Signing documents on behalf of a company can seem like a simple process but get it wrong and the document’s validity and enforceability could be called into question.
Who can sign contracts and documents? Company documents can be signed by anyone who is expressly or impliedly authorised by the company to sign contracts on its behalf. This typically includes company directors but a company can also choose to appoint an agent or named signatory (who is not a director) to sign contracts on behalf of the company under s 43 (1) (b) of the Companies Act 2006. Using an agent to sign contracts can be more convenient, for example, with large or international companies where the directors can appoint representatives to sign on the company’s behalf in different countries. However, an agent cannot execute a deed.
What is a deed? A deed is a document that a company has agreed to be bound by which contains details of an interest, property, right or obligation which is created or confirmed. This is a broad definition as these documents can take many forms, e.g. agreements where the company agrees to buy or sell assets or shares, or mortgages where the company decides to charge company assets.
A deed is “executed” – i.e. brought into effect by the agreement of the parties – and certain formalities must be observed in order to validly execute a deed, for example, the document must declare itself as a deed, be signed by specific persons and dated. These formalities must be observed even by companies registered outside of England and Wales if land in England and Wales is involved.
Who can sign a deed? A deed can be signed by a company affixing its common seal to the document, however, this is less common now and many companies do not have a common seal. A company should always consult its articles of association to see who is authorised to attest (i.e. act as a legal witness) to the sealing of a deed by common seal. This will often be two directors or a director and the company secretary.
Alternatively, under section 44 (2) of the Companies Act 2006, a document can be signed as a deed on behalf of the company if it is signed by:-
- Two directors or a director and the company secretary. If a person is both a director and the company secretary they cannot sign twice, two separate people must sign;
- One director in the presence of a witness is also a valid method of signing a deed and is used (although not exclusively) when there is a sole director of a company. Although there is not a statutory requirement it is recommended that a witness be an adult (over 18) and independent (for example, not related to the signatory or involved in the transaction).
If the deed is being made between multiple companies and the signatory is a director of the multiple companies they must execute the document on behalf of each company separately.
Corporate governance Resolving to enter into a deed should be documented in the company’s board minutes and directors should always check the company’s articles of association to ensure they have the authority to call a quorate board meeting and authorise entry into the documents.
Additionally, if the document is being signed by an agent or authorised person such authorisation would need to be minuted.
It is sometimes the case under a company’s articles of association that a written resolution of the shareholders of the company is required to authorise entry into the documents i.e. where conflicts of interest arise.
Are there any requirements after signing? The document must be delivered in order to take effect as a deed. Often this takes place on completion when the signed documents are dated. Sometimes filing the document at Companies House, the Land Registry or HMRC is necessary and there can be strict timelines to adhere to.
How can we help? We can provide companies with expert advice and guidance on corporate governance tailored to your needs. Please contact the corporate governance team if you would like further information about the services we provide.
