We look at a change to the rules on execution of deeds which came into effect on 6 April 2008, the relaxation will make it easier for companies to grant options and to make other share-based awards.

Execution of deeds by companies

Section 44 of the Companies Act 2006 came into force on 6 April 2008. It allows one director to execute deeds on behalf of a company if the signature is witnessed. Previously deeds had to be executed by two directors or a director and the company secretary (private companies no longer need have a company secretary with effect from the same date).

We often ask companies to execute deeds in order to grant options or to make other contractually binding share based awards as employees do not typically give consideration for these awards.

The change is welcome as it could sometimes be difficult for companies to obtain two authorised signatories at short notice (even with a counterpart clause in the deed).

It remains possible for companies to execute deeds as previously but there seems to be no point so from now on execution clauses should look like this:










Signed as a deed by [NAME OF EXECUTING COMPANY] acting by [NAME OF DIRECTOR], a director,

in the presence of [NAME OF WITNESS]:

…………………………………


…………………………………

[SIGNATURE OF DIRECTOR]

Director


[SIGNATURE OF WITNESS]

[NAME, ADDRESS [AND OCCUPATION] OF WITNESS]


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