Contracts and other transactions

Part 2 – Incorporation & Registration

This part of the Act deals with the company and contracts, and the company’s common seal. The key points are as follows:

  1. Section 42 sets out the three ways in which a contract may be made on behalf of a company. It is a carrying-over of Section 38 of the 1963 Act. The only difference is that the new act speaks of “natural persons” where the old Act spoke of “private persons”.
  1. Section 43 deals with the common seal. The requirement to have a common seal, and that it have the company’s name engraved on it in legible characters, is not new. The rest of Section 43 outlines how the seal should be used.
  1. A company may be permitted by its constitution to have an “official seal” which is for use abroad, and must resemble the common seal (Section 44). Use of the official seal has the same effect as use of the common seal.
  1. The old rule on pre-incorporation contracts has been carried over in Section 45. This used to be governed by Section 37 of the 1963 Act. The company may, after its formation, ratify any contract made on its behalf before its incorporation. It then becomes bound by it, as if it had been in existence at the time the contract was entered into.
  1. Section 46 is a re-enactment of the rule on bills of exchange or promissory notes.
  1. Section 47 sets out a number of Category 4 Offences for the use of the incorrect company name, or omission of the company name on certain types of document.
  1. The persons who may sign a company document in order to authenticate it are directors, the secretary, the registered person or any other authorised officer. If they sign the document to authenticate it, it need not be under the common seal. (Section 48).