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.
Izaac is a paralegal while he completes his Bachelor of Laws, Bachelor of Business at UTS.
Phil is a director at OpenLegal. He has over 16 years experience working in private practice and in-house counsel in Sydney and London, giving him expertise in employment law, IP, finance, leases, dispute resolution, insurance and contracts.
