When Is a Company Seal Used?

When is a Company Seal Used?

A company seal (or common seal as it is also known) is a company’s legal equivalent of a personal signature. Before abolishment under the Company Law Review Act 1988, companies were required to have a seal and they also had a need to execute deeds under seal. Now the Corporations Act 2001 (Cth) says that a company may use a seal to execute documents, however not as a mandatory requirement.

A company seal as a physical item is simply a rubber stamp with the words ‘Common Seal’ and the company name and business number. The physical nature of the seal means that if it finds its way to the wrong hands, it can be used as the signing authority of the company.

When to use a company seal

The use of the company seal is recommended to be restricted to important document execution. The main reason for this is that when ever the company seal is to be used, its use should be authorised by resolution of the board. For this reason, all uses of the company seal should be recorded in a register, cross referencing the minutes authorising its use. This Register is usually kept by the company legal officer.

Some example where board approval to use the company seal might be appropriate are:

  • Financial documents, such as loans, mortgages and guarantees.
  • Real estate transfers and contracts.
  • Large contracts (Involving significant financial dealings).
  • International contracts.
  • Situations that require its use by a third party.

Executing documents without a seal

The Corporations Act states that a document can be executed without using a company seal if the document is signed by either:

  • Two Company Directors;
  • A Company Director and Company Secretary; or
  • A Sole Director in a proprietary company who is also the sole Company Secretary.

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