What is company seal China | Types&Functions&Safeguarding

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Introduction

Many foreigners have done business in China. And they can notice that most documents are with the company stamp. Actually, They are company seal China. And this is quite different from doing business in the West.

Foreign businessmen may not familiar with company seal China. But the seals are important tools for running the business in China.

And for WFOE, Company seal China is also a must.

Normally, businessmen in China use company seal China to sign contracts, sign official company letters, and internal company documents.

Moreover, Company seal China not only has legal value in China but also has the same legal value in foreign countries.

Actually, seals are commonly used not only in China but also in many countries in Southeast Asia.

So, knowing what company seal China is and knowing how to use them is important for doing business in China.

Now, this article explains what a company seal is, how to use it, and how to effectively protect the legal use of the seal.

So, First of all, what is the company seal China?

company seal China

What is the company seal China?

The company seal China is an official seal. And it represents the company.

People can use a seal to sign documents or contracts. Moreover, these documents have the legal effect of the company.

When WFOE signs a contract with a Chinese company, it must also use the company’s seals. Only the signed contract has legal effect.

Therefore, each company must hold a set of company seals and obtain approval from the Public Security Bureau. Once the company seals are approved, they are refined and registered.

By the way, if the company changes its seal, it must perform the approval and registration procedures with the Public Security Bureau again.

Types of company seal China

Companies may use various seals for different purposes and different types of official documents. It depends on their business scope.

In addition, different departments and important individuals of the company also have their own seals.

Therefore, there are many types of company seals.

Let’s take a look together.

a set of company seals

Company Seal

The company seal represents the company. So, it is the most commonly used seal.

Moreover, the company can also entrust the company seal to anyone through a power of attorney. Meanwhile, the client concludes the contract, and the company is responsible for the contract.

As mentioned above, Because the company seal is approved by the Public Security Bureau, the company seal is mandatory.

And it must have the Chinese version of the company’s full registered name.

That is to say, the company must apply them according to the law. And personal will cannot change or exclude the suitable use scope.

And it cannot be changed or excluded because of personal will.

Usage of the company seal China

When people sign a contract, they stamp the company seal on the contract. And the contract becomes effective. Meanwhile, this contract has the same legal effect as the company.

Commercially, people can also use this seal for all legal documents.

Moreover, people also can use the company seal China to cover the functions of other seals sometimes.

When opening a company’s bank account or changing the company’s company name or scope, the company must use it.

And, When foreign investors register a WFOE with the State Administration, must present the company seal.

Finance Seal

General speaking, the company’s chief financial officer uses the financial seal to conduct some financial transactions.

Moreover, the financial seal is also mandatory. In other words, people must use it according to the law.

In normal situations, people can also use company seals instead of financial seals. So, the documents and contracts signed at this time also have the same legal effect.

But, when do I need to use finance seal?

Usage

Generally, People use the finance seal in the following situations:

  • Open a bank account
  • Sign financial documents
  • Complete bank-related transactions. For example, issuing checks, transferring funds.
  • Besides, the company uses financial seals to implement internal control. And this makes it more convenient to authorize users. Moreover,this can avoid misusing finance

Customs Seal

Customs seal is special. The government requires it only in the customs declaration documents for import and export of goods.

By the way, companies engaged in foreign trade must have a custom seal and use it correctly.

Legal Representative Chop

The legal representative seal is a private chop. And it belongs to the legal representative of the company.

Moreover, it represents the will of the legal representative and the number of the board of shareholders. Different from company seal, legal representative seal is a square seal. Moreover, there

Similarly, documents and contracts with a legal representative seal stamped have the same legal effect.

Although it is not mandatory, it is useful

When signing legal documents or conducting legal transactions, they can do this even if the legal representative is not present. Meanwhile, these documents and transactions have the same legal effect as a legal representative.

Like a company seal, WFOE must record it at the Public Security Bureau, Administration for Industry and Commerce (AIC) and local banks.

Sometimes, people can use it instead of signatures or beside the signatures.

Usage

Payment transactions need to use legal representative seal and company seal. If some financial transactions require a contract, and this contract also needs to have a legal representative seal stamped.

If the payments without a legal representative stamped, the bank will not approve of them.

With the protection of company seal policy, stamping the legal representative seal on documents can reduce risks.

Contract Seal

In China, many companies and employees need to use contract seals when signing contracts.

Sometimes, signing an agreement with a distributor or signing a mutually binding agreement with a customer is also a contract.

Compared to other seals, a contract seal has less right. So, the company can effectively delegate to employees.

As you have seen, many companies and employees need to use contract seals when signing contracts in China.

Sometimes, signing an agreement with a distributor or signing a mutually binding agreement with a customer also requires a contract.

Compared to other seals, the contract seal has less right. So, the company can effectively delegate to employees.

a contract seal

Electronic Seal

The electronic seal is another form of seal.

When conducting online transactions, you can also use electronic seals.

Due to the rapid development of technology, companies that use electronic seals must pay attention to the updates related to it. In this way, you can maintain your own electronics seal compliance.

Fapiao Seal

When issuing formal invoices and receipts, the invoice seal is required.

And it is also mandatory. In other words, you must use them according to the law. And you can change or exclude usage because of personal will.

Usage

In the debit note, the invoice is the receipt for the debit. Fapiao seal verifies this invoice.

The VAT invoice is proof that the company has received payment. Similarly, Fapiao seal also verifies this invoice.

If the value-added tax invoice is without Fapiao seal stamped, it means that the invoice has no payment verification.

Besides, you cannot use invoices without verification for operating expenses claims.

Sometimes, Finance seal can instead of Fapiao seal.

However, it is not necessary to use finance seal and Fapiao seal at the same time.

a Fapiao seal

Department Seal

In addition to the seals mentioned above, some companies have their own departmental seals for each department.

Moreover, the department seal has the department name printed. So, this avoids many risks in management.

For example, you can only use the seal in the quality department for documents related to the quality department. Similarly, the seal of the human resources department is only used for human resources employees to perform certain tasks.

However, they have no legal value outside the company. When dealing with external third parties, you don’t have to use these seals.

Other types of company seal China

In some cases, the government may require other seals for specific purposes.

Such as the company seal of the parent company of foreign investors.

Sometimes, depending on the company’s business scope, you may need to use other seals such as translation seals.

Moreover, the government can sometimes require companies to use the signature and seal together. Therefore, the relevant transaction has legal effect.

Importance of Safeguarding Company Chops

The company seal has a lot of legal authority. For example, the company seal represents the company, and it has the same legal function as the company.

Documents or contracts with company seal stamped, they have the same legal effect as the company.

Therefore, if companies don’t manage them well, it will affect the company’s operations. Moreover, this situation is likely to cause losses to the company.

In addition, if some important company seals are lost, it is likely that the company’s payments will not have legal protection.

Therefore, the company must protect its seal.

Next, let’s take a look at how to operate it.

Safeguarding

As for the importance of the company seal, it means that the company has to formulate some measures to protect the seal.

Moreover, the current best practice is to formulate the company’s seal policy. This can avoid many problems and losses.

Regarding the seal policy, you can refer to the following parts:

1. Seal procedure

The person using the seal must comply with the established policy.

Meanwhile, this policy records things below:

  • The date of record
  • User name
  • Reason for use.

If authorized to others, there must be a written record of the general manager.

2. Seal storage

The company doesn’t allow anyone to keep several seals.

Especially the functions of the two seals are related. All seals should be in the hands of the legal person, general manager or CEO. Moreover, they cannot transfer to others without authorization.

Besides, unless there are regulations in the company’s articles of association, the company can’t use the seals out of the office and office hours. Sometimes, the company authorize the use of the seal to others. But after used up, the person in charge must recover the seals in time.

Moreover, if someone lost or damage the seals, and he/she must report it immediately.

Some companies hire third-party custodians so that abuse is completely avoided.

3. In addition to formulating seal policies, there are some other ways to protect seals:

  • First, the company only allows people trusted to have a seal.
  • Second, the company can give different people various seals. And, this increases the difficulty of forgery.
  • Third, the company can lock the seal or fix it somewhere. This can prevent someone from stealing the seal or prevent losing it.
  • Besides, some companies require that the use of all seals must be together with the company seal. Effectively, this provides additional protection to the company.
  • Similarly, requiring the use of a seal and signature together can also have this effect.
  • At last, companies can establish internal specifications to record the use of seals.

In many Western countries, signatures are binding. Actually, Chinese companies also use signatures.

Then, what is the difference between a signature and a company seal?

safeguarding

Chinese Company Stamp vs Signature

In China, many contracts have signatures. However, the company seal has the final authorization.

Moreover, many seals are mandatory. Correspondingly, signatures are not mandatory. Therefore, the security of the seal is higher.

On the other way round, in many western countries, the signature of the authorized signatory has legal effect.

But in China, every validly registered company must have a set of company seals. Moreover, these seals must have the approval of the Public Security Bureau.

In this way, the security of contracts and transactions can have an effective guarantee.

Moreover, many times the main person in charge of the company is busy. Then, they can entrust the seal to the principal for trading.

In this way, work efficiency has also improved a lot.

signature

Conclusion

The company seals are necessary for doing business in China or with Chinese. But it is quite different in western countries. So, we provide a few key points of Chinese company seals.

First of all, there are many types of seals in China.

They are:

  1. Company seal
  2. Finance seal
  3. Customs seal
  4. Legal representative seal
  5. Contract seal
  6. Fapiao seal
  7. Electronic seal
  8. Department seal
  9. Other types of company seals for specific usage.

Since the seals have a lot of law effect, companies should keep them with a guarantee. And here are some ways to guarantee the seals mostly used now:

  1. Set up a sealed procedure
  2. Let a specific person keep the seal
  3. Put the seals in a specific position and lock them
  4. Take it back in time after use
  5. Must use with company seal or signatures
  6. Make different seals for important people to avoid forgery

Importantly, seals are mandatory in China while signatures are not.

And compared to signatures, There are many advantages to using seals. For example, You can entrust others to complete the transaction when the person in charge is not available.

That’s all for a company seal China. If you like this article, please share it with your friends.

And If you want to know more about company seals, please visit the Company seal.

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