Execution of Deeds and Company Secretaries
Introduction
On 6 April 2008, further elements of the Companies Act 2006 will come into force. Two of the changes relate to (1) the method by which a company may execute a deed and (2) the requirement for a company to have a company secretary. In accordance with the general tenure of the Companies Act 2006, these changes are being introduced to provide private companies with greater flexibility in how they choose to operate.
Execution of Deeds
Under the Companies Act 1985 companies are required to execute deeds by either affixing a common seal or signing the document by either two directors or a director and a company secretary.
Deeds are required in several situations, most notably in the following:
- transfers of land
- granting and taking leases
- granting and taking of a legal mortgage or a charge over land
- granting powers of attorney
On 6 April 2008, section 44 of the Companies Act 2006 will come into force. The key change is that a single director (whose signature is witnessed) can now execute and deliver a deed on behalf of the Company as opposed to requiring two directors (or a director and the company secretary) to execute and deliver a deed on behalf of the Company.
This change should make it easier to complete transactions, particularly when directors are not geographically connected or are travelling or otherwise engaged.
Company Secretaries
Under the Companies Act 1985 every company is required to have a company secretary. Sole directors are prohibited from also acting as the company secretary. It is therefore necessary under the Companies Act 1985 for every company to have at least two officers, namely one director and one company secretary.
From 6 April 2008, private companies can chose whether to appoint a company secretary or not. The obvious consequence of this is that private companies can have only one officer.
The activities typically completed by the company secretarial, such as filing annual returns will still need to be carried out. After April 2008 these can however be carried out by a director or anyone authorised by the directors to carry them out.
Private companies will after 6 April 2008 need to indicate in their articles if they have a company secretary or not. For companies formed after 6 April 2008, this decision will most probably be made at incorporation and the Articles of Association of the company will indicate this accordingly. Private companies existing prior to 6 April 2008 will need to amend their Articles of Association if they wish to remove the position of company secretary.
Ashfords is regulated by the Solicitors Regulation Authority. The information in this article is intended to be general information about English law only and not comprehensive. It is not to be relied on as legal advice nor as an alternative to taking professional advice relating to specific circumstances.
