A company seal is a stamp that corporations use to finalise contracts and execute company documents. It is the equivalent of a signature. A company seal is also referred to as a corporate seal or a common seal. In the past, the law enforced companies to use a company seal on documents. Changes to the law mean that this is no longer necessary and very few companies use a seal. This article explains: 

  • what a company seal is;
  • when a company seal is used;
  • how a company seal is used; and
  • how to execute documents without a company seal. 

What is a Company Seal?

A company seal is an ink stamp used on contracts to symbolise the company’s acceptance of the contract. This must include the business name and the Australian Company Number (ACN). A corporation can use its Australian Business Number (ABN) instead of the ACN. In this alternative, the company seal should include the company name, the expression “Australian Business Number” followed by the company’s ABN. 

If you are looking to get a company seal for your corporation, there are some online businesses which can make one for you. Alternatively, some company registration agents can provide you with one when you register your company with them. However, this will be an additional fee. The Australian Securities and Investments Commission (ASIC) does not make or issue company seals.

When is a Company Seal Used?

Australian businesses do not commonly use a company seal when they execute documents. Companies that existed before 1988 may continue to use a company seal because the law at the time required that they do so. However, this is no longer the law and therefore is not necessary. Today, whether you use a company seal to execute contracts depends on:

  • whether your company’s constitution requires the use of a seal; or 
  • the personal preference of your company’s directors. 

It is unusual for new companies to require a corporate seal or common seal.

Certain laws in other countries (particularly companies in the Asia Pacific region) still require the use of a company seal when executing documents. Therefore, some Australian companies may feel it more appropriate to use a company seal when signing contracts with overseas parties who are required to use one in their country.

How Do I Execute Documents with a Company Seal?

It is not sufficient to simply stamp the company seal onto the document. To validly execute a document by company seal, your corporation will need to stamp the seal onto the document and have it witnessed by: 

  • two directors of the company; or 
  • one director and one company secretary; or 
  • for proprietary companies, the sole director who is also the company secretary. 

Do I Need to Use a Company Seal?

You do not need to use a company seal unless your corporation was formed prior to 1988 or your constitution expresses so. Therefore, if your constitution requires that you use a company seal but you do not want to invest in one, then it may be time to change your company’s constitution. 

However, it is important for all companies to check their constitution to see if it contains any document execution requirements, as there are consequences for incorrectly executing a document. These include:

  • the contract may not be legally enforceable;
  • the parties may not be legally bound to fulfil the contract’s requirements; and
  • the parties did not intend to be legally bound.

For example, if one party refuses to fulfil their contractual obligation to you, you may rely on your contract to enforce them to do so. If the document has not been executed properly, the refusing party can argue that the contract is unenforceable.

How to Execute Documents Without a Company Seal?

As mentioned above, the company’s constitution may set out how a company should execute its documents. The Corporations Act also sets out legal methods of document execution. 

Some more commonly used execution methods instead of a company seal are:

  • the signature of directors and company secretaries;
  • the signature of an authorised agent of the company; 
  • execution process as prescribed by the constitution;
  • execution by online signing tools. 

Key Takeaways

A company seal is a stamp that corporations use to execute documents on behalf of your business. There is no legal requirement to use a company seal when executing contracts. However, if your company constitution says otherwise, you may need to use a seal. Many companies today do not use company seals. If you are using a company seal, you must ensure it contains the correct information and is witnessed correctly. 

If you are unsure about the execution requirements for your company, get in touch with LegalVision’s contract lawyers on 1300 544 755 or fill out the form on this page.

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