A Company being an Artificial Person cannot sign for itself. Therefore the law provides for the use Common seal as a substitute of its signature. It serves as the token of the Company’s approval of documents and it shall be binding on the Company.
The following deeds and contracts are not valid unless made under the Common seal of the Company:-
1). Power of Attorney which would be made in favour of a person to execute the deeds on behalf of the Company.
2). Share Certificates
3). Share Warrants
4). Any deed as required by the Articles.
FEATURES OF COMMON SEAL
1). The common seal should be made of metal
2). The common seal should have the name of the company and state in which the registered office is situated. Default will attract a penalty of Rs. 5000
ADOPTION OF COMMON SEAL
The Common Seal is adopted at the first Board Meeting by a resolution of the Board. It means the Company should have common Seal right from the Incorporation. Even a new Common seal in place of existing should be adopted by a resolution of the Board.
The common seal should be affixed to any instrument only by authority of a resolution of the Board or a committee authorized by the Board.
MODE OF AFFIXATION
Unless Articles provide for any other manner the common seal should be affixed in the presence of managing director or any two directors, and the company secretary or any other person as the Board may authorize for the purpose.
Note:- The share certificates issued by the company shall be sealed and signed in accordance with the provisions of the Share Certificate rules.
REGISTER OF COMMON SEAL
Every company should maintain a register containing particulars of documents on which the common seal of the company has been affixed and should be kept at the registered office of the Company.
The common seal should be kept at the registered office or at any other office of the company authorized by the Board. The common seal should be kept in the custody of a director of the company or the company secretary or any other official, as authorized by the Board.
OFFICIAL SEAL FOR USE OUTSIDE INDIA
A company whose objects require or comprise transactions of business outside India as provided in the Articles may have for use in any territory, district or place not situated in India an official seal, which shall be a facsimile of the common seal.
Each territory, district or place not situated in India should only one official seal and should have engraved in it the name of the territory, district or place where it is to be so used in addition to the name and state in which the registered office of the company is situated