The evolution of streamlining deed execution for companies in Ireland

Recent legislative change in Ireland aimed at permanently incorporating more flexible execution methods by companies of deeds represent a step forward in aligning legal practices with the practical realities of modern business.

The execution of documents as deeds in Ireland, as in many common law jurisdictions, has a history informed by both legal tradition and the evolving needs of commerce and property law. Historically, a deed, previously known as an indenture, is a formal legal document that is executed (signed, sealed and delivered) with a certain solemnity and formality.

Deeds are distinct from simple contracts by the requirement of a formal execution protocol and the traditional presence of a seal. The use of seals dates back to medieval times when literacy was not widespread and seals served as a unique identifier for the individual executing the document. This practice endowed the document with a greater sense of authenticity and solemnity.

Deeds in Ireland

In Ireland, the significance of executing a document as a deed lies in its legal implications. The formalities associated with deeds serve to evidence that the parties intend the document to have immediate legal effect and to be binding. Deeds are a legal requirement for certain documents, including the conveyance of real property, the granting of certain leases and the assignment of intangible rights where consideration may not be present. Irrespective of whether a deed is a legal requirement for validity, the strategic advantage of executing legal agreements as deeds is underscored by certain legal advantages. These include an extended statute of limitations and the absence of the requirement of consideration, rendering the cumbersome nature of deed execution worthwhile for businesses wishing to strengthen their contracts.

Evolving requirements for deed execution

The specific requirements for executing deeds have evolved over time, influenced by legislation and legal practices. In Ireland, this evolution has been marked by a shift from the use of wax seals to a more modern understanding of what constitutes a deed. The Property Law Act 2009 (the 2009 Act) was a significant piece of legislation in this area as it modernised the law relating to the execution of deeds by companies, making it clearer and more flexible. For example, the 2009 Act allowed for execution in counterpart, meaning each party could execute (sign, seal and deliver) separately so that identical copies of the document taken together would constitute a single binding agreement. The recent partial commencement of the Companies (Corporate Governance, Enforcement, and Regulatory Provisions) Act 2024 (the 2024 Act) has further increased flexibility for companies executing deeds, allowing a company to execute a deed on counterpart pages provided that the essential elements of the execution (seal, signature and countersignature) are contained in the aggregate of the documents.

Challenges in electronic execution of deeds

Another milestone in the development of executing deeds in Ireland is the recognition and increasing acceptance of electronic execution of documents, including deeds. The Electronic Commerce Act 2000, as amended, laid down the legal framework for electronic signatures and transactions. However, the application of electronic signatures to deeds is mired in difficulty, making it challenging to establish whether a deed has been validly executed. If a deed is not executed properly according to the legal requirements in Ireland, it can have significant legal consequences. Failure to adhere to the formalities can affect the enforceability and validity of the deed, leading to various legal and practical implications.

The most immediate and significant effect of failing to properly execute a deed is that the deed may be considered invalid. This means that the legal document and the transactions or agreements it was intended to formalise might not be legally binding. This can have serious implications for all parties involved, particularly in transactions involving the transfer of property where a failure to execute a deed properly can result in the transfer not being legally recognised.

A need for change

The development of executing documents as deeds in Ireland reflects a balance between maintaining the solemnity and certainty associated with traditional legal formalities and adapting to technological advancements and changing commercial practices. In a digital and global age, traditional deed execution requirements — specifically that a company seal be affixed in the physical presence of two directors or a director and the company secretary — have proved to be outdated, with recent legislation updating these requirements accordingly.

Recent legislative changes

The execution requirements of companies have been modernised via the sections of the 2024 Act that commenced on 3 December 2024. Section 43A of the Companies Act 2014 was enacted during the COVID-19 pandemic to temporarily ease the logistical burdens associated with deed execution by permitting a corporate party to a deed to execute the deed in three separate parts, including the application of the company seal separately on a deed. This provision facilitated the signing, sealing and delivery of separate copies of the same document from afar. However, the interim period during which this provision applied was not extended (while other interim measures had been extended until 31 December 2024), signalling a reversion to the more rigorous traditional requirements.

However, legislative changes have now been enacted to bridge this disconnect. The Companies (Corporate Governance, Enforcement and Regulatory Provisions) Bill 2024 was largely commenced on 3 December 2024 and is the reincorporation of provisions the same as those contained in Section 43A, which has the effect of making the changes it brought during COVID-19 permanent.

Conclusion

By addressing the logistical difficulties of traditional execution requirements, these changes streamline processes for companies and make the process of executing a deed easier, while retaining the requisite formalities.

How Ogier can help

For queries related to deeds in Ireland, contact a member of Ogier's Corporate team in Ireland via the contact details provided below.

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Disclaimer

This client briefing has been prepared for clients and professional associates of Ogier. The information and expressions of opinion which it contains are not intended to be a comprehensive study or to provide legal advice and should not be treated as a substitute for specific advice concerning individual situations.

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