A recent case shows how important it is to follow correct procedure in company law, as when the company’s internal regulations are not followed, documents executed on the company’s behalf may be invalid.
The case involved a notice relating to a tenancy matter which was signed by a director of a company on behalf of the company. The relevant law stipulated that the notice had to be signed ‘by each of the tenants, or […] by the tenant’, unlike most other notices under the Act which can be signed ‘by or on behalf of’ the tenants.
As the company’s Articles of Association were not referred to by either party, the court considered the position under general law. The Companies Act 1989, which applied when the notice was served, states that a company can sign via the signature of either two directors or those of one director and the company secretary, or by affixing the company seal.
The Court of Appeal held that, as the notice had been signed by just one director, the requirements of the Companies Act had not been complied with and the company’s signature was therefore invalid. The simple failure to obtain the signature of a second director proved fatal.
We can advise you on any company law matter and review your company’s articles of association to make sure they are efficient and compliant with current law.