A Common Seal used to be important and compulsory for all companies in Hong Kong. However, since the new Companies Ordinance in 2014, it is no longer compulsory, and a Common Seal is now optional for all companies. There is no specific way under the new Ordinance to cancel it, a company can decide how they want to cancel the Common Seal.
The Common Seal can be substituted by the official signature of a single director, signatures from two directors or more, or the official signature by the company secretary.
Hong Kong is one of many countries that practice the Common Law. A Common Seal is used to make business documents official and legally binding within the Common Law.
Think of a Common Seal as the official signature of your company. Common Seal may also be known as a Company Seal or Corporate Seal.
In this guide, we will find out what the role of a Common Seal is in Hong Kong and whether you will need one for your business.
What is the Common Seal Used For?
The Common Seal, also known as Corporate Seal or Company Seal, makes business documents legally binding and official. It usually bears the company’s name. Once stamped on important documents, these documents are certified by the company's board of directors or decision-makers.
Difference Between a Common Seal and Company Chop
The importance of a Company Chop is not as pronounced as that of a Common Seal, as it is possible to use your signature instead of a Company Chop. Both your signature and a Company Chop work in the same way and have the same legal weight.
Nonetheless, it's important to note that Company Chops are important within Mainland China due to their customary registration with the government. This explains why entrepreneurs engaged in substantial business dealings with Mainland China (or originating from there) consistently seek the inclusion of a company chop.
💡 Tip: We have an in-depth guide discussing the key differences between Common Seal and Company Chop.
Is a Common Seal Mandatory for All Companies in Hong Kong?
In short, it is not a must-have for all companies incorporated in Hong Kong. In 2014, the new Hong Kong Companies Ordinance did not require all companies to have a Common Seal.
In the previous Ordinance, all Hong Kong companies were obligated to possess a clearly inscribed Common Seal featuring the company's name. The Common Seal served various purposes, including the execution of deeds and the issuance of share certificates. However, the introduction of the New Ordinance in 2014 brought an end to this mandate, granting companies to use the common seal at their discretion. Its usage is no longer compulsory, and companies can choose whether or not to keep using it.
How do I Cancel a Common Seal?
There is no specific way to do it according to the new Company Ordinance. As per the new Company Ordinance, determining the steps for adopting or cancelling a common seal is within the company's discretion. This decision should take into account the relevant provisions outlined in its articles of incorporation, as well as the customary practices and procedures associated with the adoption or cancellation of a common seal. As an example, the company can prepare an internal official document to state that the company is cancelling the use of the common seal.
What is Replacing the Common Seal?
Following the implementation of the new Ordinance in Hong Kong, the use of a Common Seal has become optional for businesses. A Hong Kong company is free to decide whether to utilize such seals.
When a company opts to use a Company Seal, it must ensure that the seal is metallic and clearly displays the company's name through engraving. This metallic seal needs to be applied according to the stipulations outlined in the company's Articles of Association.
Under Section 127 of the Hong Kong Companies Ordinance, businesses retain the right to authenticate a document using their Common Seal. Conversely, if they opt against using a Common Seal, they can authenticate and execute documents through the following methods:
- The official signature of a single director
- Signatures from two directors or more
- The official signature of the company secretary
A Common Seal used to be significant for businesses in Hong Kong. However, due to the changes to the Companies Ordinance in 2014, it is optional now to possess a Common Seal. As such, unless it is written on your company's Article of Association, it is better not to purchase a Common Seal.
What is a Common Seal (also known as Company Seal or Corporate Seal) in Hong Kong?
Does my company need a Common Seal?
Am I still allowed to keep my Common Seal?
How can I cancel my Common Seal?