Learn Common Seal Hong Kong Practice

Learn Common Seal Hong Kong Practice

What is a Common Seal and Should I Have One For My Business?

A business document, a seal and a company stamp are there to safeguard a business’s interests and those of a business owner for a lifetime of a business.

The absence, however, of the company seal and signature creates the inability to legalize legal documents and contracts. Very often a salesperson has to deal with this situation and this is even when there is a simple transaction.

Hence, which entities you would demand to render Hong Kong contracts and documents? Would a strong common seal be enough? Let’s find out!

What is a Common Seal Hong Kong?

In Hong Kong, a company common seal (also called the corporate seal or a seal of the company) is used for authentication and legalization of documents. This kind of documents are the official voice or entity that represents the business.

The common seal refers to and is employed by the businesses operating within the Common law Jurisdiction. Along with Hong Kong, Common Law is also the main legal system that is used in Canada, Australia, New Zealand, India and the UK.

Company Chop vs Common Seal Hong Kong

The common seal is the corporate seal or the company’s rubber stamp. This is the reason for them to take part in the colonialist and the imperialist era. Chop, which is an Indian English word, is limited to certain regions – Hong Kong is certainly one of them.

But a chop of a company will not be as essential as a common seal as you can substitute your own signature for the company seal. Therefore, both of them, too, function in the same fashion, and possess the same legal power.

Nevertheless, you should know that in Mainland China it is the registration with the government that is more significant and hence, company chops become more important. This is why entrepreneurs who are more connected to business with Mainland China (or who are from the Mainland) always ask for a company chop in order to seal their deals.

May it look like the corporate seals are no longer important and useless for any kind of business relationship but they may be used as a proof of company`s intention in legal matters. Then, if you are sales-minded, it may be a perfect fit for your business in Hong Kong.

How the common seal is used?

The seal of a Hong Kong company is used to stamp key documents or contracts and it shows that they are certified by the board of directors (or sole director), decision makers or top management executives.

The seal (emblem of the organization) is used on documents such as share certificates, employee contracts, minutes of the (organizational) meeting, and agreements with various of its partners.

Is every company in Hong Kong obliged to use a common seal?

Hong Kong companies are no longer required to use seal or stamp for the documents unless the law requires so.

Under the Hong Kong law, Hong Kong companies are granted the exemption from using the seal for signing agreements and conducting business. The new Hong Kong Companies Ordinance, effective from 3 March 2014, provides the companies, located in Hong Kong, with the option of either using their common seals or not.

On the one hand, it may be beneficial to use it, and on the other hand, not every company needs it. If not used, the contract may be terminated. Unfortunately, there are no provisions in the Companies Ordinance that stipulate the much-needed procedures to be followed while dealing with the company seal in Hong Kong.

A company could choose to keep and use seals on its documents without any compulsory requirements to indicate that the seal was used.

If a company wan to prepare documents with the use of the company common seal, these documents should be made in accordance to the requirements set out in the Section 127(2) of the Companies Ordinance.

If company decides not to use the common seal, it must observe the provisions given in section 127(3) under Companies Ordinance. This also means that the document should be delivered as a deed and the company has to make sure that it is executed as a deed.

How to Authorize Common Seals

Under the current Hong Kong rules corporate seals are no longer compulsory, so a business is free to choose if they wish to use it.

As for the company chose to employ a seal, it should be a metallic one and should be inscribed legibly with the company name. The seal on the metal, has being, to be done in accordance with the Articles of Association of the Limited Company.

By law Section 127 (the Hong Kong Companies Ordinance), businesses are endowed with the authority to render a document under their common seal. If they choose not to utilize the company seal, they can render and execute the documents with: 

  • The authorized signature of only one of the directors is needed
  • Two directors or more should sign the documents
  • An official signature of the company secretary.

The Application Process

Having decided on the seal to be designed, the team can then proceed to the next step. The time-frame for the application process stands at approximately five business days, and it could be delivered to your company office.

The Application Cost

A corporate seal is HK$400, and a set of stickers for common seals is HK$100 for ten pieces. A business might also be required to pay HK$50 for local mediator fees which are inevitable. Nevertheless, it can still be possible for you to get these things without going far.

How can a company cancel its corporate seal if deemed unnecessary?

The Companies Ordinance (CO) enacted recently does not give any specific directions on this problem. The company has no obligation to provide or prove any procedural rules that are under the common seal.

The procedure to be followed for the adoption of company seal or cancellation of the same is to be decided by a company.

This should be done while taking due care of the organization’s regulations and procedures. The authorities have nothing to do with it as there is no law which makes it mandatory for a company to notify authorities if it does not wish to continue using their seal.

Can companies retain their common seals with the new CO?

Under the Companies Ordinance of the new system, companies are free to retain or adopt and use their former seals. There is no act that requires the corporate seal by law, whereas there is no act also that can be used against the company’s common seal.

Does retaining the common seal imply the necessity to execute documents under it?

The answer is no, it is not necessary for a business to use the company’s common seal for signing if it does not want to. This is so whether the business retains or not the common seal. The directors can decide on the issue of signing and/or the rendering of documents in the name of the company.

Whereas this is so, the regulations in Section 127 of the new Companies ordinance are the one that has guide for the required disclosure. Thus, rules regarding the use of a seal in documents rendering and the execution of documents without the usual seal are also laid down.

How Can FastLane Help You?

It had become imperative for making business documents official and legally authentic ever before. A local company in Hong Kong can get authorized to have a common seal and if you opt-in to have one, FastLane Group can help you with our company secretary service to assist you. Our experienced professionals will handle the whole process of incorporation from the beginning till the end. 

Want to learn more details? Contact us to chat with our experts!