Lending to a Company Incorporated in Ireland: Signing Practicalities

This Note is intended to be used to facilitate the signing and closing of a loan financing where a borrower, guarantor, or security provider (each, an obligor) is incorporated in Ireland. While the issues to be considered in relation to an obligor when signing and closing a loan agreement, guarantee, or security document will be broadly similar regardless of an obligor’s jurisdiction of incorporation, there will typically be jurisdiction-specific issues that will need to be considered.

It is important to identify any signing and closing issues, specific practices, or concerns early in a loan finance transaction that involves an obligor incorporated in a jurisdiction other than the governing law of the loan financing documentation. This will then make it easier to ensure that these issues, practices, and concerns do not have a negative impact on the transaction timeline or lead to unnecessary transaction costs. Transaction-specific advice from lawyers in the appropriate jurisdiction should be taken in due course to ensure a transaction closes without any unforeseen issues.

This Note looks at the key signing practicalities, formalities, and conditions precedent for a corporate loan made under a loan agreement which is subject to English law or the law of a US state to an obligor incorporated in Ireland. It covers the following:

• Signing practicalities
• Electronic signatures
• Notarisation and apostille
• Other signing formalities
• Conditions precedent

This Note assumes the following:

• The obligor is a company incorporated in Ireland
• The loan agreement is subject to English law or the law of a US state

This Note is part of a suite of maintained resources that explain regulatory issues that should be considered when undertaking a cross-border loan finance transaction in a specified jurisdiction where the lender is incorporated in a different jurisdiction. For more information on considerations relating to signing and closing this type of transaction, see Cross-Border Lending: Signing and Closing a Corporate Loan Transaction Toolkit. For information on regulatory issues, see Cross-Border Lending: Regulatory Issues Toolkit. For information on considerations relating to structuring this kind of transaction, see Cross-Border Lending: Structuring the Transaction Toolkit. For information on legal and documentary issues, see Cross-Border Lending: Legal and Documentation Issues Toolkit.

Signing Practicalities

In-Person Signings

It is not necessary to have a physical signing meeting in Ireland. The usual practice is for the loan agreement, guarantee, or security document to provide that it can be executed in counterparts. Lawyers for the respective parties then co-ordinate execution by their clients. PDFs of signed documents are then circulated in advance of closing.

Where original documents have been signed in “wet ink,” these are not typically required to be held by lender’s counsel pre-closing, and will often follow post-closing. One exception is where security over shares is to be granted. Here, some lenders will require the original share certificate(s) and other share deliverables to be held by them at or prior to closing, though this is negotiated on a case-by-case basis.

Documents can be signed in advance of a closing meeting. In such cases, it is usual for the signatory to give an agent (such as a solicitor) authority to date the document and deliver it to the other party. Depending on the scale of a transaction, parties may elect to have a physical closing meeting if there are deeds to be executed by an Irish company.

Virtual Signings

The decision of the courts in England and Wales on virtual signings known as the Mercury decision (R. on the Application of Mercury Tax Group Limited and Masters v HM Commissioners of Revenue and Customs [2008] EWHC 2721 (Admin)) has been discussed in Irish case law, and the Law Society of Ireland has issued guidelines for virtual closings. The Law Society of Ireland recommends three options for virtual signings, as follow:

• A PDF copy of the execution version of the agreement is sent to a signatory’s solicitors for signature. For convenience, a separate signature page of the agreement may also be included, but this is not necessary. This option must be followed where the document is a deed, and either:
  • the document in full must be signed and returned; or
  • the document in full must be returned with a PDF of the signed signature page
• A PDF of the signed signature page is exchanged with authority to append it to a final agreed version of the agreement.
• A signature page of the final agreed version of the document is obtained, in advance, with authority to append it to the agreement at closing.

The first option above is only available once both:

• The document is in final agreed form between the parties
• All parties, or their solicitors, have confirmed to the other parties that they have no further comments on a document, and it can be considered as agreed form

This is typically evidenced by circulation of the execution version of a document in an email to all parties containing details of the signing process. The second and third options are only available where the document is not required to be executed as a deed.

Counterparts

An Irish obligor can sign a loan agreement, guarantee, or security document in counterpart, provided that a document is neither:

• Expressed to be a deed, in which case the first option set out above, as recommended by the Law Society of Ireland must be followed
• Prohibited by the applicable governing law or as set out in a document itself

Typically, documents governed by Irish law will include a boilerplate clause which permits signing in counterpart.

See under “Company Seals” below for a pending amendment to Irish law as regards counterpart signatures for company seals.

Practical Arrangements for the Delivery of the Finance Documentation

An Irish obligor’s solicitor will usually be in possession of the originals of the signed transaction documents on or prior to closing. Typically, parties to a corporate loan financing are happy to close transactions based on receipt of PDFs of the signed transaction documents, with an undertaking or confirmation by an obligor’s solicitor to send the original signed documents to the lender’s solicitors after closing. These will be delivered to a lender’s Irish solicitor for onward transmission to lead counsel in another jurisdiction, though in some instances they may be sent directly to the lead counsel.

Where security over shares is being taken, the lender’s solicitors may want to take delivery of certain original documents prior to closing, for example:

• Share certificates
• Stock transfer forms
• Dividend mandates
• Proxies
• Resignation and authority letters from the directors and company secretary

This is subject to commercial negotiation. Often, delivery will follow on the day of closing or soon thereafter. The same process applies to notices, required under security documents, which need to be served on third parties to perfect a security interest. The lender’s solicitors will often require originals of those notices at closing, to ensure a notice is served promptly after closing.

Signing Formalities

Deeds

In Ireland, Section 64(2) of the Land and Conveyancing Law Reform Act 2009 governs the execution of deeds. Irish companies must execute deeds under their common seal in accordance with their constitutional documents or the Companies Act 2014 (Companies Act). See under “Company Seals” below for a pending amendment to Irish law as regards counterpart signatures for company seals.

A company can circumvent the need to execute a deed under its common seal by appointing an attorney to act on its behalf, provided that the attorney executes a deed in the presence of a witness.

An individual that is a party to a deed must execute a deed in the presence of a witness.

Signing under Hand

Loan agreements and guarantees with an Irish obligor as a party are usually signed under hand, that is, not as a deed and without the need to affix the company seal.

Electronic Signature

Electronic execution of documents is governed by the E-Commerce Act 2000 (E-Commerce Act) and EU Regulation (EU) No 910/2014 (eIDAS Regulation). Under the E-Commerce Act, all parties to a document must consent to the use of electronic signatures. Consent can be implied, but it is best practice to explicitly provide for the use of electronic signatures in the loan financing transaction documents or obligor board approvals.

A deed cannot be executed by a company using electronic signatures. This is because it is not possible to affix a seal to a document electronically. Where both an individual and a witness are executing a deed electronically, they must do so in each other’s physical presence.

Section 10 of the E-Commerce Act lists the documents which cannot be signed electronically, including documents transferring interests in real property, trusts, and sworn declarations.

Company Seals

A company seal is an embossed image, with the company’s name on it, produced by a mechanical device. It is best practice for the seal to be applied to a coloured disc, affixed to the execution section of a document that requires it, so that it is immediately visible. Though the E-Commerce Act and the eIDAS Regulation provide for electronic seals, it is currently technically impossible to apply an electronic seal to a document.

The Companies (Corporate Governance, Enforcement and Regulatory Provisions) Act 2024 made permanent the interim solution for execution of documents by a company under seal, which lapsed in December 2022.

Under the new s43A of the Companies Act, the company’s seal and the related countersignatures can be on separate copies of the document in question (which can include deeds). Those separate pages are considered part of one document.

This solution is an alternative to any provisions regarding the common seal in the company’s constitution. If a company’s constitution requires only one countersignature when affixing the seal, an additional countersignature would be required in order to rely on Section 43A.

An Irish collective asset-management vehicle, a corporate entity formed pursuant to the Irish Collective Asset-Management Vehicles Act 2015, is not required to have a seal. It therefore can create security interests by signing an agreement by hand.

Notarisation

Under Irish law, a notary is not required for an Irish obligor to execute a loan agreement, guarantee, or security document that is governed by English law or US State law.

Apostille

An apostille is not required in most loan financing transactions. It is most often seen where there is a need to verify the authenticity of the signature or seal of a public officer, such as a notary public. This itself is usually required by particular non-Irish local law requirements.

The Irish Department of Foreign Affairs applies an apostille to documents at a cost of EUR40 per apostille stamp.

Translations

Legal documents for Irish obligors are nearly always drafted in English rather than Irish, which is the other officially recognised language in this jurisdiction. Translations therefore do not usually form part of loan financing transactions, unless specifically requested or agreed commercially. If a loan agreement, guarantee, or security document with an Irish obligor is not executed in either English or Irish then a certified translation into either of these languages will be required for a document to be used in court proceedings in Ireland.

Conditions Precedent

A loan agreement typically contains conditions precedent. These are normally set out in a separate clause or schedule of the agreement and typically include, in respect of an Irish obligor, the following:

• A copy of the constitutional documents of each Irish obligor.
• A copy of a resolution of the board of directors of each Irish obligor approving the Irish obligor’s entry into the transaction and the loan financing documents.
• A certificate of each Irish obligor:
  • confirming that borrowing or guaranteeing or securing, as appropriate, the loan would not cause any borrowing, guarantee, security or similar limit binding on it to be exceeded;
  • certifying that each copy of a document is correct, complete and in full force and effect as at a date thereof; and
  • confirming that each Irish obligor has complied with sections 82 and 239 of the Companies Act
• Security and other loan finance documents
• Legal opinions in respect of the capacity of an Irish obligor and validity and enforceability of any Irish law governed documents
• Financial information, for example, a pro forma balance sheet, copies of bank mandates and a funds flow statement
• Group structure chart
• Register of members
• Know-your-customer documentation and information required by a lender
• Utilisation request or drawdown notice
• Winding up and insolvency searches

For further information on the typical conditions precedent provided by an English obligor, see Practice Note, Lending to a Company in Ireland: Key Documentation Considerations: Conditions Precedent.