A company may execute documents in a number of ways but it is important that the correct approach in executing documents is adopted to ensure that the document is legally binding. If a document is not executed correctly it could open up the company to an argument that the document is unenforceable.
A company may execute a document in accordance with its constitution and the provisions of the Corporations Act 2001 (Cth) (the Act).
A company’s governing documents (ie its constitution) generally set out how the company must execute documents. A company may also resolve to authorise a document to be executed by an alternatives means by way of a resolution of the company’s directors. Such alternative means may include the execution of the document on behalf of the company by an appointed agent, attorney or authorised representative. The company resolution should set out the identity of the person being appointed, the duration of said appointment and what the person authorised to do (or not do) during the duration of their appointment.
If the company is appointing an attorney, such appointment should be made in accordance with the provisions of the relevant powers of attorney legislation. In Queensland, a company would appoint a person to act as its attorney by using the Form 1 General Power of Attorney under the Powers of Attorney Act 1998 (Qld) . The attorney would set out the details of the person appointed, the terms of the appointment and when the attorneys powers come into effect. If an attorney is being used to sign land documents in Queensland, the company’s power of attorney must be registered with the Queensland Land Registry and the attorney’s execution must include the required signing clause.
The other person to a document being signed by a company by its agent, attorney or authorised representative should request proof of the authority of that person to sign the document on behalf of the company.
Section 127 of the Act sets out how a company may execute documents. A company may execute a document with or without a common seal in accordance with this section. Where a company signs a document under this section, section 129 of the Act includes a number of assumptions that third parties may rely upon where documents are executed on behalf of a company. These are:
- Pursuant to section 129(5) of the Act, a party may assume that a document has been properly executed by a company where the document has been signed by 2 directors of the Company, a director and a secretary of the company or by the sole director and said persons include their office designations.
- Pursuant to section 129(6) of the Act, a party may assume that a document has been properly executed by a company if the company’s common seal has been fixed to the document and witnessed by 2 directors of the company, a director and a secretary of the company or by the sole director.
Generally, where a company has signed a document in this manner, the execution on behalf of the company does not need to be witnessed.
If you require any assistance or advice regarding the execution of documents by your company or whether a document you have entered into with a company is unenforceable as a result of improper execution by the company, please contact our office.