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.