Is it fine if our company only has a representative seal (legal seal)?
★ Explanation ★
There are no provisions that require a company to have either a square seal or a bank seal during the incorporation of a company or setting-up of a branch. However, a square seal or a bank seal made can be used for different purposes in accordance to the use. This lessens the corporate risks that come with a legal seal.
＜Purpose of Seals According to Type of Seal＞
- ① A representative seal is used to execute legally binding documents such as contracts (as an official registered seal)
- ② A square seal is used in invoices and purchase orders (as an informal, unregistered seal)
- ③ A bank seal is used to open a bank account, and is impressed on cheques
Using the representative seal on a variety of documents (contracts, invoices, bank account) would cause it to be visible to many people, which increases the risk of forgery. An impression of the representative seal functions very much like a signature, and affixing the seal means the company assumes responsibility for content in the document(s) it is impressed on. If the representative seal is then used on all documentation, there is the increased potential of it being misused or fabricated. To prevent this, it is recommended that seals such as a square seal or a bank seal be used for documents other than contracts and similar important paperwork.
Now, the square seal, which is commonly used as an informal, unregistered seal, is also what is called the “company seal”, which when used as an informal seal, signifies that the document(s) it is impressed on has been “recognized by the company”. As such, similar to when a representative seal is used, a document impressed with the company seal means the company may be held liable.
Furthermore, to prevent the mishandling of the company’s seals, it is best to delegate a management of the seal to a member of company with a certain level of authority, such as a manager.