Author: Lawyer Zhang Jingxinyue, PRC-qualified Lawyer | Singapore Registered Foreign Lawyer
Note: Have you all heard or even witnessed the melodrama of law firm senior partners, clients, and "Li Guoqing" types fighting over company seals? In Chinese companies, the official seal is a symbol of power—a "god-like existence." When incorporating a Singapore company, ordering company seals is also common. However, what we more often see is the receptionist using the company chop to stamp for couriers and water delivery workers, while the formal signing of contracts with clients may not require a seal at all. What is the legal status of the Singapore company chop? This article compares the use and management of company seals in China and Singapore, so that Chinese-funded enterprises going overseas can understand and consider—should they fight over them?
01 Use and Management of Chinese Company Seals
Chinese company seals usually include the official seal, finance seal, contract seal, invoice seal, and legal representative's name seal. These seals have specific specifications and must be filed or reserved as specimen seals with the company registration authority, public security bureau, and account-opening bank. Different seals are used in different situations. Generally, even without the signature of a responsible person, the above seals may be deemed to be company acts, and the resulting legal liability is borne by the company. In practice, any slight negligence in seal management may cause disputes and losses. Seal risk control is one of the company's major legal matters.
Examples of various Chinese company seals
1. Official Seal
The official seal is the company's most powerful seal and a symbol of the legal person's authority. Except where the law provides otherwise (for example, invoices must be stamped with the invoice seal), the official seal may be used on letters, reports, official documents, contracts, letters of introduction, certificates, or other company materials issued in the name of the company. Generally, the official seal is kept by the company's founder or one of its most trusted persons, such as the chairman or general manager.
2. Finance Seal
The finance seal, also called the financial special seal, is a special seal used by an entity when handling accounting and bank settlement matters, such as stamping various bank vouchers, remittance slips, and checks. It is also used for settlements of financial transactions. The finance seal is generally kept by the enterprise's finance manager or cashier.
3. Contract Seal
When a company signs contracts externally, affixing the contract seal means that the company is represented within the scope of the execution and must comply with the rights and obligations under the contract and bear the corresponding legal liability. However, we generally advise that if the company is at an early stage or has few transactions, it need not make a separate contract seal; contracts can be signed using the official seal to reduce management risks (such as loss or unauthorized use). The contract seal may be kept by the company's legal personnel or administrative department.
4. Invoice Seal
The invoice seal is a seal made by invoice users and individuals in accordance with the rules of the tax authorities. The seal impression includes the entity's name, the words "Invoice Seal," and the tax registration number. When purchasing and issuing invoices, the invoice seal must be affixed. According to the PRC Invoice Management Measures, "invoices shall be issued truthfully in one go across all copies, in the prescribed time limit, order, and columns, and shall be affixed with the invoice seal." That is, only the invoice seal may be affixed when issuing invoices. Daily custody of the invoice seal is generally the responsibility of the invoice administrator in the finance department.
Note: Currently, some new-version invoices no longer need to be stamped with an invoice seal. According to the Announcement on Matters Concerning the Comprehensive Service Platform for VAT Invoices and Other Matters (State Taxation Administration Announcement No. 1 of 2020) issued by the State Taxation Administration in January 2020, ordinary VAT electronic invoices issued by taxpayers through the public service platform for VAT electronic invoices are invoices supervised by tax authorities. Electronic signatures are used instead of invoice seals, and their legal effect, basic purpose, and basic usage rules are the same as those of ordinary VAT invoices.
5. Legal Representative's Name Seal
This is the personal seal of the company's legal representative, abbreviated as the "legal person name seal" or "legal representative seal." It is usually used when the company opens a basic bank account, issues checks and bills of exchange, issues remittance slips, and handles other banking or capital matters, as well as when the enterprise signs contracts, authorization documents, and similar documents together with the official seal.
02 Use and Management of Singapore Company Seals
When incorporating a company in Singapore, it is common to have one company seal and two company chops.
1. Singapore Company Seal
The company seal, also called a common seal or embossed seal, is used mainly in common law jurisdictions. It is a company's formal seal and has legal effect, equivalent to the "official seal" of a Chinese company. However, many countries have now abolished the use of the company seal.
In Singapore, the company seal is the official seal used by a company to authenticate important legal documents such as share certificates and contracts.
The company seal commonly used in Singapore is a circular metal seal with a diameter of 35 mm. It bears the company name and registration number. The company seal consists of two metal pieces: one is a raised metal plate containing the details, and the other is a corresponding recessed plate. The seal is pressed onto documents to form an embossed impression.
Appearance of the company seal
Standard company seal illustration
Singapore has gradually reduced the use of the company seal. Under Section 41A of the Companies Act (CA), companies are no longer required to have a company seal. If a company considers it unnecessary to use a company seal, it may make corresponding amendments to its constitution and state this.
From 31 March 2017, under Section 41B of the Singapore Companies Act, Singapore companies and limited liability partnerships (LLPs) do not need to use a company seal on documents executed as deeds or other documents (such as share certificates). They may execute documents by the signature of authorized persons.
Authorized persons for a company include:
- the company's director and secretary; or
- two company directors; or
- a company director with the signature witnessed by a witness.
Authorized persons for a limited liability partnership include:
- two partners of the LLP; or
- one partner of the LLP (with the signature witnessed by a witness).
Therefore, even if a Singapore company currently has a company seal, documents executed as deeds, such as mortgage contracts, loan agreements, and property transfer contracts, can be executed by authorized persons. The company seal is gradually being phased out.
2. Singapore Company Chop
The company chop, also called a rubber stamp, is a circular rubber stamp with a diameter of 24 mm or 26 mm. It generally includes the company's name and registration number. The company chop is a stamp that all Singapore companies typically have, and it is used frequently in daily operations.
When dealing with certain official documents, such as government documents, utility bills, or telephone bills, the company chop may be needed. Sometimes, due to the special nature of the goods, courier companies may even ask the receptionist to use the company chop to confirm receipt of items.
Under Section 144(1A) of the Companies Act, the company's registration number must appear in a clear and legible form on all business letters, statements of account, invoices, official notices, and publications issued or signed on behalf of the company. Therefore, the company chop may be used to stamp the company registration number on these specified documents. However, for company documents that already have the company name and registration number printed on them, the company chop is not required.
In addition to the round stamp, a company may also make bar-shaped stamps (address stamps or signature stamps) according to its actual needs. However, neither round stamps nor bar-shaped stamps have legal effect. The round stamp is used to indicate that the company has confirmed a certain fact or endorsed an act as being done by the company, while the bar-shaped stamp is a form of signature.
Other circumstances where the company chop may be needed include:
- applying for grants
- applying for permits
- signing purchase orders
- lease agreements
- commercial contracts
- formal invoices
- statements of account
- bills of exchange
- promissory notes
Is the company chop important?
Although use of the company chop is optional, it is still an important item for Singapore companies because it helps enhance the company's credibility. If a company is incorporated in Singapore and its documents are stamped with the company chop, they will give a more formal and authentic impression. On the other hand, using the chop can save time and increase convenience.
03 Practical Tips
- If a contract is signed with a Chinese company and it only bears the legal representative's signature but is not stamped with the company's official seal or contract seal, the contract should generally be deemed valid unless the parties have agreed otherwise. However, lawyers recommend that when the company's official seal or contract seal is affixed, it is best to also require the legal representative's signature or the signature of a person authorized by the legal representative.
- As for the Singapore company seal and the company chop, the former has strict legal effect and its use requires a company board resolution, but the company seal is not mandatory and is gradually being phased out. The latter does not have full legal effect. Therefore, if the other party to a signed legal document has not affixed a company seal, it is advisable to require a signature from a director or authorized representative and request the corresponding board authorization letter. Of course, even if the other party affixes a company seal, it is also advisable to require a signature, which is more prudent for our cross-border investment matters (Amitabha, please forgive the editor's professional habit~).
- For more information on expanding to Singapore and company compliance matters, please contact a professional consultant at Zhongxin Faxun.
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This article is for informational reference only and does not constitute formal legal advice.
This article is general information and not legal advice. Specific matters require assessment by appropriately qualified professionals.