Following the decision in the Mercury Case, a practice of ‘virtual signings and closings’ has developed to avoid the logistical problems in getting a document signed. This guidance provides a non-exhaustive range of options that are available to facilitate virtual signings or closings where one or more signatories are not physically present at the same meeting.

It is not uncommon, especially with international transactions, for signatories to documents to be in different locations/countries, making it difficult, if not impossible, for them to attend a physical completion meeting. Additionally, it is not always possible or desirable to appoint a power of attorney. Following the decision in R (on the application of Mercury Tax Group and another) v HMRC [2008] EWHC 2721 (the “Mercury Case”), a practice of ‘virtual signings and closings’ has developed to avoid the logistical problems in getting a document signed. The judge in the Mercury Case held that adding a signature page to a deed or using a signature page from a previous draft of the deed in a final draft would not be valid.

Executing a document using Mercury rules

The Law Society Company Law Committee and The City of London Law Society Company Law and Financial Law Committees have prepared guidance on the execution via virtual signings and closings of documents governed by English law. The guidance provides a non-exhaustive range of options that are available to facilitate virtual signings or closings where one or more signatories are not physically present at the same meeting. The option that will be chosen will depend on the type of document: deed, guarantee or contract.

Deeds (also applicable for guarantees and contracts)

1. The final version of the deed is circulated to parties who are not able to join the physical meeting.
2. The absent signatory/ies print the signature page (or the entire deed), sign the deed and scan the signature page (or entire deed) in.
3. The scanned signature page (or entire deed) is sent back to the lawyer who circulated the deed, together with the final form deed.
4. For deeds, the signatory/ies must confirm whether the deed is deemed to be delivered and or when it is deemed delivered.

All contracts and guarantees (but not deeds)

Option 1:

1. The final version of the document is circulated to parties who are not able to join the physical meeting.
2. The absent signatory/ies print the signature page, sign it and scan it in.
3. The scanned signature page is sent back to the lawyer who circulated the final document, together with the written consent of the signatory/ies to the attachment of the signature page to the final form document.

Option 2 (this does not apply for real estate contracts):

1. A signature page is circulated while the document is still being negotiated.
2. The absent signatory/ies print the signature page, sign it and scan it in.
3. The scanned signature page is sent back to the lawyer who circulated it, to be held to the order of the signatory/ies until the final form document is circulated.
4. Once the document is in final form, it is circulated to the absent signatory/ies, who confirm that their signature page may be attached to the final form document.

Remember

Check whether the document is a deed or not and ensure the appropriate formalities for signing are properly followed.

Client Alert 2016-261