Cases of backdating employee stock options have drawn public and media attention.
There are some cases where this approach is not possible.For example, if a seller had sold his house in December then the seller could have taken advantage of certain tax benefits.However, he only realizes this in January and so wishes to backdate the document to December.The event did not happen during the time period required for the benefit so an attempt is being made to pretend that it did.This is a fraud on the tax authorities, a criminal offence and is likely to get the lawyer who prepared the document disciplined by his regulator and possibly also charged as a co-conspirator.Backdating is dating any document by a date earlier than the one on which the document was originally drawn up.
Under most circumstances, backdating is seen as fraudulent and illegal, although there are some situations in which backdating can be used in a legal and beneficial way, such as backdating a claim for a past period.
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.
In this situation, it may be possible to create a document after the event which recites what actually happened, and which records the key terms of the transaction.
The document should be dated when it is actually signed, but it can refer to the historic effective date of the transaction.
In this article, the author writes: “Backdating by itself is not generally, at least with respect to private agreements, illegal.