Understanding Company Execution Clauses In Australia

Running a company in Australia means you’ll be signing documents all the time - supplier agreements, client contracts, loan documents, leases, deeds and more. Getting the “execution” part right isn’t just a formality. It’s how you make sure your contracts are binding, enforceable and signed by the right people.

That’s where the company execution clause comes in. It tells everyone exactly how (and by whom) your company can sign a document. When it’s drafted and used properly, it gives your business certainty and reduces the risk of disputes.

In this guide, we’ll break down what an execution clause is, how it interacts with the Corporations Act, when electronic signatures are okay, and how you can authorise others to sign for the company. We’ll also flag common mistakes and share practical steps to set your processes up the right way.

What Is A Company Execution Clause?

A company execution clause is the section of a contract or deed that sets out the method the parties will use to sign the document so it becomes legally binding. For companies, it normally specifies who must sign (for example, two directors) and whether the document can be signed electronically, in counterparts or with a company seal.

In Australia, the safest and most common method appears under the Corporations Act 2001 (Cth). If a company signs a document in the way described in section 127, the other party can rely on statutory assumptions that the document has been duly executed. In practice, that significantly reduces arguments about whether the company is bound.

A typical execution block might look like this:

Executed by  ACN [●] in accordance with section 127 of the Corporations Act 2001 (Cth):

Signature of Director: ____________________
Name of Director: ____________________

Signature of Director/Company Secretary: ____________________
Name of Director/Company Secretary: ____________________

There are many valid variations (including sole director wording, electronic execution and powers of attorney) - the right approach depends on your company’s structure and internal authority settings.

Who Can Sign For A Company (And What Section 127 Actually Says)?

Section 127 sets out several ways a company can validly execute a document. Using one of these methods gives the other party the benefit of the statutory assumptions in the Act (often referred to alongside section 129): it’s a legal shortcut that lets them treat the document as properly signed without digging into your internal decision-making.

The main section 127 methods

• Two directors of the company sign the same document.
• One director and one company secretary sign the same document.
• Sole director proprietary companies: after the 2022 reforms, a sole director of a proprietary company can sign under section 127 even if they are not also the company secretary.
• Affixing the company seal (less common these days), witnessed in the same combinations as above.

Important nuance: if you don’t use a section 127 method, that does not automatically make the contract unenforceable. Companies can still be bound in other ways (more on section 126 agency below). However, sticking to a section 127 execution clause is generally the cleanest way to avoid disputes about authority.

If your internal rules require special signing arrangements, make sure your execution clause reflects them. For example, a tailored Company Constitution or a board resolution might specify who can sign which documents and any monetary limits.

Electronic Execution, Deeds, Counterparts And Company Seals

Most businesses now sign documents electronically - and in Australia, the Corporations Act expressly permits companies to execute documents electronically, including deeds, provided certain conditions are met.

Electronic signatures

Companies can execute a document electronically if the method:

• identifies the person and indicates their intention to sign, and
• is a reliable method given the circumstances (or is proven in fact to have been used appropriately).

That can include platforms like DocuSign and Adobe Acrobat Sign, typed names accompanied by evidence of intent, or an image of a handwritten signature placed in the signature block. For an overview of how this compares to traditional signing, see our guide to electronic signatures.

Practical tips:

• Ensure the execution block itself permits e-signing.
• Keep the “audit trail” or certificate of completion generated by your e-sign tool.
• Use role-based access and multi-factor authentication for sensitive contracts.

Deeds

The reforms also allow companies to execute deeds electronically and without a witness when signing under section 127. That’s a big shift from older rules that required “wet ink” and witnessing. Be careful if an individual (not a company) needs to sign a deed - witnessing requirements may still apply under state laws for individuals.

Counterparts and split execution

It’s common for contracts to include a “counterparts” clause so each party can sign separate copies. This helps when directors are in different locations or when some parties sign electronically and others sign by hand. If you include a counterparts clause, both separate copies together make one binding agreement. For more detail on how this works in practice, see our guide to counterparts.

Company seals

Company seals are optional. You can still use one if your constitution allows for it, but most companies now sign without a seal using the section 127 methods above.

Alternatives To Section 127: Section 126, Board Authority And Powers Of Attorney

While section 127 is the gold standard for clean execution, it’s not the only way a company can be bound. The law recognises that companies act through people - directors, officers, attorneys, and other authorised representatives.

Section 126: company agents

Under section 126, a company may enter into contracts through an individual acting with the company’s express or implied authority. This could be a CEO, general counsel, or another manager authorised under a delegation policy or board resolution. If you plan to use section 126 regularly, ensure your delegations are clear, up to date and documented.

Board and internal authorisations

Board minutes or resolutions can authorise a named person to sign a specific agreement, or all agreements of a certain type or value. An up-to-date register of authorised signatories, supported by a standing board resolution, is good hygiene - especially for larger teams or where deals move quickly.

Power of attorney

A company can appoint one or more attorneys to execute documents on its behalf. This is useful if directors aren’t available, or if you want a trusted agent (like a senior manager) to sign specific classes of contracts. If someone signs under a power of attorney, make sure the attorney cites the instrument in the execution block and you retain a copy with your records.

Authority to deal with third parties and lodgements

From time to time you’ll also authorise advisers (for example, accountants or lawyers) to deal with third parties for a narrow purpose. An authority to act is different from a general power of attorney - it grants limited authority and typically won’t permit execution of contracts unless expressly stated.

Finally, remember not all external platforms treat electronic signatures the same way. Many government and registry lodgements are digital by design, but some forms still specify particular signing requirements. When in doubt, check the form’s instructions or ask us to review before you sign.

What Happens If You Get Execution Wrong (And How To Avoid It)?

If an execution clause isn’t followed, or you ignore your internal authority settings, you risk delays and disputes. The consequences vary depending on the facts, but common issues include:

• Uncertainty about whether the company is bound, which can derail financing, settlement or delivery timeframes.
• Requests for re-execution that push deadlines or increase costs.
• Allegations of lack of authority, which can become a litigation distraction.

Getting something “wrong” doesn’t automatically make a contract unenforceable. A court can still find the company is bound (for example, under section 126 agency, estoppel or ratification). But you lose the clean, statutory assumptions that come with section 127, and you may need to gather evidence about who approved what and when - which is time-consuming and risky.

Common mistakes

• Using the wrong signature combination - for example, one director signing for a company that actually has two directors (when you intended to rely on section 127).
• Out-of-date signatory lists and delegations, especially after a change in directors or senior staff.
• Forgetting to enable e-signatures in the execution clause while signing electronically.
• Assuming an internal “approval” email equals authority to execute the contract - approval and authority aren’t the same thing.
• Mistreating deeds like ordinary contracts - deeds have additional formalities even though companies can now sign them electronically.

A short, practical safeguard is to build a pre-signing checklist and have critical contracts undergo a quick contract review before execution.

Practical Steps To Set Up Robust Signing Processes

With a few targeted steps, you can make signing simple, compliant and fast.

1) Choose your primary execution pathway

Decide which methods you will use by default. Many companies prefer section 127 execution for certainty, with section 126 delegations for day-to-day lower-value agreements. Document that policy so internal teams know which path to take.

2) Keep authority clear and current

• Maintain a central register of authorised signatories (directors, secretaries, attorneys, and section 126 delegates).
• Adopt or update your Company Constitution if you want tailored signing rules that suit your operations.
• Refresh delegations and signatory registers as people change roles.

3) Standardise your execution clauses

Include standard wording for each common scenario in your templates, such as:

• Section 127 two-director or director/secretary blocks.
• Sole director proprietary company wording.
• A clear e-signature permission clause and a counterparts clause.
• Power of attorney wording when an attorney is expected to sign.

You can maintain a short internal “style guide” so staff know which block to use. If you also rely on section 126 for certain deals, include an execution block that identifies the authorised representative’s role and states that they sign for and on behalf of the company under that authority.

4) Enable e-signing (safely)

• Adopt an e-signature platform and set user permissions carefully.
• Configure templates with locked execution blocks to avoid ad hoc edits.
• Store the signed PDF and the platform’s audit certificate together.

5) Use checklists for high-value or time-critical deals

For major transactions, add a signing pack checklist: correct execution blocks, signatory names, director status confirmed, and any attorney instruments attached. This saves last-minute scrambles.

6) Prepare for deeds and “special” documents

When a document must be a deed (for example, certain releases or security documents), ensure your template uses deed-appropriate language and execution blocks that meet the formalities. If a third party insists on witnessing or a specific seal process, plan that early so it doesn’t delay the timeline.

7) Align your contracts and governance

If you have multiple founders or investors, your execution processes should dovetail with your governance documents. A well-drafted Shareholders Agreement and clear board protocols reduce confusion about who can sign what, and when board approval is required.

Key Takeaways

• A company execution clause sets out exactly how your company will sign a contract or deed so the document becomes binding and enforceable.
• Signing under section 127 gives counterparties statutory comfort that your document is duly executed; since 2022, a sole director of a proprietary company can sign under section 127 even if they are not also the secretary.
• Electronic execution is permitted for companies, including deeds, provided the method identifies the signer, shows intent and is reliable; pair this with clear counterparts wording and strong audit trails.
• Companies can also be bound under section 126 by authorised agents, by powers of attorney, and through board-approved delegations - just keep your authorisations documented and current.
• Execution missteps create delay and uncertainty, but are avoidable with standardised execution blocks, a clear authority register, smart e-signature processes and quick pre-signing checks.
• Align your execution processes with your governance documents, like your Company Constitution and Shareholders Agreement, so internal approvals and signing authority are crystal clear.

If you’d like a consultation about company execution clauses and setting up robust signing processes for your business, you can reach us on 1800 730 617 or team@sprintlaw.com.au for a free, no‑obligations chat.