April 16th, 2020 / Insight posted in Articles, Coronavirus, Legal

Executing declarations of solvency, deeds and Wills in the current crisis

Under English law, there are certain formalities for the execution and delivery of some documents. Due to the Coronavirus pandemic and the related restrictions, it may prove more difficult to comply with these formalities. In this note, we briefly look at some of these challenges.

Companies House filings and declarations of solvency

Companies House has traditionally required some hard-copy documents to be sent by post rather than online filing or by email. As a response to the Coronavirus pandemic, Companies House will now accept filing of certain insolvency documents via emailed PDF attachments.

In particular, Companies House has changed its requirements relating to declarations of solvency.  A declaration of solvency must be given by directors before a company enters solvent liquidation and customarily the original declaration of solvency must be sent to Companies House to be filed. Companies House has confirmed that it no longer requires the original document to be filed, but instead will accept a scanned PDF copy of the document sent by email.

Declarations of solvency must be sworn before a solicitor or notary. It is custom for the declarant(s) to be physically present when the solicitor or notary ‘attests’ the declaration, which may not currently be possible due to government-imposed restrictions. Companies House says they will now accept copies of declarations of solvency sworn via video, however they have not yet confirmed the process for this.

Deeds

Certain documents must be executed as a ‘deed’, for example transfers of land, mortgages, certain business agreements, Wills and trust documents. For a deed to be valid, there are certain signing and witnessing requirements which must be complied with.

Execution formalities depend on who is signing the deed. Where a deed is executed on behalf of a UK company, it can be validly executed through the signature of two directors or one director and the company secretary. In this case, no separate witness is needed but the two directors or one director and the secretary executing the deed must sign the same copy of the document.

However, where a deed is executed by an individual, or by a UK company using only one director but no secretary, it will need to be signed by the individual (or by a director on behalf of the company) in the presence of a witness. Where a signature must be witnessed, the witness must be physically present to see the signatory signing the document. Due to the current Coronavirus pandemic, and the government’s guidance on social distancing and self-isolation, it may be hard to find potential witnesses who are able to be physically present to observe the signing of the deed.

It is generally advised that a signature to a deed should be witnessed by an independent, unrelated, adult witness so that the witness can provide (if necessary) unbiased and reliable evidence of who signed the document and when.

In most cases (however, please see ‘Wills’ below) there is no specific legal prohibition on a signatory’s spouse, cohabitee or civil partner from acting as a witness, although it would usually be advisable to avoid this. Due to the current lockdown, this advice could be relaxed depending on the circumstances to allow such persons to act as a witness if no one else is available.

Further, there is no prohibition to prevent a minor from acting as witness, however we do not recommend this. Due to the lockdown, if no one else is available and there is great urgency, if you decide to risk having a minor witness, they should be of sufficient maturity and understanding for their evidence to be regarded as reliable should it later prove necessary to verify the circumstances surrounding the execution of the deed.

It is acceptable for an employee of a party to witness that party’s signature.

Someone who is a party to a deed in their own right cannot be a witness for another party to that deed.

The above formalities will still need to be complied with where a deed is being executed by electronic signature, so the witness will still need to be physically present to see the signatory applying their electronic signature to the document.

Wills

In order for a Will to be legally valid, there are specific conditions which must be met when the Will is signed:

  • The Will needs to be in writing.
  • The Will needs to be signed by the person making the Will (the testator) in the presence of two independent witnesses (who must be present at the same time).
  • The witnesses must each sign the Will in the presence of the testator.

It is important to note that anyone intend to benefit under the Will must not be a witness (nor must their spouse), as while their signature will be valid, they will lose their gift under the Will. This creates a particular problem given the government’s advice on social distancing outside of one’s own household.

There is currently no legislation permitting the use of video-witnessing. Therefore, the physical presence of the testator and the witnesses is required. It is also worth noting that electronic signatures are not acceptable for Will signings.

The Law Society and the Ministry of Justice are currently discussing relaxing the formal requirements, but, until further guidance is given, it is imperative that the testator’s signature is witnessed by two witnesses who are both physically present.