The use of seals can seem like an unusual custom for many foreign investors. The purpose of a seal is quite simple; instead of the commonly used signature in most Western countries, the seal is required for the validation of all major business, banking, or legal transactions.
Most companies in Japan use 3 different types of seals to conduct business operations, which are: the ①Representative’s Seal, the ②Seal Used For Bank Transactions, and the ③Square Seal.
1. Representative’s Seal (legal seal)[会社代表印]
The Representative’s Seal is also called the “legal seal”, which is the official seal of the company. This seal must be registered at the local Legal Affairs Bureau, including the name of the company representative who is authorized to use it. After the completion of registration, you should obtain the seal certificate, which certifies the authenticity of the seal. You must have the Representative Seal and the seal certificate before you can validate agreements and contracts on the company’s behalf—this means that you cannot secure a loan or a lease for the company, or even open a company bank account, without possession of the seal and its accompanying certificate.
This is also the only “required” seal, because it can be used for all transactions conducted by the company. In contrast, the other 2 seals (Bank Transaction and Square) are not legally required, though they do have convenient and practical applications.
2. Seal Used For Bank Transactions [銀行印]
The Seal Used For Bank Transactions is just that—a seal used specifically for banking transactions. Though you can also use the Representative’s seal for this purpose, many businesses prefer to keep banking functions under a separate seal for auditing purposes. This ensures a proper division of business transactions, making for a more simplified and accurate internal recording process.
3. Square Seal [角印]
The Square Seal is the most frequently used company seal, because it is generally reserved for everyday business transactions with reduced legal significance. This seal is usually stamped on invoices, quotes, and other documents with minimal legal ramifications. It can also be easily replaced when it becomes damaged and worn, unlike the Representative’s Seal, which needs to be re-registered should it need replacing for any reason. The re-registration process can be long and arduous, which is why the use of Square Seals are highly recommended—it preserves the condition of the Representative Seal by minimizing its use, while establishing your imprint in the minds of your customers and vendors.
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