The Property (Execution of Deeds and Documents) Act, 2020 (the “PEDDA”) came into force on 11 December 2020. The primary purpose of the PEDDA is to remove the requirement for a seal to be affixed in order for a document to constitute a deed, which, at common law, is a writing on parchment or paper which has been sealed and delivered by its maker(s). The seal provisions in the Companies Act, 1992 and the International Business Companies Act, 2000 were also amended by the Companies (Amendment) Act, 2020 (the “CA Amendment Act”) and the International Business Companies (Amendment) Act, 2020 (the “IBC Amendment Act”) to reflect the provisions of the PEDDA which together with the CA Amendment Act and the IBC Amendment Act are referred to herein as the “New Legislation”. The Bahamas was one of the last jurisdictions in the common law world that required an actual seal to be affixed to deeds. Therefore, the New Legislation is a welcomed means of easing the burden associated with the execution of deeds governed by Bahamian law.
The key elements of the New Legislation are provided below.
Seal no longer required for an instrument to constitute a deed
A seal is no longer required to be affixed to documents which are deeds (e.g. property transfer documents, trust instruments, etc.). In practical terms, this means that red wafer seals and company seals are no longer required to be affixed to deeds. An instrument will constitute a valid deed where the instrument makes clear on its face that it is intended to be a deed (i) by the instrument being described as a deed or (ii) by the parties executing the instrument expressly indicating that the instrument is signed or executed as a deed.
Methods of Execution
Deeds which are executed by an individual must be signed (i) by the individual in the presence of a witness who must attest to the signature of the individual or (ii) at the direction of the individual, in the presence of the individual and two witnesses who each attest (a) the signature of the person signing on behalf of the individual and (b) that the individual directed such person to sign.
A deed which is executed by a Bahamian company must (i) be expressed to be, executed as, or otherwise make clear on its face that it is intended to be, a deed and (ii) be (a) signed by a director or person acting with the express or implied authority of the company in the presence of a witness or (b) be sealed with the company seal and witnessed and attested to by a director or other person authorized by the company’s memorandum and articles to witness and attest to the application of the company’s seal, in the presence of a witness who attests to the signature of such director or other person.
Deeds which are executed by a foreign company and intended to be governed by Bahamian law, will be validly executed where (i) the deed is executed in accordance with the laws of the country in which the foreign company is incorporated, registered or organized and (ii) the intention to be governed by Bahamian law is stated in or otherwise made apparent on the face of the deed.
So long as the requirements outlined above are complied with, parties to a deed may execute that deed in any manner they contemplate, including by signing (i) on the complete deed, or (ii) on the signature page (whether or not the deed is in final form) which is physically or electronically attached.
Deeds may be transmitted and signed electronically
Deeds may be transmitted electronically and executed using an electronic signature (so long as there is compliance with the requirements outlined above).
Powers of Attorney may be executed in accordance with the PEDDA
Powers of Attorney may also be executed in accordance with the PEDDA and are no longer required to be executed under seal.
Companies are no longer mandated to have a common seal
It is no longer a mandatory requirement for Bahamian companies to have a common seal. They may opt to do so if they wish. Despite the removal of the requirement for the affixing of a seal to deeds, we recommend that companies continue to retain a common seal so that this can be used to authenticate corporate documents (e.g. certified copies of corporate documents) when required.
For more information, please contact a member of our firm’s Private Client and Wealth Management Practice Group.