You must have encountered the term common seal in a business, what exactly it functions in a business and how it is different from a rubber stamp? Broadly, Common Seal is a metal stamp for stamping documents with the name of the corporation to indicate that they have been ratified officially.
We are all familiar that a company being an artificial individual cannot function on its own, therefore for achieving its actions and for arriving at various approvals, it acts through its Board of Directors. But how does a firm enter into such pacts? The reason for it is the common seal which is used as the signature of the corporation, which connects the company to all the responsibility attempted by the company. It is to be utilized in the way prescribed in the Articles of Association and the Companies Act, 2013. A sheet on which the company’s stamp is affixed and is duly approved by the legal officer of the company comes to be binding on the company.
The Common Seal should be accepted by a resolution of the Board. The Common Seal is normally accepted at the first Board meeting.
Significance of a common seal
The common seal has several aims and advantages when utilized on company documents. The main significance is that it creates documents and certificates completely authoritative and authentic. Moreover, the seal makes sure that the papers are not handily created. Thus, it averts trials of corruption that come from the short and simple imitation of the signatures of the managers. Further, the stamp is approved for use by a restricted number of workers in an institution.
Register and Custody of Common Seal
Every corporation should conserve a register comprising details of papers to which the Common Seal of the corporation has been attached and should be maintained at the registered bureau of the company.
The Common Seal should be protected at the registered department or any other office of the corporation ratified by the Board. The Common Seal should be maintained under the supervision of a director of the company or the corporate secretarial officer or any different official as enacted by the Board.
Difference between a company stamp and a rubber stamp
In short, the company seal comprises the name of the company. It generally encompasses its enrollment number as well. It is a metallic bodied seal that is utilized to emboss papers.
If it is a rubber stamp. The stamp encompasses the name, registration number, and mailing address of the company. Company seals are utilized for agreements that are compelled by law to be in jotting down under seal. An example is when the company is committing paper as a contract generally in papers associated with banking and estate marketing. Hence, the rubber stamp can be utilized to punch the registration number of the company on these stipulated documents. However, for firm papers that already have the name and registration number of the company published on them, the rubber stamp is required not to be consumed. The intention of the rubber stamp is extra for the comfort of the firm.