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12. What is a Common Seal?

Common seal of the company is a stamp with the company’s name and Australian Company Number (ACN). It is like a signature of company and used to execute documents. It is also known as company seal or corporate seal.

Is common seal mandatory for corporate?

Prior to 1988, affixing company seals were mandatory for the execution of documents and deeds.

These provisions are abolished now and use of common seal is no longer compulsory for execution of deeds and documents. However, companies may still use common seal if they wish.

Execution of documents with common seal

Section 127(2) of the Act provides that a company with a common seal may execute a document if the seal is affixed to the document and the fixing of the seal is witnessed by one of the following:

• two directors of the company
• a director and secretary of the company
• for a proprietary company that has a sole director who is also the sole company secretary – that director.

What are requirements for a valid common seal?

If a company chooses to use a seal, in order for it to be valid it must include:

1. for a company that has its Australian Company Number (ACN) as its name – the company’s ACN; or

2. otherwise:

• the company’s name, the expression ‘Australian Company Number’ and the company’s ACN; or

• if the last 9 digits of the company’s ABN are the same, and in the same order, as the last 9 digits of its ACN – the expression “Australian Business Number” and the company’s ABN.

A company may also have a duplicate common seal if it so wishes. The duplicate common seal must be a copy of the common seal with the words ‘duplicate seal’, ‘share seal’ or ‘certificate seal’ added.

Use of an invalid seal to execute a document is an offence of strict liability under the Corporations Act.