Corporate seals are a remnant of the middle ages, back when official documents were legitimized by a hot wax imprint of a seal or crest. The practice of ‘sealing’ documents kept on throughout the centuries, though the hot-wax method eventually gave way to rubber stamps and paper seals. Today, corporate law still allows for the use of corporate seals, though they are no longer as important as they once were. This week in business basics we answer a few of the most commonly questions we receive about corporate seals, and let you know if you should get one for your own corporation.
What is a corporate seal?
A corporate seal is essentially a signature for your business. When you incorporate, you turn your business into its own, legal entity. Since a corporation cannot sign anything, a corporate seal is used to mark legal and official documentation. These days, most corporate seals are either rubber stamps or steel embossers, and are normally designed to fall apart if tampered with to help avoid fraud.
Do I need a corporate seal?
No, most states do not distinguish between a corporate seal and a signature – as long as the person signing the document has the authority to bind the corporation to a legal obligation, their signature can denote an official corporate act. So no state actually requires the use of a seal, though a handful do view sealed documents differently than signed ones. North Carolina, for example, extends the statute of limitations for breach of contract to ten years for sealed documents.
The only times most modern corporations actually use a corporate seal is when they issue stock certificates or execute deeds. And even in those two cases, it is becoming increasingly rare for a corporation to prefer their seal over a signature.
How do I get a corporate seal?
States do not issue corporate seals – you effectively have to design your own and then order an embosser. Most states require the seal to reveal the type of business entity using it, the entity’s name, and the state wherein the entity does business. It can also have little embellishments like the date the company was founded, or the company’s logo. Once you have a design, the corporation has to adopt it as its seal during its initial meeting, and give the authority to use the seal to whomever you’d like to have that right in your company.
Now, while you are not legally obligated to have a corporate seal, it never hurts to have one on hand. A corporate seal does instill a sense of authenticity in official documents, and acts as a mark of identity for your business. Some corporations also fight against stock counterfeiting by issuing certificates with both the corporate seal and president’s signature. The choice is yours, but if you do decide to order a seal, we’d be happy to help you design and order one as part of your corporate kit.
If you have any questions about corporate seals, or anything else related to corporate compliance, feel free to leave a comment below, or just give us a call at 1-877-692-6772!