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The Common Seal of a Company in India: Short Notes

What is a common seal of the company?

A company is an artificial person in the eyes of law - it takes birth by the operation of law and ends its life by the operation of law.

Like a natural person, it can’t sign on its own. A common seal acts as a signature of the company, an evidence that the document, on which it is put, is approved by the company.

A Common Seal means the official seal of a company, wherein the name of the company is engraved in full.

Common Seal - Optional (Not Mandatory)

With the notification of the Companies (Amendment) Act, 2015, the use of common seal has been made optional on the part of the company.





Articles / Resolutions

Although a company is not mandatorily required to have a common seal, still if the members have decided to have one, such provisions shall be included in the articles during incorporation.

If any time after the incorporation, it was decided by the board to have a common seal of the company, and if the articles do not have such provisions, then the articles can be amended by taking necessary approval of the members in general meeting.


Who does the making of a common seal?

Common Seals can generally be obtained from rubber stamp makers at minimal cost and at short notice.

There is no compulsion that the common seal should be made in metal or any other material.

When does a company approves the common seal?

Generally, after the incorporation of a company, in the first meeting of the board of directors, the Common Seal of the company is adopted, by passing a resolution in that meeting.

But since it is not mandatory to have a common seal anymore - the above condition does not apply.

However, if the articles prescribes that the company must have a common seal, then the above condition is more suitable.





Where the common seal is used?

The Common Seal of a company is generally used for the following purposes:

a. During the execution of contracts and deeds empowering any person, either generally or in respect of any specified matters, as its attorney;

b. On the share certificate or share warrants of the company;

c. Loan agreements with the bankers.

Where is the common seal affixed?

Affixing the common seal of a company is not required to be done in every page of the documents.

It is a general and acceptable practice to affix it at the last or few important pages only, just beside the signature of the company’s authorised officials.

The authorised official who affixes the common seal on the document should also sign and mention the date beside the seal.


Register of common seal

The companies are required to maintain a Register wherein the details of the Document(s), where common seal was affixed, has to entered.

Custody and place of keeping

The common seal and the register of common seal has to be kept in the safe custody of the official, who is duly authorised by the Board of Directors of a company in this regard.

The common seal and the register of common seal shall be kept at the registered office of the company.

Comments

  1. Rahul Thombre10 August, 2018

    Although with the Companies (Amendment) Act 2015, the common seal is not required to be maintained by a Company. But the companies who are already having common seal, they are bound to use it as the Amendment says "under the common seal, if any". If the company do not want to use the common seal anymore, then they have to pass a board resolution to dispense away with it.

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  2. IMPROMPTU
    If remember right, there is a SC Judgment (to searech for citation) holding to the effect that the requirement of affixing common seal, that is relatable to the ageold Victorian practice of affixing Emperor's (or QUeen's) Ring impression to authenticate ROYAL documents, is far outdated.

    Article (on the topic- left to be Updated) > (2004) 4 Comp. LJ pg 70.

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