Corporations Act 2001

CHAPTER 2B - BASIC FEATURES OF A COMPANY  

PART 2B.1 - COMPANY POWERS AND HOW THEY ARE EXERCISED  

SECTION 124   LEGAL CAPACITY AND POWERS OF A COMPANY  

124(1)    
A company has the legal capacity and powers of an individual both in and outside this jurisdiction. A company also has all the powers of a body corporate, including the power to:

(a)    issue and cancel shares in the company;

(b)    issue debentures (despite any rule of law or equity to the contrary, this power includes a power to issue debentures that are irredeemable, redeemable only if a contingency, however remote, occurs, or redeemable only at the end of a period, however long);

(c)    grant options over unissued shares in the company;

(d)    distribute any of the company ' s property among the members, in kind or otherwise;

(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 that it is authorised to do by any other law (including a law of a foreign country).

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

Note 1: For a company ' s power to issue bonus, partly-paid, preference and redeemable preference shares, see section 254A .

Note 2: A CCIV ' s power to issue shares is affected by sections 1230 and 1230B .

124(2)    
A company ' s legal capacity to do something is not affected by the fact that the company ' s interests are not, or would not be, served by doing it.

124(3)    
For the avoidance of doubt, this section does not:

(a)    authorise a company to do an act that is prohibited by a law of a State or Territory; or

(b)    give a company a right that a law of a State or Territory denies to the company.

124(4)    

Subsection (1) does not prevent a mutual entity that is a company limited by guarantee issuing MCIs.

SECTION 125   CONSTITUTION MAY LIMIT POWERS AND SET OUT OBJECTS  

125(1)   [ Limitations in constitution]  

If a company has a constitution, it may contain an express restriction on, or a prohibition of, the company's exercise of any of its powers. The exercise of a power by the company is not invalid merely because it is contrary to an express restriction or prohibition in the company's constitution.

125(2)   [ Company's objects]  

If a company has a constitution, it may set out the company's objects. An act of the company is not invalid merely because it is contrary to or beyond any objects in the company's constitution.

SECTION 126   AGENT EXERCISING A COMPANY ' S POWER TO MAKE CONTRACTS AND EXECUTE DOCUMENTS (INCLUDING DEEDS)  

126(1)    
A company ' s power to make, vary, ratify or discharge a contract, or execute a document (including a deed), may be exercised by an individual acting with the company ' s express or implied authority and on behalf of the company.

Note 1: If a company executes a document in this way, people will be able to rely on the assumptions in subsection 129(3) for dealings in relation to the company.

Note 2: For provisions about technology neutral signing, see Division 1 of Part 1.2AA .

126(2)    
The power may be exercised without using a common seal.

126(3)    
This section does not affect the operation of a law that requires a particular procedure to be complied with in relation to the contract or document (including a deed), other than to the extent that the law is inconsistent with this section.

126(4)    
The individual mentioned in subsection (1) need not be appointed by a deed.

126(5)    
In exercising the company ' s powers in accordance with subsection (1) , the individual may execute a document as a deed if the document is expressed to be executed as a deed.

126(6)    
In exercising the company ' s powers in accordance with subsection (1) , the individual may execute a document as a deed:

(a)    without that execution being witnessed; and

(b)    regardless of whether the document signed by the individual is in physical form or electronic form.

Note: An effect of paragraph (b) of this subsection is that, despite any common law rule, the document may be executed without the use of paper, parchment or vellum.

126(7)    
Delivery is not necessary if the individual executes a document as a deed in the exercise of the company ' s powers in accordance with subsection (1) .

126(8)    
This section does not limit the ways in which the individual may execute a document (including a deed).

Note: For example, a company ' s constitution may set out otherways in which a document (including a deed) may be executed.

SECTION 127   EXECUTION OF DOCUMENTS (INCLUDING DEEDS) BY THE COMPANY ITSELF  
Executing a document without a common seal

127(1)    
A company may execute a document without using a common seal if the document is signed by:

(a)    2 directors of the company; or

(b)    a director and a company secretary of the company; or

(c)    

for a proprietary company that has a sole director - that director, if:

(i) the director is also the sole company secretary; or

(ii) the company does not have a company secretary.

Note 1: If a company executes a document in this way, people will be able to rely on the assumptions in subsection 129(5) for dealings in relation to the company.

Note 2: The requirement to sign may be satisfied electronically: see Division 1 of Part 1.2AA (about technology neutral signing).

Note 3: Because a CCIV has no natural person directors and no company secretary, it executes documents through the directors and company secretary of its corporate director: see section 1223 .

Executing a document with a common seal

127(2)    
A company with a common seal may execute a document if the seal is fixed to the document and the fixing of the seal is witnessed by:

(a)    2 directors of the company; or

(b)    a director and a company secretary of the company; or

(c)    

for a proprietary company that has a sole director - that director, if:

(i) the director is also the sole company secretary; or

(ii) the company does not have a company secretary.

Note 1: If a company executes a document in this way, people will be able to rely on the assumptions in subsection 129(6) for dealings in relation to the company.

Note 2: Because a CCIV has no natural person directors and no company secretary, it executes documents through the directors and company secretary of its corporate director: see section 1223 .

127(2A)    

For the purposes of subsection (2) , the fixing of a common seal to a document is taken to have been witnessed by a person mentioned in paragraph (a) , (b) or (c) of that subsection if:

(a)    the person observes, by electronic means or by being physically present, the fixing of the seal; and

(b)    the person signs the document; and

(c)    a method is used to indicate that the person observed the fixing of the seal to the document.

Note: For provisions about technology neutral signing, see Division 1 of Part 1.2AA .

Executing a document as a deed

127(3)    
A 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 (1) or (2) .

Note: For provisions about technology neutral signing, see Division 1 of Part 1.2AA .

127(3A)    

A company may execute a document as a deed in accordance with subsection (1) :

(a)    without that execution being witnessed; and

(b)    regardless of whether the document signed by the director or company secretary of the company, as applicable, is in physical form or electronic form.

Note: An effect of paragraph (b) of this subsection is that, despite any common law rule, the document may be executed without the use of paper, parchment or vellum.

127(3B)    

Delivery is not necessary if a company executes a document as a deed in accordance with subsection (1) or (2) .

127(3C)    
(Repealed by No 9 of 2022, s 3, Sch 1[11] (effective 23 February 2022).)

Other ways of executing documents not limited

127(4)    
This section does not limit the ways in which a company may execute a document (including a deed).

Note: For example, a company ' s constitution may set out other ways in which a document (including a deed) may be executed.