In the sphere of companies’ legislation and corporate governance in particular, common seal is known for centuries. In the present world with the latest technology, the internet having digital signatures. However, the common seal still plays a huge part in companies all around the world. This blog post will help you to know the analysis of why your company needs the common seal and which cases require its application.
What is Common Seal?
A common seal also referred to as a company seal is an official rubber stamp. It is used to indicate that the document is executed in the name of the company. It usually consists of company’s name, registration number as well as the company’s logo, which makes an identification number for agreeably official papers.
Why Your Company Needs a Common Seal?
Legal Authentication
Your company requires it where the document needs to be validated. It confirms the legitimacy of the document through certification by the company’s board of directors. It also serves as a security to forgery and unauthorized business transactions.
Regulatory Compliance
When it comes to contracts in many jurisdictions, the common seal ushers in legality of some documents. This ranges from deeds, share certificates, and official contracts among others. It is advisable for you as an organization to ensure that you have a common seal to avoid violating set laws.
Corporate Identity
It adds to the professional appearance of a company since it shows the public that your company is legitimate. It can convey an image of stability and conservativeness. And, that is very important when it comes to establishing a credibility among the clients, investors or the partners.
Evidence of Authority
It also eliminates the problem of having to prove that the particular document has been executed by the right branch of the firm. This is especially valuable in court cases.
When and How to use Common Seal?
Executing Deeds
Contracts like conveyances or leases are comprised with the necessity to be sealed. This makes the particular transaction even more formal and legally binding in nature.
Issuing Share Certificates
Current instruments of share that is the certificates of the company should be under the common seal. This helps in ensuring that that the certificates are official recognition by the company in question.
Signing Contracts
Although not always required, it is useful to use common seals on crucial agreements. The reason is that it increases the certainty of the other party that the attached document is authentic.
Corporate Resolutions
An integral component of a board resolution is applying the common seals to papers that’s especially crucial for important decisions. This formalizes the decision and provides clear evidence of board approval.
International Transactions
Traditionally in international operations particularly where parties deal with countries whose operations are largely formalized through paper work, it is vital in attesting documents.
Fastlane HR’s Suggestion on Common Seal
Nevertheless, the common seal is still a significant means of activity throughout the variety of companies and organizations. It has a legal backing, offers a compliance platform and replicates organizational identification. Last but not least, it offers evidential support for authority. Understanding when and why the company should use common seals will ensure that the company is able to maintain its professional outlook and implement the best practices in terms of corporate management.
Make sure your company has at least one common seal and be aware of the most vital cases of its necessity. In doing so, you will achieve the legislative and regulatory compliance of your business, as well as increase the overall reliability and trust of the business world.
For further information, you can contact Fastlane HR and book a consultation.