Corporate seal: Overview, definition, and example
What is a corporate seal?
A corporate seal is an official stamp or emblem used by a corporation to authenticate documents, contracts, and agreements. It typically includes the company’s name, the state of incorporation, and the word “seal” or something similar. The seal is used to signify that the document has been approved by the corporation’s board of directors or authorized officers and is legally binding. In some jurisdictions, the corporate seal is a formal requirement for certain documents to be valid, though its use has become less common in recent years, especially in modern business practices.
The corporate seal can also be used on official documents such as deeds, charters, and certificates to ensure that the document is genuine and has been executed by the corporation in an official capacity.
Why is a corporate seal important?
A corporate seal is important because it provides a means of authenticating and formalizing corporate documents. It serves as a symbol of the company’s authority and ensures that certain documents are legally binding and recognized. Historically, the seal was used to prevent fraud, making it difficult for unauthorized individuals to alter or forge corporate documents.
While its usage has become less frequent in some jurisdictions, particularly in the context of digital transactions and modern business practices, a corporate seal still holds legal significance in many situations, particularly for documents like real estate transactions or certain government filings.
Understanding corporate seal through an example
Imagine a company enters into a contract with a supplier for the delivery of goods. The contract needs to be executed formally, and the corporate seal is applied to the document to signify that the agreement has been approved by the company’s board of directors or executives. This ensures that the contract is legally binding and authentic.
In another example, a corporation is issuing stock certificates to its shareholders. The stock certificates might be stamped with the corporate seal, signifying that the shares are officially authorized and issued by the corporation. This process helps maintain the validity and legitimacy of the ownership documentation.
An example of a corporate seal clause
Here’s how a clause about the corporate seal might appear in an agreement:
“This Agreement shall be deemed valid and binding upon the execution and affixation of the Corporate Seal of the Company, as authorized by the Board of Directors or its duly appointed officers.”
Conclusion
A corporate seal is a formal tool used by corporations to authenticate and validate documents, ensuring that they are legally binding and approved by the company. While its use has become less common in modern business practices due to the rise of digital signatures and electronic transactions, the corporate seal remains a critical symbol of authority and authenticity in many legal contexts. It is used to formalize corporate actions and can be essential for the execution of significant documents, particularly in industries that require stringent compliance with regulatory or legal standards.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.