One of the questions we get asked most by our clients,
apart from "was that Drizzy playing on your call
waiting?", is whether it's OK to accept a document signed
by split execution.
Section 127(1) of the Corporations Act says that a company can
execute a document without using a common seal if it is signed by
two directors, or a director and a company secretary.
The problem is, quite often, only one director is around because
the other is busy lounging on a private island off the coast of
Belize or taking part in an alpine polo tournament in St. Moritz
(totally the kind of thing they do right?)
When directors are physically separated however, rather than
holding up a transaction, they'll sign different copies of the
same document. This is known as "split execution".
Under s 129(5) of the Act, a person (or company) may assume that
a document has been duly executed by the company if the document
appears to have been signed in accordance with s 127(1).
There seems to be confusion between not just clients, but
lawyers themselves, as to whether a split execution document (two
copies of the one document) satisfies s 127(1).
In the only reported case to deal with the question, Re CCI
Holdings Ltd  FCA 1283, Emmet J stated:
... s 127(1) may be construed as
requiring a single document to be signed by the two directors or
the director and secretary. In principle, however, I can see no
reason why that should be, so long as the two counterparts are
treated as a single instrument and that instrument is
Some lawyers take a conservative approach by refusing to accept
a document signed by split execution and insisting on "best
practice" requiring a single document, which slows down the
But where's the controversy? The Federal Court has
considered this question and said that there's no problem it
can see with split execution, as long as the two counterparts are
treated as a single instrument.
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