What is a Company Seal?
A company seal, also known as a corporate seal, is a distinctive stamp or emblem that bears the official name of the company. Historically, this seal served as the legal signature of the corporation and was required for various legal documents, including share certificates and deeds. While it was a mandatory element for the authentication of certain documents until the 1980s, modern businesses increasingly rely on signatures and electronic authentications.
Key Features of a Company Seal
- Engraved Name: The primary feature of the company seal is the engravement of the firm’s name in a clearly readable format.
- Usage: Traditionally used to authenticate share certificates, important documents, and to affix to binding contracts.
- Legal Binding: Up until the 1980s, certain types of contracts were not legally binding unless affixed with the corporate seal.
- Modern Alternatives: Nowadays, electronic seals and signatures are frequently used for document authentication, reducing dependency on the physical seal.
Examples
- Share Certificates: A corporation issues shares to its shareholders, and the certificate bears the official company seal to validate ownership.
- Property Deeds: Real estate transactions involving the company might include the seal as part of the deed documentation.
- Board Resolutions: Decisions made by the board of directors often require authentication by affixing the company seal to the resolution document.
Frequently Asked Questions
What exactly is a company seal used for?
A company seal is used for authenticating official company documents, share certificates, and certain contracts, signifying that they have been executed on behalf of the corporation.
Is a company seal mandatory for all companies?
It depends on the jurisdiction and the types of documents. While historically mandated, many modern businesses and jurisdictions accept signatures and electronic authentications in place of a physical seal.
How has the use of company seals changed over time?
With the evolution of digital technology, the need for physical company seals has decreased. Electronic signatures and seals are now commonly used and accepted for document authentication.
Can anyone in the company use the seal?
Typically, only authorized personnel such as corporate officers or designated individuals have the authority to use the company seal.
How do you create a company seal?
A company seal is usually created by specialized firms that manufacture corporate supplies. The seal can be customized to include the specific details and requirements of the company.
Related Terms
- Authentication: Verifying the authenticity or originality of a document or signature.
- Share Certificate: A physical document that certifies ownership of a specific number of shares in a corporation.
- Contract: A legally binding agreement between two or more parties.
- Electronic Signature: Digital counterpart to a handwritten signature used to sign documents electronically.
Online References
- Corporate Seal Definition - Investopedia
- Role of Corporate Seal - Inc.com
- Electronic Signatures vs. Corporate Seals - Eversign Blog
Suggested Books for Further Studies
- “The Essential Handbook for Business Writing: Communication Excellence in English, the Language of Business Worldwide” by G. L. Brumfiel
- “Corporate Governance: Principles, Policies, and Practices” by Bob Tricker
- “Business Law: Text and Cases” by Kenneth W. Clarkson, Roger LeRoy Miller, Frank B. Cross
Accounting Basics: “Company Seal” Fundamentals Quiz
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