Such relation back or forward contravenes no principle of law and is determined by the intent of the parties as deduced from the instrument itself.” As a practical matter, the proper date to put on an agreement is something that corporate counsel is likely to have to make a judgment call on quite often.This is because documents take time to draft, negotiate and execute.However in practice, for both good reasons and bad, backdating of documents does occur.The risks of backdating (or misdating) documents accidentally is multiplied in modern commercial transactions by the practice of getting all the documents signed before “completion” and then rushing around dating them afterwards.Different considerations may apply from accounting and tax perspectives, and those aspects should be taken into account too.What you can’t do Clearly, you can’t backdate a document so that is appears to have been signed on, say, 31 December, when in fact it was signed on 15 June.Sometimes a group of companies which has reorganised itself will want to backdate some of those changes, perhaps to backdate an intra-group transfer of business so that it coincides with the previous year end.
Legally speaking, this is something that you should not do – or more accurately, there will only ever rarely be occasions when this is appropriate to do.
This would be fraud, and would be likely to expose those involved to a number of different criminal offences.
Documenting what happened in the past What you can do is document a transaction which has actually happened in the past which had not been formalised.
For example, one group company may have lent money to another group company without documenting the arrangements in a written loan agreement.
In this case the fact that the transaction did happen is a matter of record, and the relevant records may include accounting entries as well as entries on bank statements.
Similar situations may arise in relation to intra-group supplies of goods of services, or transfers of a business (where the associated transfer of employees may also be a matter of record).