If you’re a company director in Australia, you’ll often see contracts asking you to sign “in accordance with section 127 of the Corporations Act.” It sounds technical, but getting this right is one of the simplest ways to avoid disputes and give your counterparties confidence that your company is properly bound.
In this guide, we’ll unpack what section 127 says, who can sign, how electronic execution works, what happens if you don’t use section 127, and practical steps to keep your execution processes clean and compliant.
The goal: help you sign company documents the right way, with less friction and more certainty.
What Is Section 127 Of The Corporations Act?
Section 127 of the Corporations Act 2001 (Cth) sets out a “safe harbour” method for how an Australian company can validly execute (sign) documents. If you follow section 127, the law says the document is taken to be properly executed by the company.
In plain English, it’s a legally recognised shortcut. You don’t need to prove behind-the-scenes authority each time. If the right company officers sign in the right way, everyone can rely on it.
The basic rule
- Two directors; or
- One director and one company secretary; or
- For a proprietary company with a sole director (with or without a secretary) - that sole director
If a document is signed by one of the combinations above, the company is taken to have executed it properly. You don’t need a company seal (most companies no longer use one).
Why this matters
When you execute under section 127:
- Your counterparty can assume the document is binding on the company (which speeds up deals).
- You reduce arguments later about whether the signers had authority.
- You benefit from the statutory assumptions third parties can make under section 129 (for example, that officers are properly appointed).
For a deeper dive into the mechanics, many businesses keep a short internal guide alongside their Company Constitution so directors know exactly how to sign under section 127 every time.
Who Can Sign Under Section 127 (And What Changed)?
The heart of section 127 is about who can sign for the company.
The current position (important update)
For proprietary companies, a sole director can now sign alone under section 127 even if they are not also the company secretary. This change has been made permanent. You do not need to appoint yourself as secretary just to sign - the signature of the sole director is enough.
Two officers still works too
For companies with more than one officer, you can still execute with two directors, or a director and a secretary. Make sure you write the correct titles under the signature lines.
Do ASIC records need to show the roles for validity?
Strictly speaking, the validity of execution under section 127 does not depend on refreshing ASIC first. However, counterparties are entitled to make statutory assumptions based on ASIC records. Keeping officer details current reduces the risk of delays or unnecessary questions about authority.
A practical signature block
Most contracts include an execution clause that references section 127. For example:
Executed by in accordance with section 127 of the Corporations Act 2001 (Cth):
Director: _______________________ Signature: _______________________
Director/Secretary: ______________ Signature: _______________________
If you are a sole director, your contract may use a single signature line. If not, it’s fine to cross out the lines you don’t need and clearly indicate “Sole Director”.
Can We Sign Electronically Or In Counterparts?
Yes. The Corporations Act now expressly supports technology-neutral execution by companies. That means section 127 can be satisfied with electronic methods, provided the method:
- Identifies the person signing and their office (for example, Director), and
- Indicates the person’s intention to sign the document on behalf of the company.
Common options include reputable platforms (like DocuSign or Adobe Sign), stylus or typed signatures with appropriate authentication, or scanned “wet-ink” signatures attached to the final document.
Split execution and counterparts
It’s also acceptable to sign in counterparts or on separate copies, so long as each copy includes the entire document (not just the signature page). If your contract says it may be “signed in counterparts,” you can lean on that language as well as the statutory position. If this crops up often for you, it’s worth reviewing your processes against our guide on signed in counterpart and your broader policies on wet-ink vs electronic signatures.
What about deeds?
Companies can execute deeds electronically under section 127 without a witness. That’s a helpful change for remote teams or fast-moving deals. If you’re unsure whether a document is a deed or just a contract, our overview of what is a deed explains key differences and when to use one.
What If We Don’t Use Section 127?
Section 127 is not the only way to bind a company. You can still create binding agreements under section 126 of the Corporations Act, which allows an individual acting with the company’s authority (for example, an officer, employee or an appointed attorney) to make, vary, ratify or discharge a contract for the company.
Section 126 vs section 127 (quick comparison)
- Section 127: Prescribes who must sign. If you follow it, the company is taken to have executed the document. Counterparties can rely on statutory assumptions without investigating internal authority.
- Section 126: Focuses on authority. An agent with actual or implied authority can bind the company even if the document isn’t signed under section 127. This is common for day-to-day contracts.
One important clarification: a person signing under a power of attorney is not “signing under section 127”; they’re signing under section 126 using the authority granted by the company. If your business uses attorneys or delegates for execution, it’s helpful to train your teams and counterparties on this difference and refer them to an accessible explainer on section 126.
Risks if you get it wrong
- Counterparties may question whether the signers had authority, slowing down completion.
- If there’s a dispute, you may need to prove authority with extra evidence (board minutes, delegations, or emails) that could have been avoided by using section 127.
- Some banks, landlords and government bodies insist on a section 127 execution clause for major documents; not following it can mean re-signing later.
Best practice: use section 127 for significant contracts and deeds, and use section 126 (with clear delegations) for operational agreements within agreed limits.
Practical Steps To Get Execution Right
Here’s a simple, repeatable checklist you can use across your business.
1) Choose your execution method early
Decide whether this document will be signed under section 127 (officer execution) or section 126 (authorised agent). If it’s important or high value, section 127 is usually the cleanest path.
2) Use the right signature block
Ensure the contract includes a section 127 execution clause for the company. Keep variants ready for two officers and for a sole director scenario. If a counterparty provides the document, check that the title beneath each line (Director, Secretary, Sole Director) matches your company’s situation.
3) Confirm officer details
Make sure you know who your current directors and secretary are. While a section 127 signature is not invalid just because ASIC isn’t updated yet, keeping details current avoids questions and supports the statutory assumptions counterparties can rely on. Many teams store this alongside board approvals and a current Director’s Resolution template.
4) Set up sensible delegations for section 126
Document internal limits for who can sign and up to what value under section 126 (for example, standard supplier agreements up to a threshold). If you give someone authority to sign routine contracts, explain when to escalate to officer execution.
5) Make electronic execution your default (where appropriate)
Adopt an e-signature platform with identity and audit features. Train directors on how to apply titles and sign in the right capacity. Keep a short internal guide and a master contact list for the sign-off sequence, especially if you often sign in counterparts. If you anticipate questions, share your standard process and point to your policy on electronic signatures.
6) Keep a clean paper trail
- Save the fully executed version (all pages, not just the signature page).
- Store the audit trail if you signed electronically.
- File any supporting board approvals or authority documents with the final contract.
7) Align execution with your governance
Your internal governance should say who can sign, when approvals are needed and how you record decisions. Keep this aligned with your Company Constitution and any shareholders arrangements. If multiple founders are involved, clearly separating management decision-making from signing authority in a Shareholders Agreement prevents confusion later.
8) Be clear on deeds
If the document needs to be a deed (for example, certain releases or documents with extended limitation periods), confirm that the execution clause is set up for a deed and that you’re using section 127 officer execution. If a counterparty proposes a bespoke deed process, check it against your policies and your understanding of what a deed is.
9) Train your team to spot the difference
Teach staff to recognise when a contract requires officer execution (section 127) and when their delegated authority (section 126) is enough. A one-page flowchart and a list of FAQs goes a long way. For longer explainers your team can reference, it helps to keep an internal link to your policy and a public explainer on signing under section 127.
Common pitfalls to avoid
- Using the wrong titles under the signature lines (for example, writing “Director/Secretary” under a person who is a Director only).
- Assuming a power of attorney means you are “signing under section 127” (an attorney acts under section 126 authority).
- Signing only a signature page without the full document attached (especially risky with counterparts).
- Treating a deed like a simple agreement without checking how the company will execute it.
Key Takeaways
- Section 127 is a safe, simple way to bind your company - use two officers, or a sole director for a proprietary company, and you’re covered.
- Sole directors can sign alone under section 127 even if they’re not also the company secretary - that change is now permanent.
- Electronic execution and counterparts are supported, including for deeds, provided your method identifies the signer and shows their intention to sign.
- Section 126 still lets authorised agents or attorneys bind the company, but major documents are cleaner and faster when executed under section 127.
- Keep processes tight: the right execution clause, correct titles, updated officer records, and a clear filing trail for your signed documents.
If you’d like a consultation on signing documents under section 127 of the Corporations Act, contact us on 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
