The safeguards being put in place globally to address the spread of Coronavirus have required many people to work from home and have severely restricted contact between individuals. This raises a number of practical challenges in the execution of documents. Corporate Trustees are particularly affected as they are often required to execute deeds and to produce wet ink original signed documents for filing with public registries (for example, the Land Registry).
In normal times, most signings take place over email without the need for physical signing meetings. However, this relies on the ability to print hard copy documents and to send a scanned copy of the signature (observing the ‘Mercury’ guidelines if the document is executed as a deed) back to the person organising the signing or to return a physical copy of the signed document. However this will not always be possible when working remotely, as a number of organisations restrict the ability to print documents outside the organisation and IT security policies prevent using file sharing services or sending documents to personal emails for printing from personal computers. Some offices continue to have authorised signatories available in the office, but further restrictions on travel may prevent this. In this note, we look at some of the options that can be considered.
To understand the options, it is necessary to have an overview of the law behind the execution of documents by Corporate Trustees. This note assumes that a Corporate Trustee will be subject to the execution formalities of the Companies Act 2006. It is written only from an English law perspective.
Under section 43(1) of the Companies Act 2006, a contract may be made:
(a) by a company, by writing under its common seal, or
(b) on behalf of a company, by a person acting under its authority, express or implied.
In practice, a Corporate Trustee will enter into general contracts through one or more individuals who are expressly or impliedly authorised to contract on the Corporate Trustee’s behalf. The individual may be a director, but this is not a requirement.
The Corporate Trustee will need to ensure that individual signatories have been granted the requisite authority. For these purposes, the individual need not be a director, but does need to have been granted the necessary authority to contract on the company’s behalf, for example, by way of board resolution establishing (i) the list of authorised signatories and (ii) the extent of their signing authority. Given the extraordinary circumstances, Corporate Trustees may now want to re-visit and possibly extend their list of authorised signatories.
To be executed validly, a deed must fulfil the requirements prescribed by statute and, in the limited circumstances where statute does not apply, by common law.
Section 1(2) of the Law of Property (Miscellaneous Provisions) Act 1989 (“LPMPA 1989”) provides that an instrument shall not be a deed unless:
(1) it makes clear on its face that it is intended to be a deed (the “face value” requirement); and
(2) it is “validly executed as a deed”.
Whether an instrument has been “validly executed as a deed” will depend on the circumstances and who is executing the deed.
Section 46 of the Companies Act 2006 provides that a deed is validly executed for the purposes of section 1 of the LPMPA 1989 if it is duly executed and delivered as a deed.
Under section 44 of the Companies Act 2006, a document may be executed in two ways by a company:
(1) by affixing the common seal; or
(2) by the signatures of:
(a) two authorised signatories (such as a director or the secretary of the company); or
(b) a director of the company attested by a witness.
In addition to these statutory requirements, a deed made by a company must in general be executed in accordance with any formality requirements in its constitution.
A Corporate Trustee may also appoint a person as its attorney to execute deeds or documents on its behalf – section 47(1) Companies Act 2006. An appointment under section 47 must be made by deed.
A deed executed by an attorney appointed in accordance with section 47 of the CA 2006 has the same effect as if executed by the donor company (section 47(2), CA 2006). Therefore, execution by an attorney under a power of attorney is another method by which a company can execute a deed.
This allows a Corporate Trustee to execute a Deed by a single signatory acting as attorney for the Company. The signatory need not be a director, though it is still necessary to ensure that the signature is witnessed. Again, given extraordinary circumstances, Corporate Trustees may want to appoint additional individuals who can execute documents (i.e. Deeds) as attorney.
A Corporate Trustee may delegate the execution or exercise of all or any of the trusts, powers and discretions (functions) vested in them as trustee either alone or jointly with any other person or persons by way of a power of attorney for a maximum of 12 months – see section 25 Trustee Act 1925. The power of attorney may be put in place for a specific transaction or purpose or may be a general power of attorney, subject to the 12 month limitation.
Method of execution
If conventional signing practices are unavailable, what are the alternatives?
It is possible under English law to legally execute documents by electronic signature. The Lord Chancellor has recently confirmed that documents signed electronically have legal force in England and Wales (even where a statutory requirement for a signature predates the digital age).
An electronic signature is capable in law of being used to execute a document (including a deed) provided that (i) the person signing the document intends to authenticate the document and (ii) any formalities relating to execution of that document are satisfied. Such formalities may be required under a statute or statutory instrument, or may be laid down in a contract or other private law instrument under which a document is to be executed.
The following are examples of formalities that might be required: (i) that the signature be witnessed; or (ii) that the signature be in a specified form (such as being handwritten).
Whilst there continue to be some practical issues around the electronic signing of deeds (which are the subject of further review), it would be prudent for Corporate Trustees to expand their signing authorities (in particular if the use of e-signing platforms is not contemplated) to maximise flexibility for signature of agreements by electronic means, which may include any or all of the following:
- Email: if the whole document or just the execution pages can be printed, execution can take place by email. Once the document has been sent by email, the signed page can be scanned (or photographed) and returned by email in accordance with agreed signing instructions.
- E-signature template: an e-signature (e.g. a saved pdf or jpeg of a signatory’s signature) can be used, provided it is recognised as a legitimate signature and the e-signature is applied as required to an electronic document with the authority of the person purporting to sign.
- E-signing platform: this is a system providing an interface through which people can both create and upload documents to be signed electronically and affix electronic signatures to those documents. The signatory will open a link sent by email and click a tab or type their name to sign the document. Once all signatories have done this, the platform will apply a computer generated signature of each party to the electronic document and create a digitally sealed pdf version which cannot be altered. Such platforms may also provide an “audit trail” of a particular electronic document, which includes data such as the time at which it was signed and the IP address through which it was accessed.
While in theory e-signing platforms can accommodate witnessing requirements, it is not certain that all will have the requisite functionality. The witness must actually be present and see the signatory sign the document.
We do not recommend using e-signatures for documents which require notarisation as there is currently a lot of uncertainty in this area.
In the context of executing a deed, attestation involves two elements:
- the witness observing the document being signed by the maker of the deed.
- the subscription of the witness’ signature to the attestation clause that the document was signed or executed by the maker of the deed in the presence of the witness.
The current law probably does not allow for “remote” witnessing where the witness is not physically present when the signatory signs a deed, so it is not possible for a document to be witnessed by videoconference or similar remote process.
While a party to a deed cannot be an attesting witness, there is no statutory requirement for the witness to be independent or disinterested. There is no prohibition on a signatory’s spouse, co-habitee or civil partner from acting as a witness. Surprisingly, there is no apparent prohibition against a minor acting as a witness. It is also generally acceptable for an employee or director of a party to witness that party’s signature. Ordinarily, given that the purpose of requiring a party’s signature to be witnessed is to provide, if necessary, unbiased evidence of what was signed, by whom and when, independent witnessing should always be required as a matter of best practice, but given the exceptional circumstances, some flexibility may be necessary.
Other practical solutions
If the party organising a signing is working from an office running a skeleton print service, it may be simplest to organise for the relevant documents to be printed there and then couriered to the signatories for manual execution. To allow maximum flexibility, internal rules on who is allowed to witness a document may need to be relaxed. Unless there are even more radical restrictions on social interaction, this may turn out to be the simplest most effective way of getting documents executed – particularly where a document needs a “wet ink” signature or must be executed as a deed.
Where documents need to be executed overseas, it may also be appropriate to appoint an attorney to execute a document, in order to overcome international travel restrictions.