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I'm trying to understand who has the right to issue new shares in my proprietary limited company (wherther through board or general resolution). I found the following clause in the constitution:

  • The company possesses all powers of a natural person, subject to any restrictions in the Corporations Act. The powers of the company may be exercised in any manner permitted by the Corporations Act. In particular, the company possesses the following powers:
    • the power to distribute property of the company amongst members in kind or otherwise;
    • the power to charge uncalled capital assets of the company as a security;
    • the power to grant a charge over company property, whether fixed or floating;
    • the power to issue and cancel shares, which shall include redeemable or non-redeemable preference shares, partly paid shares and bonus shares;
    • the power to grant options over shares that have not been issued; and
    • the power to issue company debentures;

It refers to 'The Company' but who is the company? The board or the shareholder?

I'm from Australia.

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The company is the company. It has its own legal personality. (That's why it "possesses all powers of a natural person, subject to any restrictions in the Corporations Act.") The company makes decisions and takes actions according to its constitution.

Speaking of companies generally, some decisions are made by the shareholders, according to some voting process or another. Some decisions may be made by the board. Some decisions may be made by the company's officers, if there are any, although in my (not very extensive) experience officers only have as much power as the board delegates to them. Officers may in turn delegate to employees, if there are any, some responsibility to make decisions and take actions for the company.

Similarly, the company's actions may be undertaken by a shareholder resolution, a resolution of the board, or by executive action of one or more officers, depending on the details of the company's constitution and any bylaws or earlier resolutions that have been enacted by the shareholders or the board.

In theory, employees answer (perhaps indirectly) to the officers, who answer to the board, which in turn answers to the shareholders. Smaller companies may lack these distinctions, or blur them, since if there are only a small number of shareholders it is far less unwieldy to require their agreement, or at least majority vote, on everything.

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    Employees also make decisions on behalf of the company – Dale M Sep 3 at 21:25
  • @DaleM good point. – phoog Sep 3 at 21:29
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The Company is the Company

Companies have their own legal personhood and they are responsible for their actions. Obviously, a company has no physical existence so it can’t act on its own - it must act through its agents, acting within their actual or ostensible authority.

Actual authority means the person(s) actually have the power under the law and the company’s rules to do whatever it is they are doing. Ostensible authority means that a third-party is allowed, by law, to assume they have the authority even if they don’t providing that its reasonable to make that assumption. For example, a third-party can assume that a single director alone can act for the company even if the company’s constitution requires 2 directors - as a third-party not privy to the constitution couldn’t know that. This isn’t a company law thing; it’s an agency law thing.

So, who are these agents and what ostensible authority do they have?

  • Shareholders have the authority to call meetings of shareholders, propose and vote on resolutions at those meetings and hire and fire directors.
  • Directors have the authority to do pretty Mech anything on behalf of the company. People who the company allows to act like directors even if the officially aren’t are called officers and have the same authority.
  • Employees have the authority to do what an employee of their position would be expected to have - the CEO has more authority than the cashier.
  • Contractors can have agency depending on the nature of their contract. For example, quasi-employee contractors have the same authority as employees while the company’s external lawyer or accountant has authority to do what lawyers and accountants do respectively.

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