Covid-19: Taking Valid Security During Lockdown

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Covid-19: Taking Valid Security During Lockdown

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The current lockdown in the UK is throwing up issues for financiers aiming to take security. Claire Butler takes a look at how you can ensure your security is validly executed and registered.

Executing Deeds

 

Many documents that a financier requires its clients and guarantors to sign are generally expressed to be deeds, with the signatory signing in the physical presence of a witness.

 

Recently the Law Commission ruled that attestation by video link is not acceptable, but there are a number of strategies you can adopt to ensure valid execution of deeds when the signatory is self-isolating. These include:

  • executing by two-authorised signatories, that is, two directors, or appointed attorneys, or a director and a company secretary. A witness is not required where there are two signatories. Nor do the signatories have to sign at the same time.
  • using a household member as a witness - there is no rule against it for finance or security documents, as long as the witness is not also a party to the deed. Nor is there an absolute bar on under 18s, provided the witness has sufficient maturity to be able later to verify the circumstances of the execution but this should be seen as a last resort; and
  • Witness and signatory being either side of a window or glass partition.

 

Registering at Companies House

 

To ensure valid enforcement, a debenture must be registered at Companies House within 21 days of it being executed. The usual electronic filing procedure requires a certified copy of the original deed to be uploaded. This presents obvious difficulties where businesses are not accessing post, with the risk of a debenture not being registered in time. Companies House have, however, confirmed that they will now accept certified counterpart deeds; so please contact us if you wish to know more about this arrangement.

 

Registering at the Land Registry

 

HM Land Registry also permit the execution of deeds in parts, provided the statutory rules are followed. This is complex, and the practice of attaching pre-signed execution pages to a later deed is not acceptable. If in doubt your solicitor will be able to guide you through the process.

 

If you have any questions about executing or registering your security, please contact Dawn Shadwell or Noel Ruddy at PDT.

 

View more information on the Covid-19 pandemic on PDT Solicitors Covid-19 Legal Hub

The content of this webpage is for information only and is not intended to be construed as legal advice and should not be treated as a substitute for specific advice. PDT Solicitors LLP accepts no responsibility for the content of any third party website to which this webpage refers.

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