What are the Company powers outlined in the corporations Act 2001 and how they are exercised?

According to subsection 124(1) of the Corporation Act 2001, a company has a legal capacity and powers of an individual as well as of a body corporate which includes power to:

a)   Issue and cancel shares

b)   Issue debentures (also issue irredeemable debentures)

c)    Grant options over unissued shares in the company

d)   Distribute any of the company’s property among its members

e)   Grant a security interest in uncalled capital

f)     Grant a circulating security interest over the company’s property

g)    Arrange for the company to be registered or recognised as a body corporate in any place outside this jurisdiction.

h)   Do anything it is authorised to do by any other law (including the law of a foreign country)

(A company limited by guarantee does not have the power to issue shares)

However, subsection 124(3) clearly states, for the avoidance of doubt, that powers conferred to a company does not authorised it to do an act that is prohibited by law of a State or Territory or give a company right that a law of State or Territory denies to the Company.

Section 125 of the Corporation Act 2001 states that a company constitution may limit powers and set out objectives; however, exercise of power or an act of the company is not invalid merely because it is contrary to or beyond any restriction or objects in the company constitution.

Corporation Act 2001 section 126 allows individual acting with the company’s express or implied authority and on behalf of the company to exercise its power to make, vary, ratify or discharge a contract.  The power may be exercised without using a common seal.

When it comes to the execution of documents (including deeds) by the company itself, section 127 outlines the conditions as follows:

1.    A company may execute a document without a common seal in case it is signed by the following:

a.   2 directors of the company

b.    A director and a company secretary of the company

c.    For a proprietary company that has a sole director who is also the sole company secretary of the company – that director.

Note: If a company executes a document without a common seal in accordance with subsection 127(1), person dealing with the company may assume that a document has been duly executed by the company as per subsection 129(5). For the purposes of making the assumption, a person may also assume that anyone who signs the document and states next to their signature that they are the sole director and sole company secretary of the company occupies both offices.

2.    A company with a common seal may execute a document if the seal is fixed and is witnessed by:

a.   2 directors of the company

b.   A director and a company secretary

c.    For a proprietary company, a sole director acting as a sole company secretary – that director

Note: If a company executes a document with a common seal in accordance with subsection 127(2), person dealing with the company may assume that a document has been duly executed by the company if:

(a) the company’s common seal appears to have been fixed to the document in accordance with subsection 127(2); and

(b) the fixing of the common seal appears to have been witnessed in accordance with that subsection.

For the purposes of making the assumption, a person may also assume that anyone who witnesses the fixing of the common seal and states next to their signature that they are the sole director and sole company secretary of the company occupies both offices.

3.    Company may execute a document as a deed if the document is expressed to be executed as a deed and is executed in accordance with subsection 127(1) or (2)

4.    It is important to note that section 127 which deals with the execution of documents does not limit the ways in which a company can execute its documents (subsection 127(4)).