Sand pail and shovel

Picture the scene: after months of hard work, you’re finally lying by the pool, relaxing in the sunshine, sipping a colourful drink with an umbrella in it and toying with the idea of picking up that novel you’ve been meaning to read for ages when….your phone rings. It’s the office and they need you to sign some urgent documents. Can you go and find a computer, a printer and a scanner and stand by for further instructions?

With a little bit of planning, you can ensure this doesn’t happen and that others can sign on your behalf, leaving you to get on with all that important relaxing you’re supposed to be doing.

Personal signatures

In some cases, documents will need to be signed by you in your personal capacity. For example, where a company you hold shares in is being sold you will need to sign a stock transfer form to transfer those shares. The solution here is for you to appoint an attorney to sign the relevant documents on your behalf. The power of attorney can be a general one, enabling the attorney to do anything which you could do yourself, or a limited one, just allowing the attorney to sign the specific documents required as part of the transaction taking place in your absence. In either case, the power of attorney must be executed by you as a deed.

Signing on behalf of a company

Where documents will need to be signed by a company of which you are a director, the position is slightly more complicated – particularly if you are the sole director.

A company can appoint anyone to sign simple contracts on its behalf. So a board meeting could be held before you leave for your holiday at which nominated individuals are given authority to sign documents on behalf of the company. However, this only relates to simple contracts and would not permit the authorised signatory to execute a deed on behalf of the company.

Executing a deed on behalf of a company

There are three alternative methods by which a company can execute a deed:

  • by affixing its common seal (in which case the provisions of the company’s articles regarding use of the seal would have to be complied with, in terms of who has to sign next to the seal);
  • by the signature of a single director signing in the presence of a witness; or
  • by the signature of two authorised signatories, but an “authorised signatory” for these purposes is just a director or secretary.

If none of these options will be available in your absence, the company will need to appoint an attorney itself. The Companies Act confirms that a company can appoint any person as its attorney to execute deeds or other documents on its behalf. You would have to check that the company’s articles give it the ability to exercise this power to appoint an attorney (the Model Articles contain such a provision). The power of attorney itself would need to be executed by the company using one of the three methods outlined above and again could be drafted on a general or limited basis. Once appointed, the attorney would then be able to sign documents or execute deeds on behalf of the company.

Attending a board meeting

If you are a director and the company will have to hold a board meeting at which you need to be present (perhaps because the meeting will not have a quorum without you) this will require further thought.

The company’s articles of association may allow you to attend a board meeting by telephone but this would still interrupt your holiday.

Unfortunately, a power of attorney cannot be used to delegate your functions as a director since that position is personal and cannot be delegated. You may, however, be able to appoint an alternate director to carry out your role as a director in your absence. The company’s articles of association would have to be checked to see if they permit alternate directors and, if so, what the relevant formalities are for appointing an alternate and whether there are any limits on what an alternate may do once appointed.

Happy holidays

So, with a little planning and forethought you should be able to ensure that things run smoothly in your absence on holiday and you arrive back in the office thoroughly relaxed and raring to go after your break in the sun.

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This blog is intended only as a synopsis of certain recent developments. If any matter referred to in this blog is sought to be relied upon, further advice should be obtained.