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Can I complete my corporate transaction remotely?
2020 has seen the world move to a more online forum to restrict the spread of the coronavirus, which has left some business owners wondering whether their corporate transaction can proceed without the ability to meet face to face. Stacey Browne, Solicitor within our Company Commercial team, reassures those with questions that remote transactions are a possibility, highlighting the key considerations you will need to make and how we can support you in a Covid-19 world.
Remote completion is far more common than a traditional boardroom completion these days, yet it is still a question that we are asked on a daily basis. Fortunately, we are able to send documents by email or in the post for execution in advance of completion which are then signed and scanned back to us in readiness to complete. More often than not, the solicitors for the other side are happy to complete on the basis that we hold copies rather than original signed documents (as long as we do send them the original documents after completion has occurred) therefore completion is not held up waiting for the original documents to arrive in the post.
Electronic signatures strengthen this position because they hold the same legal standing as handwritten signatures and are becoming increasingly popular leading to a need for physical presence in a boardroom, and celebratory glass of champagne post completion, redundant.
There are, of course, some key considerations to think about:
Corporate contracts in remote transactions
Electronic signatures are valid, unless it is explicitly set out within the contract that they are not. Provided that the signatory inserts the electronic signature in the appropriate place in the document with the intention of authenticating it, signing electronically will satisfy the statutory requirement of a document being signed, in England and Wales.
There will always be complexity with cross border transactions, due to the potential differing of local requirements as to the validity of the non English parties, which need to be considered. For example, some jurisdictions may require documents to be signed using a corporate seal, notarised or apostilled.
Deeds are usually where remote completions require the most planning and preparation, when it comes to execution, due to the requirement under English law for them to be signed in the presence of a witness.
A deed can in fact be executed electronically, and the witness can also sign and add in their details electronically too, the issue arises (predominantly in a social distance world) due to the need for the witness to be physically present in the same location as the party signing and this may require some thought.
Some useful hints and tips for witnessing documents virtually could include:
- Sometimes a witness is not physically available. If this is the case, there is the option (if applicable) of having a deed signed in the presence of two directors, if permitted under the company’s constitutional documents.
- Have the witness email you to confirm that they are in the same location as you when the deed was signed – there is no legal requirement for this BUT this could prevent you a lot of stress over the validity of a witness signature if it is ever questioned later down the line.
- A power of attorney can reduce the time it takes to complete a transaction enormously and is a very common procedure within corporate transactions, especially if there are lots of parties by each signatory appointing one person to execute on their behalf. This has become even more common since Covid-19 by simply organising one person to sign all documents in the presence of one witness. Note however that a power of attorney must be signed as a deed, albeit not usually under such time pressures as the completion of a transaction.
- The purpose of a witness signature is to provide a neutral and un-favoured opinion of what was signed. If a witness who is not a relation or friend is available, that is best practice; however, given the current world where Covid-19 may mean that a family member is the only available witness, the law states that a family member would be sufficient.
With some logistical thought and legal consideration, almost all corporate transactions are able to complete remotely making use of the ever growing technology platforms and legal framework to deliver a smooth, efficient and legally binding corporate transaction. To discuss your transaction with Stacey or a member of the Company Commercial team, you can contact her today by calling 023 8071 7411 or email firstname.lastname@example.org.
This is for information purposes only and is no substitute for, and should not be interpreted as, legal advice. All content was correct at the time of publishing and we cannot be held responsible for any changes that may invalidate this article.