A Company is an Artificial Person in eyes of Law, it has no soul, it
takes birth by the Operation of Law and ends it’s life by the Operation
of Law. Like a natural person, it can’t sign by its own. As still it’s
an Artificial Person and as it operates in the world market, there
arises some situation where Law asks a Company to sign by putting its
Common Seal on the Documents.
The acts of a Company in India
are governed by the Companies Act, 1956. And this Companies Act, 1956
does not define the term ‘Common Seal’. Thus generally, a Common Seal
mean the official seal of Company, wherein the name of the Company is
engraved in full. Common Seals can generally be obtained from rubber
stamp makers at minimal cost and at short notice. There is no compulsion
under the Companies Act, 1956 that the common seal should be made in
metal or any other material.
After the incorporation of a
Company, generally in the first Meeting of Board of Directors the Common
Seal of the Company is adopted, by passing a resolution in that
meeting. If the Company desires substitute its Common Seal, then it can
do so only with the authorization by the way of passing a resolution in
any subsequent Board Meeting (or any Committee of the Board as
If authorised by its articles, a company can also
have a Seal which shall be a facsimile of the common seal of the company
even outside India, with the addition on its face, the name of the
territory, district or place where it is to be used, generally to
transact some business there, if necessitate the such Sealing. (Section
50 of the Companies Act, 1956).
The Common Seal of a Company is generally used for the following purposes:- a. For Execution of Deeds empowering any person, either generally or in respect of any specified matters, as its attorney. b. On the Share Certificate/Warrants of the Company c. Loan Agreement with the Banker(s), etc.
Affixing the Common Seal of a Company in the documents, for whatsoever
reason, is not required in every pages of the Documents. It is a general
and acceptable practice to affix it at the Last / some of the necessary
pages, beside the Signature of the Company’s Authorised Official.
The Authorised Official who puts the Common Seal on any document should sign and mention the date beside the seal.
The Companies are required to maintain a Register wherein the details
of the Document(s), where Common Seal was affixed, has to entered.
Such Register has to be kept in the Safe Custody of the Official, who
is duly authorised by the Board of Directors of a Company at the
Registered Office of the Company.
***UK’s Companies Act, 2006
have made it optional for all the Companies to have Common Seal, but
subject to the condition that if a Company wants to have a Common Seal
then the name of the Company must be engraved in legible characters on
the seal and failure to do so constitutes an offence under Section 45 of
the Companies Act 2006.
Adoption of Common Seal - Board Resolution
In the meeting of the Board of Directors of a Company, by passing the following resolution, the Common Seal can be adopted.
In case of: Adoption of the Common Seal of the Company
The Common Seal engraved with the name of the Company was placed before
the Board. The Board showed its satisfaction with the Seal design and
approved the same.
Upon motion duly passed and seconded, it was Resolved that:
“RESOLVED THAT the Common Seal as submitted to this meeting, an
impression of which be affixed in the margin of the minutes and be
initiated by the chairman, be and is approved and adopted as the Common
Seal of the company.
RESOLVED FURTHER THAT the Common Seal
together with the Blocks and engravings be kept under the safe custody
of Shri R, Company Secretary or in the absence of whose, be handed over
to Shri J, General Manager – Finance for the safe custody of the same."