There are any number of reasons for transaction completions to be delayed beyond the scheduled date and many of these are understandable. For example, unexpected issues arise as a result of due diligence or negotiations stick on a contentious point. However, often completions can be delayed by a day or two because of easily avoidable administrative issues. Over this week and next we’ll be taking a look at some of the avoidable causes of last minute delays we’ve come across.
Missed transfer deadlines
Banks have deadlines for transferring cash and law firms also have their own internal deadlines. These are to give time to deal with administrative and regulatory requirements for the identification and movement of client monies. Parties on both sides should be aware of these deadlines. Account details should be circulated in advance so no-one is scrabbling for them at the last minute. On more complex transactions, a funds flow should be prepared outlining which funds should go to which account.
Missing board members
A remarkable number of transactions are delayed because members of the board or key shareholders have booked holidays on the assumption everything will be done and dusted on time and a holiday will prove a relaxing break after a stressful period. Key signatories should allow a “safety” period before booking a holiday so that when they do go they’re left in peace to enjoy it – who wants to speak to their lawyer when they’re on holiday?! If you do need to be away during a scheduled completion, ensure that everyone involved knows early on in the transaction so that, where possible, alternative signatories can be arranged. Check with your hotel that when you’re away you will have sufficient phone, email and printer/scanner access.
Document signing instructions
It seems that solicitors are getting more and more fussy about how documents are signed. Following a 2008 case known in short-hand as Mercury, signing requirements where documents are being circulated by email are much more strict than they used to be. The City of London Law Society has published detailed guidance and if your solicitor doesn’t ensure you follow this then the documents may not be validly executed. This is why, when the documents are emailed to you for signing, there may be detailed instructions about printing them out and emailing them back. Take a moment to ensure these are followed and it’ll avoid the need for everything to be recirculated, printed and signed. Other methods may have worked in the past but they’re not good enough now.
Part two of tips for avoiding completion delays will be posted next week.