What Is A Common Seal?

Articles > Small Business

What Is A Common Seal?

July 2, 2021         Izaak Haupt

A common seal is a signature personalised to the company which can be used to carry out documents. A common seal is a stamp with the words ‘common seal’ on it and other information including:

  • The company’s name
  • The words ‘Australian Company Number’ or (ACN)
  • The ACN number
  • The words ‘Australian Business Number’
  • The company’s ABN number

A company may have a duplicate common seal displaying the words “duplicate seal”, “share seal” or “certificate seal”. It is important to protect the company’s common seal in a secure place.

When Should A Company Use A Common Seal?

Companies that were established before 1988 require a common seal unless the company’s constitution has been updated since 1988. Many companies choose to use a common seal. One of the benefits is that a common seal provides a lot more legitimacy to documents. An Australian company with several overseas clients may carry out documents with a common seal to prove validity and show legality. It is not necessary to use a common seal for every day-to-day business operation as it needs to be signed and passed by a board resolution. A common seal can be necessary when:

  • Large contracts for significant purchases
  • Land contracts
  • Property transfers
  • Mortgages and loan documents

It is important to note that a register should be kept of the records of use by a legal officer or general counsel of the company. 

Can A Company Use A Common Seal Without Executing A Document?

Yes, but the document must be signed by:

  • At least two directors
  • A secretary of the company
  • A sole director who is also a sole company secretary of a proprietary company

Final points

A common seal is a company signature used to execute documents. A company does not need a common seal but if they do and want to implement it, it must be signed by the board of directors. Companies that were established before 1988 require a common seal unless the company’s constitution has been updated. It should be used cautiously and records must be kept by a legal officer or general counsel in a register. 

About Izaak Haupt

Izaac is a paralegal while he completes his Bachelor of Laws, Bachelor of Business at UTS.