The High Court recently ruled that a debenture which had been signed by a company’s sole director and the company secretary but not actually dated until three months later, by which point the sole director was no longer in office, had been validly executed by the company.

In June 2008, the company’s board approved the execution of a loan agreement and a debenture as security for the loan. Both documents were executed with the signature of the company’s sole director and company secretary. However, the documents were not dated until 15 September 2008, by which time the sole director was no longer a director of the company.

On 17 April 2014, an administrator was appointed to the company under the terms of the debenture. The administrator questioned the validity of their appointment, which was depended on the debenture having been correctly executed.

The High Court held that the debenture had been validly executed. The process had been evidenced in minutes of a board meeting and a written resolution of the company had been passed, which confirmed that both documents had been prepared and executed at a time much earlier than when they were dated. It did not matter that the transaction completed at a later date, when the director was no longer in office, as there was a clear intent to enter into the documents before the director had left the company.

This decision highlights that it is not always necessary to re-execute a deed when a company’s signatory has ceased to be a director (or company secretary, as the case may be) between the execution, and the dating of a deed. However, as with this case, proceeding without re-executing a document carries the risk that the validity of the execution may be challenged in the future. To be safe, it is recommended that a party should be reluctant to accept a document which is signed by a person who has ceased to be a director, unless it is clear that the document was signed and authorised while the signatory was still in office.

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