Signing By A Company? How Not To Get It Wrong!

Company Documents – How To Stop Getting It Wrong!

In earlier Blogs I have explained how the Law of England and Wales requires that Company documents must be signed in order to be binding on the Company.

Here is one of them link here

The rules about this are to be found in the Companies Act of 2006. When this Act was created, it was then the longest Act of Parliament there had ever been. As Wikipedia marvels, the Index alone is over 59 pages long.

No-one should be surprised I suspect, that this record has already been broken!

So the rules are clear – proper execution requires one of the following
• Company Seal Witnessed
• Two Officers signing
• One Director signs in the presence of an adult witness who then countersigns as Witness

My [incorrect] understanding had been that these requirements related only to a formal Deed, and that documents of slighter substance, such as contracts or notices, could be signed more informally and yet bind the Company.

WRONG!

In mitigation of this admittedly appalling ignorance on my part, I have met very few lawyers and no Company Directors at all, who properly understand the situation.

My eyes have been opened, at a Seminar I attended last week addressed by Iain Rogers, who is a Scrivener Notary and Senior Visiting Fellow at UCL.

Mr Rogers said – THESE RULES APPLY TO ANY SITUATION WHERE A COMPANY IS REQUIRED TO SIGN A DOCUMENT.

The authority for this statement is the case of Hilmi & Associates -v- 20 Pembridge Villas Freehold Limited – Link here

The facts of the case related to the service by a Company of the necessary Notice which is a preliminary to the negotiation of freehold enfranchisement of its leasehold property – the Notice had been signed by a Company Director. No witness had seen him sign it or had countersigned it.

How many Company Directors would consider that inadequate? I suspect that many Companies would consider that signing such a notice could be delegated to the Company Secretary, or to an employee in charge of property matters.

The Court of Appeal [and by the time any case gets to the Court of Appeal, many thousands of pounds have been wasted] found that the Notice had not been executed by the Company as required by the Law.

So in the case of Documents for use in England which have to be signed by your Company – do make a note, and make sure that everyone in your Company is told – all legal papers, notices, contracts, anything to be signed on paper relating to the legal rights and obligations of the Company, can only safely be certain to comply with the law, if it is treated as formally as if it were a Deed.

I repeat, proper execution, to be safe, requires one of
• Company Seal Witnessed
• Two Officers signing
• One Directors signs in the presence of an adult witness who then countersigns as Witness

Who knew!

Of course, any paper signed by a Director in the presence of a witnessing Notary will comply.

This blog of course is still skating the surface of many of the issues affecting Company executions, and does not address issues of good faith, declarations of personal interest or conflicts with Company constitutions. Scope for some future Blogs there.

This was a bit of a dry subject to link with a song, how about this? Link here

For all of your Notarial Certificates, with Clarity and for use all around the World, do get in touch. As ever, it’s AtkinsonNotary Limited at E7 Joseph’s Well Leeds, 0113 8160116 and notary@atkinsonnotary.com and louise@atkinsonnotary.com We shall be very pleased to see you.

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