The difference between several seals of Hong Kong companies

• Corporate Seal (Common Seal) – Metal Stamp / Official Seal
• Company Chop / Small Circular Chop – Rubber Stamp / Optical Stamp
• Signature Chop / Rectangular Chop – Rubber Stamp / Optical Stamp
• Official Seal – For Use Outside Hong Kong
• Core Changes and Impact of the 2014 Companies Ordinance Reform
• Summary of Hong Kong Company Chop Efficacy and Relationships

The seal system of Hong Kong companies is significantly different from that of mainland China, especially after the revision of the Hong Kong Companies Ordinance in 2014, which brought about significant changes in its legal effect. Understanding the relationship and effectiveness between these seals is crucial for conducting business dealings or operating Hong Kong companies.

The common types of seals used by Hong Kong companies are as follows:

Corporate Seal (Common Seal) – Metal Stamp / Official Seal

Difference from Mainland China’s Official Seal: Hong Kong’s common seal is fundamentally different from the mandatory, government-registered official seal in Mainland China, which holds the power to “externally represent the company’s will.” In Mainland China, the official seal is a legal requisite for a company’s external actions, whereas in Hong Kong, its importance has significantly diminished.

Appearance: Typically a circular, metal-made stamp, hence commonly known as a “steel seal” or “official seal.” The company name must be engraved on the seal clearly and legibly (in either Chinese or English, or both if the company has registered names in both languages). Its use often involves applying it onto a red or gold circular sticker, creating a raised or embossed impression.

Legal Effect (Under the New Ordinance):

Share Certificates: Used on certificates representing company shares.

Deeds: Traditionally used for documents required by Hong Kong law to be executed as deeds, such as property transfer documents or certain guarantee documents.

Major Contracts: Used to signify that the document has been approved and executed by the company’s board of directors or the sole director.

Non-Mandatory Nature: This is the most significant change! According to the new Companies Ordinance effective March 3, 2014, Hong Kong companies are no longer required to have or use a common seal. Companies can choose to use one or operate entirely without it.

Authorized Use: If a company chooses to use a common seal, its usage must follow the provisions in the company’s Articles of Association and typically requires authorization from the director(s).

Function: When used, the common seal is primarily applied to formal and significant company documents.

Company Chop / Small Circular Chop – Rubber Stamp / Optical Stamp

Appearance
Typically a circular stamp made of rubber or optical material, using blue or red ink. It usually includes the company’s Chinese and English name, and may sometimes include the Business Registration Number, though this is not mandatory.

Legal Effect & Usage

• Routine Administrative Use: Used to acknowledge receipt of documents, sign for courier packages, or stamp invoices and simple documents to make them appear more formal.
• Supplementing Signatures: In some cases, it may be used alongside the signature of a director or authorized representative to indicate the document has been confirmed by the company.
• Bank Account Opening: Some banks may require this chop to be provided and used when opening a corporate bank account.
• No Inherent Legal Force: This small circular chop is not a statutory seal and holds no legal force under the Companies Ordinance. It functions more as an administrative or confirmation stamp.

Risk Warning
If a contract or other important document is stamped only with this small chop without the signature of a director or authorized representative, its legal binding force is highly uncertain and it may even be deemed invalid. In Hong Kong, the **signature of an authorized signatory carries significantly more weight than a chop.

Signature Chop / Rectangular Chop – Rubber Stamp / Optical Stamp

Appearance
Typically a rectangular-shaped stamp. It may be engraved with phrases such as “For and on behalf of [Company Name]” or “Authorized Signature,” and often includes a dotted line or blank space for a handwritten signature.

Legal Effect

• Supplementary Role: The signature chop itself holds no independent legal force. Its purpose is to indicate that the individual, whose handwritten signature is placed below or beside the chop, is signing the document on behalf of the company and not in a personal capacity.

Risk Warning
Similar to the small circular chop, if a document bears only the signature chop without an accompanying handwritten signature, its legal validity is significantly weakened. Its primary function is to clarify the representative capacity of the signatory and to avoid personal liability for the individual signing.

Official Seal – For Use Outside Hong Kong

Appearance
This seal is distinctive. It is typically based on the Common Seal but is engraved with the company name and the words “For use in [Location] only” (e.g., “For use in the People’s Republic of China only” or “For use in the United States only”).

Legal Effect

• According to Section 125(6) of the Companies Ordinance (Cap. 622), a document executed by a company by affixing its Official Seal is as binding on the company as if it had been executed under its Common Seal.
• A company may authorize a person outside Hong Kong to use the Official Seal, facilitating the execution of formal documents overseas.

Applicable Scenarios
This seal is primarily used for situations requiring a company to execute deeds or other significant legal documents outside of Hong Kong, ensuring their legal validity is equivalent to using the Common Seal within Hong Kong.

Core Changes and Impact of the 2014 Companies Ordinance Reform

The core spirit of the 2014 new Companies Ordinance is to simplify company operations, reduce compliance costs, and align its practices with mainstream common law jurisdictions (such as the United Kingdom).

Key Changes

• Abolishment of the Mandatory Common Seal: This is the most significant change. The new Ordinance introduced more modern and flexible methods for a company to execute documents.

Methods of Document Execution

• Single Director Company: Documents can be executed by being signed by that sole director on behalf of the company.
• Company with Multiple Directors: Documents can be executed by being signed by either:
  • Two or more directors acting on behalf of the company; or
  • One director together with the company secretary.
• Using the Common Seal (if the company chooses to retain it): A company may still choose to execute a document by affixing its Common Seal, provided this is done in accordance with its Articles of Association.
• Execution by Director(s): As outlined above for single or multiple director companies.
• Execution by Authorized Representatives: A company may authorize specific individuals (e.g., a General Manager, CFO) to execute documents on its behalf, as stipulated in its Articles of Association.

Summary of Hong Kong Company Chop Efficacy and Relationships

1. Common Seal

• It is the only seal type explicitly mentioned in the Companies Ordinance, but its use is no longer mandatory.
• If used, it holds the highest legal authority, representing the company’s formal intent, but its use must comply with the company’s Articles of Association and require authorization from the director(s).

2. Company Chop & Signature Chop

• These are products of market practice and do not possess independent legal force.
• They are primarily used for administrative confirmation, assisting signatures, or indicating the signatory’s capacity.
• To genuinely represent the company’s will, they must be used in conjunction with the valid signature of a director or an authorized representative.

3. Official Seal (for use outside HK)

• This seal is an extension of the Common Seal for overseas use and possesses legal effect equivalent to the Common Seal.
• Its use requires proper authorization and is restricted to a specified geographical area.

4. Core Principle: Signature over Seal

• In Hong Kong, the legal validity of a document primarily depends on the authority of the signatory and their signature, not the seal itself.
• Even if a document bears no seal whatsoever, it is generally legally binding as long as it carries the valid signature of a duly authorized director or company representative.

5. Key Distinction from Mainland China Practice

• This is the area most prone to confusion.
• In Mainland China, the company chop is a symbol of the company’s will, carrying immense legal weight and can sometimes substitute for the legal representative’s signature.
• In contrast, in Hong Kong, the “signature” of a director or authorized representative is the core credential for a company to execute documents and assume legal obligations. Seals primarily serve auxiliary, formal confirmation, or evidentiary purposes.