What is the difference between seals, stamps and chops?
Stamps, Seals and Chops
The term ‘seal’ can refer to a device used to make an impression in wax or paper, as well as the actual impression itself.
‘Stamp’ refers to a rubber stamp, a device where ink is applied to an image, pattern or text that has been moulded onto a sheet of rubber and mounted on a block.
The term ‘chop’ originated from the Hindi word chapa and the Malay word cap, both words mean ‘stamp’ or ‘rubber stamp’.
Today, the terms seal, stamp and chop are basically interchangeable and often refer to the same thing: a stamp or rubber stamp.
Usage in the United Kingdom
Companies in the UK used to be required to have a seal clearly displaying the company name. The use of this seal was required on all contracts, deeds and share certificates. Originally it would be pressed into melted wax. The use of a seal was a clear indication of action by the company. The use of the company seal (and there would often only be one seal) meant that the company had come to a definite decision. For many years UK common law held that a seal was necessary for contracts to be valid.
These rules no longer exist. The 1989 and 2006 Companies Acts made the use of a company seal optional. The 2006 Companies Act states that “A company may have a common seal, but need not have one.”
Under the 2006 Companies Act, a document is validly executed by two authorised signatures (usually, company directors). The use of a seal is optional.
Notaries still use seals on a daily basis. In the UK, each registered notary has an individual personal seal, registered with the authorities. This includes his or her name and a pictorial emblem, often an animal.
Usage in the United States
Much like in the UK, seals were used to legitimise the execution of documents. These seals included information such as a company’s legal name and the year and state in which they were formed. Today, corporate seals serve little legal purpose, since the legitimisation of documents only requires the signatures of the president and vice-president of the corporation. Corporations do still use seals, mostly as means for corporate branding or identification.
One legal area where seals are still used is the in issuing of share certificates, which are often issued to shareholders with the corporate seal embossed on the documents. While corporate seals are not necessary to open a bank account in most states, some states do consider it a precondition. In addition, notaries in certain states are required to use seals.
Unlike the UK and US, seals still have an important role to play in the Chinese-speaking world. Chinese seals are used by individuals as signatures for many kinds of official documents, such as legal papers and bank transactions. Most of these seals simply bear the owners name. They are used as identification when signing for a parcel, or signing cheques at the bank. Since seals are hard to forge and should only be accessible to the owner, they are accepted as proof of ID. Signatures are sometimes required along with the seal, the two together being a very secure method of identification.
A Company may hold a wide range of seals, each being used for different purposes and applying to different documents. Whilst the Company seal is mandatory for every incorporated company, there are also seals which have a very specific scope. These seals are not mandatory and may include the Financial seal, Human Resources seal and the Contract seal. These seals provide individual departments with the ability to enter into contracts on behalf of the company without having to use the Company seal. The Company seal is the most important seal held by an organisation. It provides legal execution for all documents and is required when any important documents are signed, issued or changed.
Unauthorised and inappropriate use of seals may cause legal problems for an organisation. In order to prevent this, an appropriate management system should be in place. The Executive Director or General Manager is ultimately responsible and held legally accountable for an organisation’s seal management.