Under Section 123 of the Corporations Act 2001 (Cth) (the Act), a company may have a company seal (or common seal) to execute documents. The common seal is, in its physical manifestation, a rubber stamp carrying the words ‘Common Seal’ and the name and business number of the association or company.

The common company seal is, in legal terms, the equivalent of the signature of an ordinary individual. Hence, it is important to protect and store the common seal in a secure place, as its use has a degree of legal formality.

If a company does have a common seal, it must set out the following information:

  • for a company that has its Australian Company Number (ACN) as its name – the company’s ACN, or

otherwise:

  • the company’s name, the expression “Australian Company Number” and the company’s ACN; or
  • if the last 9 digits of the company’s ABN are the same, and in the same order as the last 9 digits of its ACN, the expression “Australian Business Number” and the company’s ABN.

Use of a Common Seal

The use of the common seal should be restricted to the minimum number of cases. It is not necessary to use the common seal for all business, such as approving minutes. The Company Law Review Act 1988 (Cth) abolished the requirement that companies have a seal and also the need for deeds to be executed under seal.

Common uses of company seals include:

  • Significant contracts (i.e. not the purchase of a roll of stamps)
  • Real (landed) property transfers and land contracts
  • Loan documents, mortgages and guarantees
  • Occasions where its use is required by a third party

Whenever the common seal is used, its use must be authorised by a resolution of the board. All uses of a company seal should be recorded in a special register kept by a company’s general counsel or legal officer. The register should contain a record of the use of the common seal together with a cross reference to the management committee minute authorising its use.

Execution without a Common Seal

The Act does not prescribe how documents must be executed by companies without a seal. However, Section 127(1) of the Act provides that a company may execute a document without using a common seal if the document is signed by:

  • two directors of the company;
  • a director and secretary of the company; and
  • for a proprietary company that has a sole director who is also the sole company secretary – that director.

Conclusion

LegalVision can assist you with any questions about your company or its common seal, including drafting clauses in your company’s constitution. Please call our office on 1300 544 755 and our Client Care team will happily provide you with an obligation-free consultation and a fixed-fee quote.

Lachlan McKnight

Ask Lachlan a Question

If you would like further information on any of the topics mentioned in this article, please get in touch using the form on this page.