Execution is something so fundamental to a contract that it is surprising how often it is overlooked until the last minute of a deal. Signing can take place in the dead of night and sometimes under extremely tight time pressures so it is useful to drill down into who can sign on behalf of a company under the laws of England and Wales.
Contracts executed by the Company
When we think about the Requirements of Writing (Scotland) Act 1995 it is clear that, for a contract to be validly executed, it must be signed either by a director, secretary or authorised signatory of the company. To ensure the self-proving nature of the document, the director, secretary or authorised signatory must sign in the presence of a witness who will also sign the document.
Alternatively, validity and probativity can be achieved if the document is signed by two directors, two authorised signatories, or a director and secretary.
The rules are similar – but not identical – in England where a document is being executed by a company. S44 of the Companies Act 2006 provides that valid execution requires signature by “two authorised signatories or a director of the company in the presence of a witness“.
Confusion often arises because the s44 definition of “authorised signatory” differs from Scots law. Under section 44 (English law), an authorised signatory can only be a director or a company secretary whereas, under Scots law, an authorised signatory would be anyone authorised by the board to sign. Therefore, under English law, only a director or company secretary can sign for the purposes of execution by the company itself under s44.
It should be noted that when a document is being signed as a deed under English law, it is the s44 method of signing that must be followed (in addition to the formal delivery requirement).
Contracts signed on behalf of a company
There is another option available to companies under English law, however. Instead of having a contract executed by the company, s43(1)(b) of the Companies Act 2006 provides that contracts can be signed on behalf of the company by a person acting under the company’s authority. Provided a person has express or implied authority to sign on the company’s behalf, they can make contracts on the company’s behalf, regardless of whether they are a director or company secretary.
By having a contract “signed on behalf of” the company (rather than “executed by” the company), a contract can be made in terms of s43 rather than under the stricter s44 rules.
Power of Attorney
Another alternative to the s44 requirements would be for the company to grant a suitably worded power of attorney to a person. In this scenario the person with the power of attorney, who does not have to be a director or company secretary, can execute documents (including deeds) on behalf of the company.