What is the Common Seal of Company?

Updated on January 27, 2026 11:33:40 AM

Common Seal of Company

In the corporate world, the common seal of a company holds significant importance. The common seal of a company serves as a tangible symbol of a company's authenticity and authority. Understanding the common seal and its usage is crucial for entrepreneurs, professionals, and individuals involved in the business realm. In this blog we will discuss the meaning, significance and use of the common seal of a company.

Table Of Content

What is a Common Seal?

The common seal, also known as a company seal or corporate seal, is an official stamp or embossing tool used to authenticate and validate company documents and transactions. 

A common seal of company typically contains the company's name, registration number, and the jurisdiction in which the company is registered. 

The common seal is usually affixed to important documents, such as deeds, share certificates, contracts, and other legal agreements, to signify the company's agreement and commitment.

Significance of the Common Seal of Company

The common seal plays a vital role in establishing the authenticity and credibility of a company's documents. It represents the company as a legal entity and ensures the integrity and validity of its transactions. 

The usage of a common seal provides a level of assurance to stakeholders, such as business partners, investors, and clients, that the documents they are dealing with are genuine and legally binding.

Why is the Common Seal Required?

A company is an artificial entity; thus, it acts through its board of directors. In the case of entering into contracts, the company uses a common seal. The common seal acts as a signature or seal of the company which binds the company for all the obligations and agreements signed under its name.

The common seal is required for a number of reasons, and these are:

• Legal Validation: The common seal gives legal validity to documents executed on behalf of the company. When it stamps agreements, contracts, and other valuable papers, it endorses the authenticity and binding force of a document in question. That helps not only the interests of the company but also makes the parties rely on the document's validity.
• Third-Party Assurance: The common seal being an instrument for building confidence and establishing a level of credibility with external parties, such as customers, clients, business associates, and even investors. The common seal on a document offers them the confidence that the document is indeed genuine and legally effective. In fact, this kind of assurance is highly needed in formal business deals and agreements.
• Legal Compliance: In most jurisdictions, the common seal is required for particular types of documents. For failing to do so, there are legal implications, and the document in question can be deemed invalid. Therefore, the companies should follow the regulations and use the common seal whenever needed to keep up legal compliance.
• Historical Practice: This requirement has a substantial historical background. The common seal was to be affixed on documents, which served physically to impart the official mark of the company. Although recent technologies may have overcome this requirement by other means, such as digital signatures that validate documents, the practice remains carried forward.
• Preserving Corporate Formality: The common seal helps to retain a degree of formality in corporate affairs. It represents that certain actions or decisions have been properly authorized and agreed upon by the company. This formality is an important aspect of transparency, accountability, and professionalism within the business environment.

Legal Implications of the Common Seal of a Company

There are many places where the use of a common seal is necessitated by the law for various documents. It is relevant to know the legal implications of using the common seal in order to comply with the proper laws and regulations.

Even though specific rules may vary depending on the country in which the company is incorporated, the common seal is usually required for various document types, such as:

• Share Certificates: The common seal is used to confirm the issuance of shares to shareholders, confirming that they are indeed owners of the company.
• Deeds and Contracts: Major agreements, such as property deeds and contracts, are normally executed with the common seal to demonstrate legal validity.
• Power of Attorney: The common seal can be used to legalize the power of attorney that is granted to a person, allowing him or her to act on behalf of the company.

Using the Common Seal Effectively

Good practices and some directives should be followed for the proper use of a common seal. Some key things to remember are as follows:

• Only Authorized People: The common seal should be placed in the custody of few individuals, usually senior officers or directors, for the purpose of controlling use and adhering to company rules.
• Secure Storage: The common seal is to be kept in a sealed and locked box at all times when not being used. This is very helpful to avoid unauthorized access and prevent its wrong usage.
• Keeping Records: A record is to be kept each time the common seal is used, including the date on which it is used, for what purpose it is used, and the details of the document carrying the seal.
• Quality of Impressions: The impression of the common seal should be clear and complete, matching the space on the document provided. It is also good to make several copies of the seal for backup purposes.

Common Seal vs. Digital Signatures

In recent years, the digital signature has gained much favor as a convenient alternative to the traditional common seal. Digital signatures employ special security methods designed to make an electronic document safe and trustworthy. Even though digital signatures are easier to use and much more efficient, many still employ a common seal, particularly in those places where this is required by law.

Conclusion

The concept of a company's common seal is important in understanding the legalities of conducting business. It is supposed to be a stamp on trust, reliability, and authenticity as well as confirmation of valuable documents and transactions.

A Common Seal which follows all the proper rules and is updated according to the various legal changes will surely enable the firm to exercise it efficiently for bettering their professional reputation while also adhering to the rulebook at the same time. For expert advice on common seal and other company law areas, contact our corporate law experts at Professional utilities.