NSW Constitution - Use of Shortened Name on Legal Documents?

Discussion in 'Commercial Law Forum' started by Director1, 29 August 2018.

  1. Director1

    Director1 Member

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    Hi there,

    I have a situation whereby a Unit Trust Deed (for which the trustee is a company) was signed by the directors of the trustee company. One of the directors was listed using a shortened name (e.g Ben instead of Benjamin, Mick instead of Michael). The director isn't one of the unit holders (so the unit holders are all listed correctly.)

    The current issue is that the bank is refusing to open a bank account for the trust citing the difference between the director's listed name in ASIC (which is the full-length name e.g. Michael) rather than the shortened name. The full-length name is also the official (e.g. driver's license) name of the director.

    The question is, does the shortened name make the trust deed (or in fact any legal documents, director's signature on company resolutions, contracts, etc.) void or legally problematic?

    For the specific case of the deed, there are 3 signatures (2 of them without issues) and the trustee company's constitution requires only 2 directors' signatures so even if the one signature is "invalid" would the deed still be valid considering there are two valid signatures on it also?

    And I am very interested in general whether other official documents would also be valid/invalid if they show the shortened name in printed form.

    For clarity, the signature doesn't have either the shortened or full-length name it's just the printed name shown above which the signature was placed.

    Perhaps as an additional "bonus" question, would the omission of middle names (when someone's legal name for example is Susan Emily Jones) e.g. Susan Jones on the document be "more acceptable" or fine whereas say Sue Jones might not be?

    Many thanks for your insights into this.
     
  2. Tim W

    Tim W Lawyer
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    As a general thing, short-form names can be OK (that's why "Preferred Name" is a thing these days)...so long as it is otherwise quite clear (and probably supported by documents) that Michael and Mick are the same person.

    But that doesn't require a bank, that is risk-managing
    identity fraud, to accept a short form name if they don't want to.

    While on the one hand, over zealous, over officious, and ignorant
    front counter staff can be a pain, on the other, you can't really blame the bank
    for being hyper-vigilant about fraud.

    Maybe make an appointment with a manager-level person in a physical branch,
    and go in and have a conversation with them.
    Don't waste your time with junior (ie powerless) front counter staff
    or with third party overseas call centres.

    And if they don't see sense, then there are lots of other banks in the marketplace.
     
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  3. Rob Legat - SBPL

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    Opening bank accounts, especially where trusts are involved, has become a daunting proposition - for which you can predominantly blame the know your customer requires under the Anti-Money Laundering and Counter-Terrorism Financing legislation. However, it is pretty much an internationally mandated level of compliance, so there's not much you can do about it.

    The bank are being somewhat overly pedantic if they are kicking up a fuss at this, however - particularly if they can verify the identities with government issued photographic ID and match signatures.

    I would suggest:

    1. Correct the error by the signee and have them initial it; or
    2. Re-execute a further copy of the trust deed and do it correctly. It must be a re-execution of the exact terms of the trust. For safety's sake, a Deed of Restatement or Deed of Confirmation should also be done.

    It's important to get these things right in the first place and the error should be brought to the attention of the person who drafted the trust deed in the first place.
     
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  4. Director1

    Director1 Member

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    Thank you both for your responses. It's much appreciated.

    I completely understand that the bank is not under any obligation to accept a document. Their rules are their rules and that's fine and understandable (in a way).

    The real question is whether the trust deed is invalid as such because of the name issue and do we have generally a bigger problem on our hands than just an overly careful bank.

    If I may seek some clarity on one other thing. Since the trust deed is 100% fine (the unit holders are all fine, the trustee company is fine, etc.) and the only issue is the name of one of the directors of the trustee company (signing off on the deed) - does a re-executing/deed of restatement need to say anything or is it simply the identical deed with the name corrected? And would this re-executed deed need to go to OSR for another stamping/duty or not? The OSR website gives no clear information about trust stamping (especially in this sort of case).

    many thanks
     
  5. Rob Legat - SBPL

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    The trust deed in my mind is not invalid, as long as the execution requirements of the Corporations Act have been complied with. These don't require the names of the signatories to a company execution be written, merely that their office designations (i.e. director) are shown. If anything, this is a case of going beyond what is required biting you on the backside from a simple error.

    Your bigger issue if you 're-create' the trust instrument is stamp duty. In Queensland there's no stamp duty on the initial declaration of trust. I understand that's quite different in NSW.

    All in all, I suggest going back to whoever assisted with the creation of the trust deed and ask them to fix it.
     
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