Execution of Corporate Documents: Tips on Execution Remotely
20 May 2020
With the rapid change in physical working environments to remote working, how do Boards, in practice, get Agreements signed?
- Board meetings can be held remotely and Directors’ resolutions can also be signed in writing.
- Companies can execute most Agreements under hand either by appointing a director or someone authorised to execute on behalf of the Company.
- E-signatures can be used by authorised representatives where they have been appointed to sign on behalf of the Company. Parties to the contract should consent to the use of e-signatures (for example, by email exchange).
- Company seals (for example required when a Company executes a Deed) have to be applied physically with wet ink signatures. If there is difficulty achieving this, then the Company can appoint a Power of Attorney or a different representative to counter-sign the seal with one of the other directors.
- Certain documents cannot be executed by way of e-signature.
Briefly to explain the above key points.
Virtual Board Meetings
- The Companies Acts provide for Directors’ meetings to take place by way of conference between some or all of the Directors who are not all in one place, provided each of them is able to speak to each other and can be heard. This can be by way of telephone, video or electronic communication.
- Such a board meeting will take place where the largest group of those participating is assembled. If there is no such group, then the meeting takes place where the Chairperson is located and if neither of these possibilities apply, then the meeting takes place in such location as the meeting itself decides. It is important that the minutes reflect the location of the meeting and the usual formalities such as date and time.
Directors’ Written Resolution
Directors may also pass a resolution in writing being a resolution which is signed by all of the Directors of the Company. Such a resolution shall be as valid as if has been passed at a meeting of Directors. The resolution may consist of several documents in the like form each signed by one or more Directors and therefore this gives rise to the possibility of there being several Directors executing the same resolution at different locations. The resolution takes effect from the time that it is signed by the last Director. Such resolutions can be signed by the Directors using e-signatures or by applying his signature and scanning the signed page.
There are two types of e-signatures in Ireland.
- Electronic signature, being an electronic signature for example a typed name on a signature block.
- Advanced Electronic Signature (AES) which are more digitally enhanced signatures which are uniquely linked to the signatory, capable of identifying with the signatory and created using means under the control of the signatory.
Irish law also recognises Qualified Electronic Signatures. These are e-signatures with additional security measures created by a device which is based on a Qualified Certificate, that is a certificate which is issued by a particular trust service provider.
Most documents can be executed using e-signatures.
The following documents cannot be executed by way of an e-signature;
- Wills or Trusts;
- Enduring Powers of Attorney;
- Affidavits or Statutory sworn declarations;
- Documents which relate to an interest in real property in relation to the acquisition, creation or disposal of that interest.
In addition, some Registers, for example, the Companies Registration Office, may require certain forms to be executed in wet ink (i.e. as originals).
Important points to note when using e-signatures
- The parties should consent to the use of e-signatures: This could be by way of email or preferably included in the document itself.
- Witnessing of signatures: Where a document requires to be witnessed, for example, deeds being executed by an individual must be witnessed, the witness must be physically present when the signatory applies his/her e-signature. The e-signature to be witnessed must be an Advanced Electronic Signature with a Qualified Certificate. The signature of the witness can either be applied by wet ink signature or by an e-signature. The e-signature of the person purporting to witness the signature must be an Advanced Electronic Signature also based on a Qualified Certificate if the witness is using an e-signature.
Execution of deeds by a Company
In the event that it is not possible to have two directors or a director and secretary to countersign the affixing of a seal then where a Company is required to execute a deed in the current environment, the following are the options:
- Under Section 43 of the Companies Act, when the seal of the Company is to be affixed to a document then that affixing must be authorised by the Directors. In that resolution, the Directors can provide that any document to which the seal is to be affixed can be signed by a director or by some other person appointed for that purpose by the Directors and countersigned by the secretary or by a second director or by some other person appointed for that purpose by its Directors.
Therefore, a resolution of the Directors could provide that two persons who are not directors would countersign the seal of the Company provided that that resolution was appropriately passed by the Directors. As mentioned above, Directors can hold meetings by telephone or video in the event that they are not all in the one place. The Constitution of the Company needs to be checked to make sure it doesn’t provide anything to the contrary.
- The second option of executing a deed that can be availed of by a Company (where physical sealing cannot be achieved), is for the Company to appoint a Power of Attorney. Under the provisions of the Companies Act, 2014, a Company may appoint a Power of Attorney. Such attorney as appointed can execute deeds or any other matter on the Company’s behalf in any place whether inside or outside the State. A deed signed by such an attorney binds the Company and shall have the same effect as if it were under its common seal.
Such a Power of Attorney does not need to be given under the common seal of the Company. Therefore the Directors could approve the Power of Attorney at a board meeting and appoint either a Director of the Company or another third party to be its attorney. The Power of Attorney does not need to be executed under seal and therefore any director of the Company could sign the Power of Attorney on behalf of the Company. Once the Power of Attorney is appointed, then that person can execute deeds on behalf of the Company. The original Power of Attorney put in place by the Company can be executed with an e-signature.
The above represents some practical solutions where a company is presented with a situation where it needs to execute documents and deeds but does not necessarily have the signatories and the common seal in the same location.