power of Attorney or other Deed to be executed by the Company at a time when the Directors are unavailable , that named Attorney can now validly execute the Deed on behalf of the Company. This authority derives, please note, from the previous Deed of Power of Attorney and not from a resolution at a hastily convened Board Meeting

 

I would suggest that this is a very useful tool particularly for busy UK Companies with Directors who live or work overseas.

 

I do also point out that many foreign jurisdictions do not consider a Power of Attorney to be reliable when over 12 months old. Therefore a Company minded to grant a standing Power of Attorney to one or more persons whether generally or for specific purposes written in the Power should in my opinion be careful to include an expiry date in each Deed, and to remember to renew at least annually.

 

As ever, please do contact me if you would like your Company to proceed in the way which s.47 of the 2006 Companies Act now permits.

Must I Disclose My Personal Address On Company Documents?

Tuesday, August 18th, 2009

REGISTERED ADDRESSES OF COMPANY DIRECTORS
– CHANGES FROM 1ST OCTOBER 2009 –
THE NEW CONCEPT OF “SERVICE” ADDRESSES

At present all Company Directors and Company Secretaries in England and Wales are required to disclose their home addresses to the general public.

They must disclose them to the Registrar of Companies House and they do so in the knowledge that that information will be made available to anyone who pays a small fee to the Registry to discover it. The only exceptions are for those who have applied for and obtained a “Confidentiality Order”. Various reasons have to be proven before such an order can be obtained. One such might be that the Company’s activity renders its officers liable to personal attack by criminals. For example a drug company testing the effect of new medicines on animals might expect to suffer terrorist attacks and an Order could at least enable Officers to keep their home addresses secret.
The law and practice will soon change.
From 1st October 2009 every Director and Secretary must provide Companies House with both their usual residential address, and for each appointment they hold, a service address. The service address will be on the public record and will be public information but the residential address will be protected information.

A Director can choose any address as the service address including the registered office address of the company. The address must be where documents can be delivered and an acknowledgement or receipt can be provided if required. The address cannot be a PO Box or a DX number.

If the Director chooses to use his residential address as the service address the fact that the two addresses are the same would not be apparent from the public record.
The residential address will only be available to prescribed regulatory authorities such as the police and HMRC, and it may also be made available to Credit Reference Agencies.

What does the introduction of service address mean for Directors?


Directors will be able to file a service address for the public record. This address can be the same as the residential address, or the registered office address, or it can be somewhere different. This will be introduced from 1st October 2009.
What does the introduction of service addresses mean for my Clients?

 

Whilst not all Notaries appear to take the same view, my own opinion is that when I notarise a Company document executed by a Company Officer, I shall be content to refer to the registered Service Address in my Certificate and shall not seek to insist that your Residential Address is used.
This does not of course alter my requirement that every client appearing before me must provide evidence of identity and full residential address; the change is that this information is for my own records only and need not be shown in the Notarised paperwork should you prefer that the Service Address is shown instead.

 
Please note that this blog does not contain the full detail of the changes. They are disclosed in full on the Companies House Website and the link below gives further information as to who can lawfully gain access to the residential address details and for what reason.
http://www.companieshouse.gov.uk/companiesAct/implementations/oct2009.shtml#directorsserviceaddresses

“Witnessing” Signatures - Signatory not present!

Wednesday, May 20th, 2009

 

WITNESSING SIGNATURES

 

It might surprise you that often I am asked to assist in a case where an urgent document -which needs to be “witnessed by a Notary Public”, has in fact already been signed. “Can you witness a document please; Mr Jones signed it last night!”

 

Usually there is nothing sinister about this – typically it is just a matter of someone being very busy.

 

Imagine a Company Director, who has flown in from Brazil late on a Saturday night and dealt with his paperwork in his office overnight then caught the early morning plane to South Africa on Sunday. With no time to arrange a Notary to attend to witness his signature, he leaves the signed paper on his desk and asks his colleagues to “get it notarised” the following week.

 

Clearly the word “witness” has a dictionary meaning – I witness what I see. I cannot be a witness, if I didn’t see.

 

Some legal papers – particularly those called DEEDS and also of course WILLS – are defined by Statute Law as required to be signed in the presence of appropriate witnesses. If they are not witnessed, they are in-valid. If my imaginary Businessman has left a document like that to be dealt with then of course I cannot assist.

 

However it may sometimes be that the document does not require a witness as a matter of legal validity; but merely that some person or Authority abroad needs to be satisfied that the document was properly signed by the right person.

 

For example, a letter from a Company Director, confirming to a customer abroad that Fred Bloggs is a properly appointed employee of the Company authorised to take orders for company products, does not need to be a deed. It does not need to be witnessed, even though the foreign customer may require that it be Notarised. In such a case, I can often assist. If I know the signature of my client and already have copies of it on other papers in my records, if he emails me to confirm that he did indeed sign the letter, then I can add a Notarial Authentication.

 

In such a case my Certificate might say that – “As a Notary Public well aware of the signature of Mr Jones I have carefully considered the signature above which was made in my absence and I hereby confirm it to be the genuine signature of the said Mr Jones”.

 

This makes it clear that I was not a witness, but nevertheless I certify that Mr Jones made the signature.

 

This arises so often, that the Council of the Notaries Society, has given written guidance which I set out below

 

THE NOTARIES SOCIETY

AN OPINION OF THE COUNCIL

CERTIFYING UNATTESTED SIGNATURES

A Notary may properly witness a signature only if it is signed in his presence . Similarly he may authenticate the due execution of a document only if it is executed in his physical presence. Occasionally a notary may be asked to verify that a signature is genuine, even though he was not present when the signing took place.

If he accepts such instructions then he must adhere to the following minimum standards:

1. On a prior occasion the Notary must have first seen the signatory affix his signature to a form which is retained in the protocol file of the Notary;

2. The Notary should check the continued existence of the signatory regularly;

3. If the signatory is a representative of an organisation or company his continued authority should be checked regularly;

4. The Notary should at the time of verifying the signature take such steps as are reasonable to ensure that the signatory has in fact signed the particular document;

5. The certificate must be unequivocal and must not state or imply that the signature has been affixed in the presence of the Notary or that the document has been properly executed;

6. The Notary must refuse to certify the unattested signature if full attestation by a notary is required to complete the formal requirements for the proper execution of the document.

7. The Companies Act 2006 allows the execution of Deeds on behalf of a Company by the signature of one Director in the presence of a witness who attests his signature. Notaries must be aware of the risks involved, and specifically state that they are not attesting a signature which was not affixed in their presence, so as to avoid an accidental attestation which would give the document an authenticity and validity which it does not deserve. But it would be possible to attach a notarial certificate to a document on which the director’s signature had already been witnessed, provided that all of the above safeguards were followed.

Notaries must be aware of the risks of issuing such certificates and should, if in any doubt at all, decline to act.

It is the opinion of the Council of The Notaries Society that there can be no professional objection to a Notary certifying the fact that the signature on a document is that of a signatory known to him provided that the Notary follows the foregoing procedure.

Dated this 20th day of January 2009

Thomas A Hoyle

President The Notaries Society

By authority of the Council

© The Notaries Society

 

Deeds - Execution by Limited Companies

Tuesday, April 21st, 2009

LIMITED COMPANIES - EXECUTING DEEDS

Directors of Limited Companies are very busy people. They have to make the decisions and they often need to delegate tasks to be carried out by others because there are not enough hours in the day to do everything themselves.
A typical case is a decision to buy or sell or contract in respect of foreign goods or property. More often than not, the Company will need to give Power of Attorney to its agents aboard in order for them to be able to complete the deal.
Often I will be introduced to a manager or executive of the client Company who has been asked to “sign the Power of Attorney” because the Directors themselves are otherwise engaged. The larger the company, the more often this is the case.
This causes a problem because in England and Wales, a Company can only effect a Power of Attorney by executing a Deed. A Deed is a legal document whose characteristics are defined by law. For a Company, a Deed can be executed by
1) affixing the Seal in the presence of two Directors or of one Director plus the Company Secretary, or
2) signature of two Directors or of one plus the Company Secretary, or
3) Since 2008, by signature of one Director alone, provided that it is witnessed
Note that option 3, introduced by the Companies Act 2006 section 44, does not enable execution of a Deed by the Company Secretary before a witness, unless the Secretary is also a Director.
Also note that, notwithstanding the provisions of S 44, I cannot certify due execution by a Company by one director alone, or for that matter by two (or one and the company secretary), without checking the provisions of the Memorandum and Articles (as to whether the proposed “transaction” is within the powers of the company and for any particular requirements as to execution) and also having sight of a Resolution by the Board of Directors authorising the particular director(s) to execute the document in question.
The concerns are
firstly as to whether the proposed transaction is within the powers of the Company;
secondly whether S 44 overrides any specific provisions in the Articles restricting who may sign for the Company;
thirdly (and even if S 44 does override) to avoid the possibility of the notary facilitating a fraud by one director (or two or one and the company secretary) on the Company.

I would add, fourthly, to avoid any third party, relying upon the notary’s certificate, being exposed to any possibility of being caught up in litigation by a Company seeking to undo a fraudulent adventure by one or more of its directors.

It is generally preferable to have third party witness rather than the notary acting as witness as well as the certifying authority. If there is to be a third party witness then unless that witness is known to me I require that the witness produce identification and would record details (and retain copies) as for the appearer.