As a company grows it needs to think about whether and how the board can delegate authority to management.

It is one thing to authorise bank account signatories.

But who can authorise contracts, investments, leases and property transactions?

Must every document be approved by the Board?

Do you have a contracts policy setting out the review of key risk and probity issues required before approval?

Companies need a delegation policy so that employees know their levels of authority and relevant limits.

Execution of documents

Section 126 of the Corporations Act states “A company’s power to make, vary, ratify or discharge a contract may be exercised by an individual acting with the company’s express or implied authority and on behalf of the company. The power may be exercised without using a common seal.”

Under section 127, a company may execute a document 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 who is also the sole company secretary–that director.

If the company has a common seal it must also affix the common seal.

Under section 129 a person may assume that anyone who is held out by the company to be an officer or agent of the company:
(a) has been duly appointed; and
(b) has authority to exercise the powers and perform the duties customarily exercised or performed by that kind of officer or agent of a similar company.

If directors are not always available then you should consider a corporate power of attorney authorising one or more senior managers to sign documents.