Deed of Accession
- Roger Pay
- Aug 15
- 7 min read
Deed of Accession Explained
A Deed of Accession, also known as a Deed of Adherence, is a legal document used to add a new party to an existing agreement. It is a streamlined way of ensuring that new members, such as shareholders, partners, or unitholders, become bound by the terms and conditions of a pre-existing contract without the need to redraft the entire agreement.
Purpose and Common Uses
The primary purpose of a Deed of Accession is to ensure continuity and consistency in legal agreements as a business or organization evolves. It is most commonly used in the context of:
Shareholders' Agreements: When a company issues new shares to an investor or a new founder joins, a Deed of Accession is used to bind the new shareholder to the existing shareholders' agreement. This is crucial because a shareholders' agreement is a separate contract that doesn't automatically apply to new shareholders, unlike a company's constitution.
Partnership Agreements: When a new partner joins a partnership.
Unit Trust Deeds: When a new unitholder or trustee is added to a unit trust.
How it Works
A typical Deed of Accession works as a "shortcut" document. Instead of all original parties and the new party signing a brand-new agreement, the new party signs the Deed of Accession and, by doing so, agrees to be bound by all the terms of the original agreement as if they were an original signatory.
The deed will typically:
Reference the existing agreement it is acceding to (e.g., the Shareholders' Agreement).
Name the new party joining.
Clearly state that the new party agrees to be bound by all the terms of the original agreement.
Key Benefits
Using a Deed of Accession offers several advantages:
Efficiency: It saves significant time and money by avoiding the need to draft and negotiate a new, comprehensive agreement every time a new party joins.
Enforceability: Deeds are legally enforceable without the need for "consideration" (something of value exchanged between parties), which is a requirement for many other types of contracts. This makes them a robust legal instrument.
Consistency: It ensures that all parties, both old and new, are subject to the same set of rules, rights, and obligations, reducing the risk of confusion or legal disputes.
Protection: It protects the existing parties by ensuring that new members are bound to key provisions like confidentiality, voting rights, share transfer restrictions, and dispute resolution processes. It also gives the new party the right to enforce the agreement against the existing parties.
A hypothetical and simplified example to illustrate what the language and structure of such a document would look like:
Simplified, Hypothetical Example of a Deed of Accession
DEED OF ACCESSION
DATED: 15 August 2025
PARTIES:
(1) ARLO INVESTMENTS PTE LTD (Company Registration No. 202012345Z) of 10 Collyer Quay, #10-01, Singapore 049315 (the "Company"); and
(2) CHLOE TAN (NRIC No. S1234567A) of 25 Orchard Boulevard, #05-10, Singapore 238865 (the "New Shareholder").
RECITALS:
A. The Company and its existing shareholders (collectively, the "Original Parties") are parties to a Shareholders' Agreement dated 1 January 2023 (the "Shareholders' Agreement").
B. Pursuant to the Shareholders' Agreement, the Company has agreed to issue 50,000 new ordinary shares (the "New Shares") to the New Shareholder.
C. Clause 15.2 of the Shareholders' Agreement requires any person to whom shares are issued by the Company to execute and deliver a deed of accession in the form of this Deed, agreeing to be bound by the terms of the Shareholders' Agreement.
NOW, THIS DEED WITNESSETH AS FOLLOWS:
1. Definitions All capitalized terms used in this Deed have the same meaning as defined in the Shareholders' Agreement, unless expressly stated otherwise.
2. Accession to Shareholders' Agreement The New Shareholder hereby irrevocably and unconditionally agrees to be bound by and to adhere to all the terms, conditions, duties, and obligations contained in the Shareholders' Agreement as if the New Shareholder were an original party to that agreement.
3. Rights and Benefits The New Shareholder shall be entitled to all the rights and benefits of a Shareholder under the Shareholders' Agreement from the date of this Deed.
4. Representations and Warranties The New Shareholder represents and warrants to the Company that:
(a) The New Shareholder has received a copy of and has read and understood the Shareholders' Agreement;
(b) The New Shareholder has the legal capacity and power to enter into this Deed.
5. Governing Law and Jurisdiction This Deed shall be governed by and construed in accordance with the laws of Singapore. The parties submit to the exclusive jurisdiction of the courts of Singapore.
IN WITNESS WHEREOF this Deed has been executed and delivered on the date first written above.
EXECUTED AS A DEED BY
(For the Company)
Signature: ______________________
Name: [Name of Authorised Signatory]
Title: Director
EXECUTED AS A DEED BY
(For the New Shareholder)
Signature: ______________________
Name: CHLOE TAN
NRIC: S1234567A
NOTE: This is a simplified example. A real Deed of Accession would be more detailed and contain additional clauses regarding notices, counterparts, and specific warranties. Legal formalities for execution as a deed vary by jurisdiction and should be followed precisely.
Bestar Professional Fees
In Singapore, for a routine and straightforward matter like drafting a Deed of Accession, Bestar offers a fixed-fee arrangement to provide cost certainty for clients.
Here is a fee structure that is typical for Bestar in Singapore:
Professional Fees
Fixed Fee for a Standard Deed of Accession: S$1,500 - S$2,500. This fee covers:
Initial consultation to understand the context and confirm the requirements.
Drafting of the Deed of Accession, ensuring it aligns with the existing Shareholders' Agreement or other foundational document.
Reviewing the final document with the client.
Liaising with the other parties' lawyers (if applicable) for a smooth execution process.
Providing professional advice on the purpose and implications of the Deed.
The actual price within this range depends on the complexity of the matter. For instance, if the underlying agreement is complex or if there are multiple parties involved, the fee might be at the higher end.
Out-of-Pocket Expenses (Disbursements)
In addition to the professional fee, there are also disbursements, which are costs incurred on the client's behalf. These are charged separately. For a Deed of Accession, these might include:
Notarization/Witnessing Fees: If the Deed requires notarization, there will be a fee for the notary public's services.
Printing and Courier Charges: Costs for printing and delivering the documents to the parties.
Searches: If Bestar needs to conduct any legal or company searches to verify information, the cost of these searches will be passed on.
GST: Goods and Services Tax (GST) at the prevailing rate (currently 9%) is applied to both professional fees and most disbursements.
Total Cost
For a standard Deed of Accession, the total cost would typically be the fixed professional fee plus the disbursements and GST. It is important to ask Bestar for a clear, itemized quote upfront to understand all the potential costs involved.
How Bestar can Help
Engaging a professional to handle a Deed of Accession is highly recommended for several reasons. While the document's purpose is to be a straightforward shortcut, the legal context surrounding it can be complex. Bestar's expertise helps ensure the process is legally sound and protects all parties involved.
Here's a breakdown of how Bestar can help:
1. Ensuring Legal Validity and Enforceability
A Deed of Accession must be drafted and executed with precision. Bestar ensures:
Compliance with the Original Agreement: The deed must be consistent with the terms of the main agreement (e.g., the Shareholders' Agreement). Bestar will review this document to ensure the accession clause is properly followed.
Proper Execution: Bestar will guide the parties on the correct legal formalities for executing the deed, which may require specific witnessing or notarization depending on the jurisdiction. This is crucial for making the document legally enforceable.
Consideration: A deed's enforceability does not require "consideration" (something of value exchanged). Bestar will ensure the document is properly structured as a deed to avoid any issues with enforceability.
2. Tailoring the Document to Specific Needs
While a Deed of Accession is a standardized document, the details within it must be tailored to the specific situation. Bestar will:
Customize Clauses: They can draft clauses to address unique circumstances, such as specific obligations for the new party or variations on their rights
.
Address Other Documents: Bestar ensures the Deed of Accession is consistent with all other related corporate documents, such as the company's constitution, share subscription agreements, and any other relevant contracts. This prevents potential legal conflicts.
3. Mitigating Risks and Protecting Interests
For both existing and new parties, Bestar helps to protect their interests by:
Clarity and Ambiguity: Bestar uses clear, precise legal language to avoid ambiguity that could lead to disputes in the future. We ensure that the new party is unequivocally bound to all the obligations of the main agreement.
Review for the New Party: If you are the party acceding to an agreement, Bestar can review the Deed of Accession and the underlying agreement to ensure you fully understand your new rights, obligations, and any restrictions (e.g., non-compete clauses, share transfer restrictions).
Protecting Existing Parties: Bestar can protect the existing parties by ensuring the new party is bound by all key provisions, especially those related to confidentiality, dispute resolution, and corporate governance.
4. Efficient and Streamlined Process
While a Deed of Accession is inherently efficient, Bestar makes the process even smoother by:
Project Management: Bestar can manage the entire process, including liaising with other parties' lawyers, drafting the document, and arranging for its proper execution and record-keeping.
Cost and Time Savings: While there are legal fees, Bestar helps avoid the significant time and cost of litigation that could arise from a poorly drafted or improperly executed document.
In essence, Bestar adds a layer of due diligence and expertise that is invaluable for a seemingly simple transaction, ensuring the Deed of Accession serves its intended purpose without creating unforeseen legal risks.
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