When incorporating a company, it is important to consider all the documents, company charters, and seals that will safeguard the major interests of the business and its owners.
Even when the main transaction in question is straightforward, this is a typical occurrence in a firm. However, it is impossible to render contracts or legal documents without a firm seal and signature.
What would a Hong Kong company need to execute contracts and paperwork? Will a regular seal be sufficient? This article gives a comprehensive insight into a Hong Kong Company Seal. Let’s look at it and learn more.
What is a Hong Kong Company Seal?
Business papers are made official and legally binding by using a Hong Kong company seal, sometimes called the common or corporate seal. As a result, these documents serve as a business’s voice or official signature.
In 2014, the new Companies Ordinance simplified the mode of execution of documents by companies. Since then, the keeping and use of a Hong Kong company seal has become optional. Please refer to the Frequently Asked Questions on the Companies Registry’s website for more details.
Although companies are not required to have a common seal, many still choose to keep and use a Hong Kong company seal. Businesses operating in common law jurisdictions acknowledge and use the common seal. Common Law is used outside Hong Kong in countries like Australia, Canada, India, New Zealand, and the United Kingdom.
Understanding the Relationship between Common Seal and Company Chop
Business chops happen to be the official seal of the company. This is a holdover from the times of imperialists and colonialists. Since the word chop has English roots, only a few jurisdictions, Hong Kong inclusive, use it.
However, since you can use your signature in place of a corporate chop, it is not as significant as a Hong Kong company seal. Thus, both operate similarly and have equivalent legal significance.
However, remember that since businesses in China are normally registered fully with the country’s government, they become more crucial. This is why business owners that conduct more corporate business with (or are from) Mainland China consistently ask for company chops.
Although business chops may appear outdated and useless, they could be useful in legal situations as a statement of intent. Consequently, owning a Hong Kong company seal can be a great option for a locally based company.
What Do Company Chops Entail?
A firm’s rubber stamp is referred to as company chops in Hong Kong. The firm’s rubber stamp, often known as the “company chop”, is round or rectangular and comes in different ink colors: blue and red. The firm registration number and name are displayed in either Chinese or English.
The stamps (rectangular) are sometimes known as signing chops because they are engraved with the phrases “For and on behalf of above a line and the words “Authorized Signature.”
For formality’s sake, it is preferable to create a company chop for your firm if your Hong Kong firm frequently communicates with businesses in China (Mainland) because they are seen as more significant there.
The Importance of a Hong Kong Company Seal
All significant contracts or documents are stamped with a Hong Kong company seal, which denotes that the board directors of the business, higher-up executives or decision-makers, have approved them. Share certificates, employment contracts, meeting minutes, and other partner agreements all bear the same (business) seal.
Getting a Common Seal or Company Chop
You must fulfill a few requirements before you may obtain a Hong Kong company seal or corporate chop:
- Your business needs to have at least one shareholder and one director for a common seal. Also required is the registration of the firm name with the Companies Registry.
- Before you begin the application process, ensure you have all the necessary paperwork and information. Plan because it may take a few weeks to receive your Hong Kong company seal or corporate chop.
- The next step is to visit the registered office of your business and request the relevant paperwork and instructions. You must go through your business’s registered office to obtain a Hong Kong company seal or corporate chop. They’ll be able to give you the essential paperwork and guidelines.
Do All Businesses Require a Hong Kong Company Seal?
In today’s world, there is no requirement for incorporated companies in Hong Kong to have a company common seal. According to Hong Kong legislation, organizations are not required to use a Hong Kong company seal to sign papers and conduct business.
According to the updated Hong Kong Companies Ordinance, which became effective on March 3, 2014, Hong Kong firms now have the option of using or not using the common seal.
One might choose to use or not make use of a Hong Kong company seal as a business owner. A business has the option to utilize it or not. The most recent Companies Ordinance does not contain regulations that outline Hong Kong’s company seal usage procedures.
No legal requirements state that a business must utilize the seal when producing papers if it chooses to preserve and utilize the seal.
A corporation must adhere to the conditions outlined in Section 127(2) of the Hong Kong Companies Ordinance to render papers in Hong Kong using the company common seal.
A corporation must abide by the guidelines outlined in Section 127(3) of the Hong Kong Companies Ordinance if it decides not to use the common seal. This indicates that the document must be given as a good deed and executed as a good deed by the corporation!
Approving Common Seals
A company can decide whether or not to use a Hong Kong company seal because the new Ordinances made it optional. If a business decides to utilize seals, they must be metallic and etched with the business’s name. By companies’ association articles, a metallic seal must be applied.
The Hong Kong Companies Ordinance Section 127 permits enterprises to render documents using their common seal. They may execute and render papers without a Hong Kong company seal by using the following:
- The sole official signature of the director
- The seals of more than one director or just one
- The corporate secretary’s official signature
What Use does the Company Stamp Serve?
Businesses provide corporate documents like share certificates, certify documents that must be fully executed as deeds, and communicate the information required by the law using company stamps. The registration numbers must be legible and stated on various sorts of documentation in many nations. Using a letterhead, stamp, or chop to add this information.
In essence, a company chop in Hong Kong is similar to a corporate signature. Thus, it’s not always necessary. A business chop or signature is needed in Hong Kong. On the other hand, a company stamp is not typically required, and a signature is usually fine.
Due to the government’s registration of corporate entities in China (Mainland). As a result, all businesses doing business with China (Mainland) should perform a company chop. However, corporate chops are more important in mainland China.
The Legality of a Document With a Company Stamp VS Without One
A firm’s stamp had a crucial function in the past since it could certify documents and adequately support their authenticity. The stamp on a paper document indicates a company’s commitment to the contract. Today, documents actively signed by a director alone may be construed legally as an act or omission made by the person on the company’s behalf.
Therefore, company chops no longer appear as significant as they were. Additionally, they are typically not required. In other words, a document with or without stamps may be legally binding.
How We Can Help
In the past, a Hong Kong company seal had legal significance when employed by a firm as it gave corporate documents formal status and legal weight. However, using and having one legal document is no longer required.
Since the Companies Ordinance’s revisions in 2014, some businesses have completely stopped utilizing their seals. However, if you are a new business owner thinking of starting a company in Hong Kong and you are interested in creating a Hong Kong company seal for your business, you are more than welcome to do so.
Have any other queries about company incorporation or other corporate-related? We are here to help.
At SJH Global, we strive to provide personalized professional solutions for your corporate needs. We offer simple and straightforward company incorporation services to ensure that your business is up and running in no time. We also offer personalized consultations to help you with any concerns or questions you might have about starting your own company.
We understand that registering your company can be a tedious and difficult process, so we aim to simplify this for you. We will help ensure you have all the necessary documents before providing the final sign-off and registration service.
Hong Kong Company Seal - Frequently Asked Questions
The new Company Ordinances does not contain a particular line addressing this matter. A firm need not adhere to any formal regulations to remove or adopt its common seals.
The company is responsible for determining the process for effectively adopting or removing company seals. The rules and procedures of the business should be considered when doing this. There are no rules requiring a firm to notify authorities if it wants to stop using its seal, and the government has no authority over the matter.
Companies may maintain or adopt and utilize their common seals under the new Companies Ordinance. The company seal is not required by law, but there is no legislation that forbids businesses from employing the Hong Kong company seal.
No, if a corporation doesn’t want to, it is not compulsory to utilize the common seal. Even if companies still use their seals, the board executives can still decide whether to sign documents or not with the common seals.
As was already indicated, Section 127(2) of the new Companies Ordinance has particular guidelines to follow when rendering business documents with and without the Hong Kong company seal.
In Hong Kong, a common or company seal was once used to give business documents formal status and legal significance. However, since 2014, it’s no longer required to be used physically on documents.
Companies operating in common law jurisdictions like Australia, Hong Kong, India, Canada, New Zealand, and the UK recognize and use the company seal.
After the Ordinance was enacted, businesses incorporated after 3 March 2014 were exempt from having common seals. Company seals are now optional, and companies will not be penalized for not having them.