Australian Corporate Lawyer - Autumn 2016

theAustraliancorporatelawyer
THERE IS NO ‘ONE SIZE FITS ALL’
FOR EXECUTION OF DEEDS
“No good deed goes unpunished.” – Oscar Wilde
Orla McCoy
Orla McCoy is a Partner at Clayton Utz,
specialising in corporate restructuring and
insolvency. She acts on behalf of financiers,
private equity interests, external administrators,
government departments, corporations and
individuals and has acted in many of Australia’s
most significant and high-profile corporate
restructuring and insolvency matters.
Flora Innes
Flora Innes is a Senior Lawyer at Clayton Utz
and specialises in corporate restructuring and
insolvency. She has had exposure to a number
of high-profile clients and matters, acting for
external administrators, creditors, trustees, and
government clients.
For the enforceability of any commercial
arrangement, proper execution of
the underlying documentation is
critical. However, compliance with execution
formalities takes on heightened importance
when the arrangement is being documented
by deed.
Importantly, there are substantial differences
in the manner in which deeds may be
executed by companies, individuals and other
types of entities.
The aim of this article is to provide a high
level summary of the general execution
requirements applicable to the different
types of legal entities most frequently
appearing as counterparties; and provide
some practical tips for assessing whether
a deed has been properly executed by a
counterparty (Counterparty).
Companies registered under
the Corporations Act
For companies incorporated in Australia and
foreign companies that are registered under
the Corporations Act 2001 (Cth) (Corporations
Act), the position is straightforward. These
companies can simply execute a deed
in accordance with section 127 of the
Corporations Act, that is, they can arrange
for the deed to be:
• signed by two directors;
• signed by one director and one
company secretary;
• signed by the sole director (who must also
be the company secretary); or
• affixed with the company’s common seal in
the presence of: two directors; one director
and one company secretary; or the sole
director/company secretary.
By having the Counterparty execute a deed in
accordance with section 127, a party can rely
on the statutory assumptions in sections 128
and 129, including the assumption that the
Counterparty has duly executed the deed.
Moreover, provided that the document is
expressed to be “executed as deed” and is
executed in accordance with section 127 of
the Corporations Act, the document will not
need to be otherwise sealed in order
to become a deed. The document will,
however, need to be delivered by the parties
(that is, formally intended to be released
to the Counterparty).
It is important that the identities of the
signatories are checked against ASIC’s records
to ensure that they are in fact current directors
and/or secretaries of the company.
Power of attorney
Occasionally, a Counterparty may indicate
that it intends for its attorney to execute a
deed on its behalf. In those circumstances, a
copy of the relevant power of attorney should
be reviewed, to ensure that the power of
attorney itself:
• is expressed to be “executed as deed”.
This is because of a common law rule that
an agent signing a deed on behalf of a
principal must be authorised by a deed of
appointment to do so;
• was properly executed by the Counterparty
in accordance with section 127 of the
Corporations Act;
• has not expired; and
• actually confers upon the attorney the
requisite authority to execute the deed
in question.
The principal deed should state that it was
“executed as a deed” and that it was “signed,
sealed and delivered for and on behalf of” the
Counterparty by its attorney in the presence
of a witness. The witness should sign the deed
and the attorney should declare, by signing
the deed, that he has not received any notice
of the revocation of the power of attorney.
Australian companies under
external administration
It is possible for one or both parties
to a deed to be companies under
external administration.
Formalities
In those circumstances, it will normally be the
external administrator of the company that
will sign the deed on its behalf. The deed itself
should expressly state that it is:
• “executed as a deed”; and
• “signed, sealed and delivered for and on behalf
of” the relevant company by its external
administrator in the presence of a witness.
The witness should also sign the deed to
attest to the execution of the deed.
Unless the deed is (also) being entered into by
the external administrators in their personal
capacity, the Corporations Act facilitates
14 VOLUME 26, ISSUE 1 – AUTUMN 2016