(1) Introduction
Singapore law on the execution of documents, in particular deeds, has recently been submitted to further review. As a result of a joint consultation initiated by the Accounting and Corporate Regulatory Authority and the Attorney- General's Chambers, a Supplemental Report was published in October 2010 complementing the proposals presented in a 2001 Report on proposed amendments to the execution formalities by local companies and foreign corporations (the "Report"). Comments on the proposed changes were invited from the public by December 2010 and the outcome is awaited.
The Report proposes additional amendments to the Companies Act (Cap 50) (the "Act") and to the Limited Liability Partnerships Act ("LLP Act") to allow such entities to execute documents by the signature of certain authorized persons, as an alternative to execution under seal, and to make other consequential amendments. The Singapore law on the execution of documents by corporations is dealt with under the Act and this article deals only with the amendments to the Act and does not address the proposed amendments to the LLP Act, which is beyond the scope of this article.
The 2001 Report, together with the recent Report, evoke the intention to simplify the execution of instruments, particularly deeds, by individuals and corporations by abolishing certain archaic formalities, while maintaining the level of security and control necessary for the purposes for which those documents are created.
The proposed reforms, among other things, extend the options someone has when executing a deed. A deed still has to be a document in writing; however, it no longer has to be made on paper or parchment.
The document must be clear on its face that it is supposed to be a deed. For example, although the document no longer need refer to its being executed under seal, instead it should simply say it is "executed as a deed".
(2) Legal precedents for change
The impetus for the proposed amendments has its origins in changes to English law, which has been modernised in this area over the last few decades. The most recent reforms were implemented via Regulatory Reform ( Execution of Deeds and Documents) Order 2005 (2005 No. 1906), which was brought into force on 15 September 2005. Section 44 of the English Companies Act 2006, which came into force on 6 April 2008, made further changes to the execution of documents by English companies by allowing a company to execute documents (including deeds) by a single director signing in the presence of an attesting witness.
(3) To seal or not to seal? - The Common seal may become optional in Singapore
A proposed new section "41A", which would replace section 41(3) of the Act, would permit a company to enter into a contract either under its common seal or by a person acting under its express or implied authority.
A proposed new section "41B" to the Act, intends to make clear that a local company or a foreign corporation would not need to have a common seal anymore for the execution of documents. The provision set s out how a local company or a foreign corporation may execute a document with or without a seal and that either way the document would have the same effect as if it were executed under the company's common seal.
In the case of a local company the document could be executed in one of two ways: either (1) by affixing the common seal, or (2) by signing on behalf of the company by (i) two directors or (ii) a director and a secretary of the company or (iii) a director and a person witnessing the director's signature.
In the case of a foreign corporation, the execution would be valid, as long as the document i s executed in a manner recognized by the relevant foreign law or signed by a person recognized by the relevant foreign law as acting for the corporation and expressed to be executed by the corporation.
In the case of deeds, a proposed new section 41C (replacing sections 41(5) and (6)) of the Act sets out how a local company may validly execute a document as a deed. It remains the case that a deed has to be duly executed by the company and would not take effect ( i .e. , bind the company) until the requirement of delivery is fulfilled. Delivery means committing an act that shows an intention to be bound by the terms of the agreement (Vincent v Premo Enterprises Ltd [1969] 2 Q.B. 609) and does not necessarily mean that the document has to be physically handed over to any other party.
The authority to act as an agent or an attorney of a foreign corporation for the execution of deeds has to be by way of a valid power of attorney or document of authorization in accordance with the laws of the territory of incorporation. However, for local companies, where Singapore law applies, the authority to execute deeds has to be given to the agent or attorney by way of a deed itself.
There is also a proposal for the provisions relating to foreign corporations to be dealt with in legislation separate from the Act.
(4) Other issues regarding execution
The proposals also make clear that when a person is signing a document in various capacities, for more than one entity (either a company or a foreign corporation) the person is required to sign separately for each entity in each capacity.
If you wish to have further information on this update or wish to discuss how it may potentially have an impact on your business, please feel free to contact the authors.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
