Common Seal and Company Stamp in Singapore: Legal Requirements and Operational Use

1. Introduction

In Singapore, the use of company seals and stamps remains a notable element of corporate governance, even though their functional importance has evolved over time. While the Companies Act 1967 (“the Act”) provides for optional use of a common seal, corporate entities often maintain these tools for authenticity, administrative efficiency, and internal controls.

The proper management of common seals and company stamps is essential not only for legal compliance with the Act and ACRA regulations, but also for maintaining robust corporate governance standards as guided by the Code of Corporate Governance 2018. Misuse or improper control of these instruments can lead to invalid document execution, regulatory scrutiny, and reputational risks.

2. Definition and Purpose of a Common Seal

A common seal is an official device representing the company’s legal identity. Historically, it served as the primary method for executing legal documents, such as share certificates, contracts, and deeds. Affixing the seal signified that the document was issued under the authority of the company, providing formal authentication.

While modern practice permits director signatures in place of the seal, many companies continue to maintain a common seal to preserve formal authenticity and demonstrate good governance, particularly in transactions involving multiple jurisdictions.

3. Legal Framework Governing the Common Seal

The Act permits, but does not require, companies to adopt a common seal. Specifically:

• Section 41A(1): A company may have a common seal but is not required to have one.

• Section 41B(1): A company may execute a document described or expressed as a deed without affixing a common seal onto the document by signature:

(a)       on behalf of the company by a director of the company and a secretary of the company;

(b)      on behalf of the company by at least 2 directors of the company; or

(c)       on behalf of the company by a director of the company in the presence of a witness who attests the signature.

• Section 41B(2): A document mentioned in subsection (1) that is signed on behalf of the company in accordance with that subsection has the same effect as if the document were executed under the common seal of the company.

• Section 41B(3): Where a document is to be signed by a person on behalf of more than one company, the document is not considered to be signed by that person for the purposes of subsection (1) or (2) unless the person signs the document separately in each capacity.

• Section 41B(4): This section applies in the case of a document mentioned in subsection (1) that is executed by the company in the name or on behalf of another person, whether or not that person is also a company.

• Section 41C: Where any written law or rule of law requires any document to be under or executed under the common seal of a company, or provides for certain consequences if it is not, a document satisfies that written law or rule of law if the document is signed in the manner set out in section 41B(1)(a), (b) or (c) and (3).

4. Definition and Purpose of a Company Stamp

A company stamp, sometimes referred to as a company chop, is a tool used primarily for administrative purposes. It typically displays the company name, UEN (Unique Entity Number), and registered office address.

Unlike a common seal, a company stamp does not carry legal weight in executing contracts or deeds unless specifically authorised. It is commonly used for:

• Stamping invoices, receipts, and correspondence

• Endorsing official forms and administrative documents

• Identifying the company in everyday operations

The use of a company stamp facilitates operational efficiency but should not replace proper execution of legal documents under the Companies Act 1967.

5. Risks and Compliance Considerations

Improper use of common seals or company stamps can result in:

• Invalid execution of contracts or deeds, exposing the company to legal disputes

• Regulatory scrutiny by ACRA, especially during audits or statutory inspections

• Internal control failures, potentially leading to misuse or fraud

Corporate governance frameworks, including the Code of Corporate Governance 2018, emphasise the need for clear policies on document execution and authorisation, particularly for companies with multiple directors or international operations.

6. Practical Guidance for Companies

Companies should adopt the following measures to mitigate risks:

• Decide whether to maintain a common seal: Evaluate if the company frequently executes high-value contracts or cross-border transactions where a seal adds credibility.

• Safeguard the common seal and company stamp: Limit access to authorised personnel and maintain a log of usage.

• Internal policies and authorisation procedures: Establish board-approved resolutions and documented procedures for execution of documents.

• Training and awareness: Ensure staff understand the difference between administrative use and legal execution requirements.

7. Emerging Trends and Digital Considerations

Technological advancements have reduced reliance on physical seals:

• Electronic signatures are recognised under Singapore law for most contracts, reducing the need for a common seal.

• Digital company stamps may serve as identifiers in administrative processes.

• Companies should ensure any digital solution complies with the Electronic Transactions Act and maintains sufficient audit trails.

8. Conclusion

Understanding the differences between a common seal and a company stamp is essential for legal compliance, operational efficiency, and strong corporate governance.

While the Companies Act 1967 and ACRA regulations provide flexibility in execution methods, companies that implement robust internal controls and best practices are better positioned to mitigate risk and demonstrate accountability to regulators, stakeholders, and business partners.

Maintaining proper usage, safeguarding, and record-keeping of seals and stamps is not merely procedural; it is a core aspect of good corporate governance and compliance in Singapore.

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TVS Corporate Services Pte. Ltd.

At TVS Corporate Services Pte. Ltd., we provide professional advisory services to help you navigate the complexities of corporate governance and ensure that your company complies with all statutory obligations. Whether you need assistance with director appointments, secretarial services, or understanding the roles of various company officers, we are here to support your business.

For more information or personalized guidance, please contact us via WhatsApp at http://wa.me/+6588693738 or via email at chloe@tvscorporation.com. We look forward to assisting you in achieving your business goals.

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