First of all, we need you to know what common seal is. If you haven’t experienced incorporation in Hong Kong or other jurisdiction, you properly think “common seal” belongs to a group marine mammals with streamlined bodies and flippers-like limbs – see the world of seal. :)
No, it’s not an animal. Common Seal, usually named as the Corporate Seal and Company Seal, it’s largely employed by companies in common law jurisdictions including Hong Kong to act as a legal significance of document. Nowadays, more and more jurisdictions are going away from the use of seals, Hong Kong has just joined this trends officially.
Is Common Seal still essential for Hong Kong companies?
Common Seal is no longer the must-have item of Hong Kong companies. the amended HK companies laws (i.e. NEW Hong Kong Companies Ordinance effective on 3rd March 2014) gives flexibility to Hong Kong companies by allowing them (both existing companies or companies incorporated under the current C.O.) to keep or adopt and use their common seals, although this requirement is no longer mandatory.
Therefore, when a company keeps a common seal, it may choose to execute a document whether under its common seal or not.
When should Common Seals be used under the current C.O.?
The Common Seal can only be used (in effect) by the authority of the Directors. For example, if Share Certificate is issued, the common seal shall be affixed on the Share Certificate by Directors only. Other person who are authorized by Directors for signing agreements or company documents with common seal can still use the common seal.
Common Seal is no longer a mandatory item to be physically used on document to act as a legal significance by a Hong Kong company. If a company has its seal, only the directors and its authorized person can use the seal.
For thos who have incorporated a Hong Kong company under the amended C.O. (going to incorporate in Hong Kong), we suggest not purchasing a Common Seal anymore unless its use is wrtten on their Articles of Association.