(1)In Chapter III of Part I of the [1985 c. 6.] Companies Act 1985 (a company’s capacity; the formalities of carrying on business), for section 36 (form of company contracts) substitute—
Under the law of England and Wales a contract may be made—
(a)by a company, by writing under its common seal, or
(b)on behalf of a company, by any person acting under its authority, express or implied;
and any formalities required by law in the case of a contract made by an individual also apply, unless a contrary intention appears, to a contract made by or on behalf of a company.”.
(2)After that section insert—
(1)Under the law of England and Wales the following provisions have effect with respect to the execution of documents by a company.
(2)A document is executed by a company by the affixing of its common seal.
(3)A company need not have a common seal, however, and the following subsections apply whether it does or not.
(4)A document signed by a director and the secretary of a company, or by two directors of a company, and expressed (in whatever form of words) to be executed by the company has the same effect as if executed under the common seal of the company.
(5)A document executed by a company which makes it clear on its face that it is intended by the person or persons making it to be a deed has effect, upon delivery, as a deed; and it shall be presumed, unless a contrary intention is proved, to be delivered upon its being so executed.
(6)In favour of a purchaser a document shall be deemed to have been duly executed by a company if it purports to be signed by a director and the secretary of the company, or by two directors of the company, and, where it makes it clear on its face that it is intended by the person or persons making it to be a deed, to have been delivered upon its being executed.
A “purchaser” means a purchaser in good faith for valuable consideration and includes a lessee, mortgagee or other person who for valuable consideration acquires an interest in property.”.
(3)After the section inserted by subsection (2) insert—
(1)Under the law of Scotland the following provisions have effect with respect to the execution of documents by a company.
(2)A document—
(a)is signed by a company if it is signed on its behalf by a director, or by the secretary, of the company or by a person authorised to sign the document on its behalf, and
(b)is subscribed by a company if it is subscribed on its behalf by being signed in accordance with the provisions of paragraph (a) at the end of the last page.
(3)A document shall be presumed, unless the contrary is shown, to have been subscribed by a company in accordance with subsection (2) if—
(a)it bears to have been subscribed on behalf of the company by a director, or by the secretary, of the company or by a person bearing to have been authorised to subscribe the document on its behalf; and
(b)it bears—
(i)to have been signed by a person as a witness of the subscription of the director, secretary or other person subscribing on behalf of the company; or
(ii)(if the subscription is not so witnessed) to have been sealed with the common seal of the company.
(4)A presumption under subsection (3) as to subscription of a document does not include a presumption—
(a)that a person bearing to subscribe the document as a director or the secretary of the company was such director or secretary; or
(b)that a person subscribing the document on behalf of the company bearing to have been authorised to do so was authorised to do so.
(5)Notwithstanding subsection (3)(b)(ii), a company need not have a common seal.
(6)Any reference in any enactment (including an enactment contained in a subordinate instrument) to a probative document shall, in relation to a document executed by a company after the commencement of section 130 of the Companies Act 1989, be construed as a reference to a document which is presumed under subsection (3) above to be subscribed by the company.
(7)Subsections (1) to (4) above do not apply where an enactment (including an enactment contained in a subordinate instrument) provides otherwise.”.
(4)After the section inserted by subsection (3) insert—
(1)A contract which purports to be made by or on behalf of a company at a time when the company has not been formed has effect, subject to any agreement to the contrary, as one made with the person purporting to act for the company or as agent for it, and he is personally liable on the contract accordingly.
(2)Subsection (1) applies—
(a)to the making of a deed under the law of England and Wales, and
(b)to the undertaking of an obligation under the law of Scotland,
as it applies to the making of a contract.”.
(5)In Schedule 22 of the [1985 c. 6.] Companies Act 1985 (provisions applying to unregistered companies), at the appropriate place insert—
| “Section 36 | Company contracts. | Subject to section 718(3). |
| Sections 36A and 36B | Execution of documents. | Subject to section 718(3). |
| Section 36C | Pre-incorporation contracts, deeds and obligations. | Subject to section 718(3).”. |
(6)The Secretary of State may make provision by regulations applying sections 36 to 36C of the [1985 c. 6.] Companies Act 1985 (company contracts; execution of documents; pre-incorporation contracts, deeds and obligations) to companies incorporated outside Great Britain, subject to such exceptions, adaptations or modifications as may be specified in the regulations.
Regulations under this subsection shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.
(7)Schedule 17 contains further minor and consequential amendments relating to company contracts, the execution of documents by companies and related matters.