Different Execution Formalities for Document Types
Q1) What are the formalities for execution of different types of documents?
Generally, the transaction documents, which are in the nature of agreements/contracts, are executed on appropriate value of stamp paper and also witnessed by 2 witnesses for each signing party. In case of specific nature of documents such as share transfer deed, the same is required to be appropriately stamped through special adhesive stamps. Further, certain documents like power of attorney are required to be duly notarised as a general practice.
Proof of Identity and Authority to Sign
Q2) What documents are the parties generally required to produce for signing transactional documents?
It is a standard practice for the parties to (i) provide a certified board resolution approving the transaction and authorising a person, normally a director, to execute the transaction documents where the party is a company, (ii) provide a duly executed and notarised special power of attorney authorising to execute the transaction documents where the party is an individual and
Is not present at the closing. Depending upon the circumstances, the proof of identity may also be requested.
Document Execution Formalities for Incorporated Companies
Q3) What are the formalities for execution of documents by a company?
Company is required to pass a board resolution authorising a person, normally a director, to execute the documents on company’s behalf. In some specific transactions, e.g. sale of undertaking, the company in addition to board’s approval may also be required to obtain shareholders’ approval as per requirements of the Indian Companies Act.
Formalities for Execution of Documents – Individuals
Q4) What are the formalities for execution of documents by an individual?
An individual may enter into a contract either orally or in writing except where the transaction or the Indian law requires the execution of document/contract in writing. The person may either execute the document himself or authorise some other person through a power of attorney to execute the documents/contracts on his behalf. Execution is generally witnessed by minimum 2 witnesses as a practice.
Formalities for Execution of Documents – Foreign Companies
Q5) what are the formalities for execution of documents by a foreign company?
Generally, the board resolution of the foreign company is required to execute documents on its behalf. In case certain documents are required to be filed with registrar of companies in India, the board resolution of foreign company whose registered office is located in a country, which is a member to Hague Convention, is required to be apostilled in the home country. However, if the registered office of the foreign company is located in a country which is not a member to Hague Convention then board resolution of such company is required to be consular zed by the Indian embassy in that country.
Notaries – Share and Asset Purchases Role / Types of Documents / Director Appointments
Q6) What are the documents required to be notarized in case of acquisition by way of share purchase or asset purchase?
Only power of attorney, if any, is required to be notarised.
Notary Power & Deal Terms
Q7) What is the role of a Notary?
A notary cannot change the terms of the transaction as the only role the notary performs is to validate the execution of contracts/documents which are signed in his presence.
Notaries Fee – Level / Negotiable?
Q8) What is the fee of a Notary?
The fee of a notary is very nominal but depend on the nature of document being notarised. However, instrument-wise threshold of fee is prescribed under the Indian law.
Notary Impact on Transaction Timetable
Q9) Is there any impact of notarization on general timelines of a transaction?
Generally no impact.
Appointment to execute documents at signing/closing meeting & requirements
Q10) Whether a company or an individual appoint any third party to execute documents on their behalf?
Yes, both the company and the individual can appoint a third party to execute documents on their behalf at the time of signing/closing. The company will be required to pass a board resolution authorizing a person to sign on its behalf. However, an individual is required to execute a duly notarised power of attorney in favour of a person authorised to sign on his behalf.
Execute Documents in Counterpart?
Q11) Can a document be executed in counterparts?