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Hi everybody - George Sourris, Empire Legal.

Today's topic: Signing a contract as a Company / Director in QLD.

There is always confusion around exactly who needs to execute a Form 6 or a Contract of Sale in Queensland when it comes to companies. Yes, I'm talking about PTY LTD's. Let's explore exactly what has to be done to make sure the execution is valid.  Guys, the governing body for this is the Corporations Act 2001 (Cth).

This Federal Act is the principal legislation regulating business entities, i.e. Companies in Australia.

How does a Company validly execute a document? 

When it comes to contract law, it's mission critical to ensure a Company has the power to enter into a legally binding agreement. In particular, Section 127 of the Corporations Act 2001 (Cth) explains how Companies can validly execute documents.

Basically, it's the rulebook for Companies signing legally binding agreements. In order to make Company execution valid, at least two Directors, or a Director and a Company Secretary must sign. If there's only one Director, who is also the Company Secretary, only that Director has to sign. So, when there is two or more Directors, you'll need to get the signature of two of them.

If a Company fails to comply with the requirements of Section 127, the agreement may not be legally binding. Obviously, this could have serious consequences.  

What do I do to ensure I don't have issues with companies in my contracts? 

This is such a cheap, simple solution, guys. It's called an ASIC search. It's a Company extract. It costs $10. It takes under a minute to order from start to finish. It comes right to your inbox. You can do it all off your phone. The link's in the blog where you can order an ASIC search.  

What will an ASIC search give me?

You will obtain current information about the companies that you're searching.  This includes the Company name, the Directors, the Secretary, the ACN, the ABN, the registered address, and shareholders and share structure.

HOT TIP -  if you are given an ASIC search or Company extract by your client, check it's not old.

We only want current, up to date ASIC searches. This is because the Directors could have changed since that search was ordered. 

So what do I do once I have the search?

Simply, you're looking to check how many Directors the Company has,  and who they are and make sure that corresponds to what is going on the legal document - i.e, the Form 6, contract of sale, etc. Make sure you validly ID each Director or Secretary that is signing - take a copy of their government issued ID for your file.

You should also check that the Company is registered and that the correct ACN is noted on the contract documents. 

How to validly execute the document.

On the Form 6 or contract of sale, the Company is one entity, so no need to list it more than once - even if there are multiple signatories.

The signature block should be signed by the Director or Directors or Secretary with their signature and next to the signature, their name, designation, name of Company, and ACN should also be written. For example, I would sign, then write, George Harrison Sourris, Empire Legal PTY LTD, ACN 123456789.  Yep, it has to be your full legal name.  As Empire Legal has multiple Directors, my business partner, Abi would also need to sign in a separate signature block. 

The cool thing about signing as a Company is there's no requirement for witnessing. So, nope - Company officers, Directors and Secretaries do not need a witness. Just to note guys, this is for Title office documents for example - where  the witness block isn't required. There's no harm if you get a witness, but it's not required.

What about Trusts or Trustees? 

A Trust itself is not a legal entity that can hold property. So there needs to be a PTY LTD Company that is the trustee for that Trust. Although note that individuals can also be trustees, it's important to check the trust deed and get this right. If you're unsure, talk to your accountant.

The Trustee/s of the Trust will all have a Director or Directors. They're the people you need to find to validly execute the legal documents. So the same as what we've already unpacked above. Note - the solicitors in the transaction will want a copy of the Trust so it's never a bad idea to flag the trustee to have the original or a certified copy.

Why is it important to validly sign as a Company? 

If a contract is NOT validly signed, there can be significant complications for all parties involved. It can deem the contract not legally executed, meaning it's unenforceable. The seller, buyer, real estate agent, all get affected by this.

So take an extra minute, order the ASIC search, and check the right people are signing the contract you are preparing. If not, it could cost you a deal, as well as explaining to an upset vendor or buyer that the contract is not validly executed, not legally enforceable, and therefore the deal falls over. It will be the most expensive $10 you wish you spent, as well as an expensive lesson of stress.

There you have it, folks. You now know what to do to validly execute as a Company. Questions? Get in touch with us. We're happy to help. 

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George Sourris. Empire Legal.

If you have any questions, you can email me: george@empirelegal.com.au. 

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Thanks for reading everybody. See you on the next one.

Ladies and gentlemen, please keep in mind that all advice is general in nature and does not constitute legal advice. This is authorised by George Sourris, Empire Legal, Brisbane, Queensland, Australia.

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Note: all information is general in nature and as each matter is unique please contact our office for tailored advices: the above does not constitute legal advice.