The Companies (Corporate Governance, Enforcement and Regulatory Provisions) Act 2024 was signed into law on 12 November 2024. Commencement orders are needed for its provisions to become operational.
Under the first commencement order (S.I. No. 639/2024 – Companies (Corporate Governance, Enforcement and Regulatory Provisions) Act 2024 (Commencement) Order 2024) one of the first provisions to become operational will be the widely-welcomed reinstatement, on a permanent basis, of the so-called 'interim fix' for the execution of documents by a company under seal, introduced during the COVID-19 pandemic.
The 'interim fix' allowed a company to execute documents under its common seal on separate counterparts between 21 August 2020 and 31 December 2022. It proved extremely useful in practice for companies when a company's seal, and the persons authorised to countersign it, were in different locations.
That mechanism will be permanently reinstated from 3 December 2024.
From that date, a company's seal and the signatures of those who countersign it may be on separate copies of the relevant agreement or deed with the aggregate considered as one instrument.
Key points to bear in mind include the following:
- Section 43A will apply "notwithstanding any provision of the company's constitution": it will be an alternative to any provision regarding the affixing of the common seal set out in the company's constitution.
- Where a company has specified in its constitution that only one countersignature is required when affixing the seal, that company must obtain an additional countersignature if it wishes to rely on Section 43A.
This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.
