Business across borders: how does a foreign company sign?

The normal rules for document execution vary where a document is to be signed by a company incorporated outside of England and Wales. In this insight we look at the signature requirements for an overseas company entering into an agreement under the laws of England and Wales.

Simple contracts

Where each of the signatories to a simple contract (as opposed to a deed) is a company incorporated in England and Wales, it is usually sufficient for the parties to simply sign the contract.

Where an overseas company is signing an English law contract, it must sign the contract either by affixing its common seal or by signing the contract in a manner permitted by the laws of the territory in which that overseas company is incorporated (the overseas territory).

Where the latter option is chosen, a legal opinion (or at the very least, local advice) will be required from legal counsel in the overseas territory to confirm that the company has signed the contract in accordance with the laws of that overseas territory.

An English law contract can also be signed on behalf of an overseas company. For such a signature to be valid, the contract must be signed by an authorised signatory of the company, and it must also be expressed to have been signed by the company. Again, for certainty it is advisable to obtain an opinion from legal counsel in the relevant overseas territory confirming that the ‘authorised signatory’ is indeed duly authorised under local law.

Deeds

Certain documents, such as mortgages, charges, sales by a mortgagee, deeds appointing trustees, powers of attorney, releases and variations of existing deeds require execution by way of a deed.

An overseas company can execute an English law deed either by affixing its common seal or by executing it in any other manner permitted by the laws of its own territory. Alternatively, the deed can be executed by an authorised signatory provided that it is clearly expressed as being executed by the company.

Again, a legal opinion should be obtained for comfort that any local method of execution is valid or that any ‘authorised signatory’ is in fact duly authorised.

There are certain other requirements that must be met for any deed governed by English law to be legally binding and valid.

It’s also worth noting that for documents being registered at the Land Registry, additional rules around execution wording apply.

Let’s not jump to conclusions…

It will generally be presumed that a document has been duly executed by an overseas company if, on the face of it, it has been signed by a person acting under the overseas company’s authority (in accordance with its local laws) and if it states that it has been signed by the overseas company.

This presumption will, however, only apply in favour of a “purchaser”. Most commonly this might include a lender in relation to a mortgage, or a tenant in respect of a lease, but generally it could benefit any person who acquires an interest in property for valuable consideration.

When dealing with an overseas company, it is crucial to get a legal opinion from local legal counsel to minimise the risks which would arise from a document being incorrectly signed.