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Common seal

15 March 2012

Dear All

Kindly advice on the following :

if Article of the company says," Seal shall never be used except by the auhority of the Director or committee of Directors previously given and one Director at least shall sign every instrument to which the seal is affixed."

Then do we need not to comply with Regulation 84 Sch. 1 and SS-8 regarding the presence of atleast two director and CS or any other oficer autorised by board at the time of affixing common Seal and signing of all of them on the same instrument?

in anticipation of kind reply

Thanks n Regards

Aditya

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16 Replies

prakash (Company Secretary) (1352 Points)
Replied 15 March 2012

Secretarial Standards have not been formed part of Comanies Act, Secretarial Standards are recommendary for better corporate practice, not compulsorily followed by companies, So that Articles of company prevail over SS.

Generally there is article in AOA of company that The regulation contained in the table A of the First Schedule to the companies Act, 1956 shall apply to the company so far as applicable to a private company except as otherwise provided impliedly or expressly by the following articles.

In your company articles otherwise provided sothat Articles of Association of company prevail over Sechdule 1A.

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 15 March 2012

POSITION OF AOA IN PUBLIC COMPANY

Kindly appreciate it is optional for a public companies limited by shares to get its articles registered. It may be registered without its own set of articles. Section 28 of the Companies Act, 1956 provides that if a public company does not register articles of its own, the provisions in Table 'A' of Schedule I to the Act will automatically apply to such company. Generally, a public company formulates its own Articles and registers it along with Memorandum. Therefore a public company may either:—

(i) formulate and register Articles of its own within the provisions of the Act and the Memorandum of Association; or

(ii) adopt Table 'A' of Schedule I as its Articles; or

(iii) partially adopt Table 'A' and also have its own articles.

As per the judgement in Seth Mohan Lal v Grain Chambers Ltd. (1968), If a company has not expressly or by implication excluded any regulation in Table A, regulation will be deemed to be incorporated in its articles.

Now you are requested to check your AOA whether the same excludes “Table A”. If AOA specifically excludes “Table A” then provisions of your Public company AOA shall prevail over “Table A”.

If AOA includes “Table A” so far as it is applicable then also provisions of your Public company AOA shall prevail over “Table A” in case where any contradiction arise.

If your private company fully adopts “Table A”, then first of all contradiction should not arise, and if arise for some reason then provision of “Table A” shall prevail.

POSITION OF AOA IN PRIVATE COMPANY

It is essential for a private limited company to have its own articles including the four restrictions as provided in section 3(1)(iii) of the Companies Act, 1956. [Section 27(3)].

With these restrictions the private limited companies are having liberty to adopt all or any of the regulations contained in Table 'A'.

Now you are requested to check your AOA whether the same excludes “Table A”. If AOA specifically excludes “Table A” then provisions of your private company AOA shall prevail over “Table A”.

If AOA includes “Table A” so far as it is applicable then also provisions of your private company AOA shall prevail over “Table A” in case where any contradiction arise.

Best Regards

Ankur Garg

CS Aditya Agrawal (PCS) (110 Points)
Replied 15 March 2012

Thanks Mr.Prakash & Mr. Ankur

would you be kind to interpret the lines in article already mentioned in original querry? means if in the given situation article prevails then can we affix common seal in the presence of only one director. ( Pub Ltd.)

Regards

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 15 March 2012

Originally posted by : CS Aditya Agrawal
	Thanks Mr.Prakash & Mr. Ankur would you be kind to interpret the lines in article already mentioned in original querry? means if in the given situation article prevails then can we affix common seal in the presence of only one director. ( Pub Ltd.) Regards

Bhai ji….let us know the position of Table A in your AOA. You may find it in the first page of AOA. Just check whether AOA excludes Table A or includes.

CS Aditya Agrawal (PCS) (110 Points)
Replied 15 March 2012

Sirji i have alredy written that article prevails means our AOA excludes Table "A".

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 15 March 2012

Originally posted by : CS Aditya Agrawal
	Sirji i have alredy written that article prevails means our AOA excludes Table "A".

Hmmm...here as per understanding of section 26, 27 and 28, you should simply follow the provision of your Article.

CS Aditya Agrawal (PCS) (110 Points)
Replied 15 March 2012

I am sorry to bother u again n again but still you dint get my querry, i just want to know that as AOA says, " Seal shall never be used except by the auhority of the Director or committee of Directors previously given and one Director at least shall sign every instrument to which the seal is affixed."

Does it mean that the seal can be affixed in presence of only one director?

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 15 March 2012

Originally posted by : CS Aditya Agrawal
	I am sorry to bother u again n again but still you dint get my querry, i just want to know that as AOA says, " Seal shall never be used except by the auhority of the Director or committee of Directors previously given and one Director at least shall sign every instrument to which the seal is affixed." Does it mean that the seal can be affixed in presence of only one director?

Your AOA is silent about presense of director. However Signing instrument to which the seal is affixed by the director implied that seal was affixed in his presence.AOA saying that use of seal should be authorised by the board of committee of directors and at least shall sign every instrument to which the seal is affixed.

Charu Srivastava (Company Secretary) (4210 Points)
Replied 15 March 2012

If your Articles says so, then one Director so authorised can the sign and affix the Comman Seal.

(Guest)

But for share certifcate it should be 2 directors as per issue of share certificate rules.

P C Agrawal (Registered independent director Past Chairman of Aurangabad Chapter of ICSI Practicing Company Secretary at Aurangabad) (8229 Points)
Replied 15 March 2012

Yes, if your Articles exclude Table A and provide for signature of only one director, then only one director is required to sign a document as witness to common seal. However, in case of share certificates, Companies (Issue of Share Certificates) Rules will prevail over your Articles and two directors and Secretary/authorised signatory will have to sign the certificates.

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 15 March 2012

Originally posted by : P C Agrawal
	However, in case of share certificates, Companies (Issue of Share Certificates) Rules will prevail over your Articles and two directors and Secretary/authorised signatory will have to sign the certificates.

Totally agree with Agarwal ji. Here section 9 comes into picture.

Section 9(b) any provision contained in the memorandum, articles, agreement or resolution aforesaid shall, to the extent to which it is repugnant to the provisions of this Act, become or be void, as the case may be.

Charu Srivastava (Company Secretary) (4210 Points)
Replied 15 March 2012

Originally posted by : P C Agrawal
	Yes, if your Articles exclude Table A and provide for signature of only one director, then only one director is required to sign a document as witness to common seal. However, in case of share certificates, Companies (Issue of Share Certificates) Rules will prevail over your Articles and two directors and Secretary/authorised signatory will have to sign the certificates.

Agree with the view

Sumit Middha (Head (Fin.& A/c) M.COM M.A.(Eco) MBA CS Final) (2453 Points)
Replied 16 March 2012


	Yes, if your Articles exclude Table A and provide for signature of only one director, then only one director is required to sign a document as witness to common seal. However, in case of share certificates, Companies (Issue of Share Certificates) Rules will prevail over your Articles and two directors and Secretary/authorised signatory will have to sign the certificates. Agree with the view