A common seal is a company's formal signature. It is a stamp, or a digital image of one, that carries the company's name and identifying number, and when it is fixed to a document in the way the Corporations Act 2001 (Cth) (the Act) prescribes, it binds the company to that document in the same way a person's signature binds them. Despite how official it looks, most Australian companies are not required to have one, and the companies that do own a seal often use it incorrectly.
This article covers what a common seal actually is, the rules that apply when one is used, and the questions to ask before your company adopts, dusts off, or abandons a seal. If you are a director of a small or medium business that signs significant contracts, leases, or loan documents, this is the part of corporate law that quietly decides whether those documents are enforceable.
What a common seal is
Under s 123 of the Corporations Act 2001 (Cth), a company may have a common seal. If it chooses to have one, the seal must carry specific information so that anyone dealing with the company can tell which company it belongs to. The seal must set out:
- Standard case: the company's name plus the words "Australian Company Number" and the company's ACN; or
- ABN alternative: if the last nine digits of the company's ABN are the same, and in the same order, as the last nine digits of its ACN, the words "Australian Business Number" and the company's ABN instead; or
- ACN as name: if the company's ACN already forms part of its name, just the company's name.
A company may also have a duplicate common seal. A duplicate is a copy of the main seal with the words "duplicate seal", "share seal", or "certificate seal" added, and it is typically kept for use on share certificates or other certificates rather than general documents. Using or authorising a seal that does not comply with these requirements is an offence of strict liability under s 123, which means it does not matter whether the company intended to breach the rules.
The Act's own small business guide sums up the concept neatly: the seal is equivalent to the company's signature and may be used on important company documents such as mortgages. That equivalence is the whole point. Where a person signs their name to take personal responsibility for a document, a company fixes its seal, witnessed by its officers, to do the same thing.
Is a common seal required?
The short answer is no. Australian companies have not been required to have a common seal since 1 July 1998, when the Company Law Review Act 1998 (Cth) removed the requirement that had existed under the earlier companies legislation. Today the Act states plainly that a company is not required to have a common seal, and that a company can deal with contracts and execute documents without using one.
There are two situations where a seal can still be effectively compulsory:
- Old constitutions: If your company was incorporated before 1 July 1998 and its constitution has never been updated, the constitution may still contain a provision requiring the company to have and use a common seal. Because a company must follow its own constitution, that older document can keep the seal requirement alive even though the Act itself no longer imposes it.
- New constitutions that opt in: A company can choose to require a seal in its constitution. Section 127 makes clear that a constitution may set out its own ways of executing documents, so a company that wants the formality of a seal for its major contracts can adopt one.
Separately from the legal position, many companies keep a seal as a matter of commercial convenience. Australian counterparts accept director signatures without a second thought, but some overseas banks, landlords, and government bodies expect to see a seal on formal documents such as guarantees and property transfers. For a business that deals with parties unfamiliar with Australian execution rules, a seal can smooth a transaction that might otherwise stall on questions about whether the document was validly signed.
How a company executes a document with a common seal
The procedure for using a common seal is set out in s 127 of the Corporations Act 2001 (Cth). Fixing the seal to the document is not enough on its own. The fixing must be witnessed by at least one of these combinations of company officers:
- two directors of the company; or
- a director and the company secretary; or
- for a proprietary company with a sole director who is also the sole company secretary, or who is the only officer because the company has no secretary, that director.
The same combinations apply where a company executes a document without a seal. Under s 127(1), a company may execute a document if it is signed by two directors, a director and the company secretary, or the sole director in the circumstances just described. This is why most modern companies never need a physical seal at all. Two director signatures, or one director and the secretary, bind the company just as completely as a witnessed seal.
Two further points matter in practice. First, a document takes effect as a deed only if it is expressed to be a deed and is executed in accordance with s 127, and since 2022 a deed signed under s 127(1) does not need to be witnessed at all and does not need to be delivered. Second, the witnessing of a seal can now happen electronically: under s 127(2A), a witness may observe the fixing of the seal by electronic means and sign the document to confirm they saw it. These changes came from the Corporations Amendment (Meetings and Documents) Act 2022 (Cth), which took effect in February 2022 and made the Act technology-neutral about how documents are signed. A person may sign a physical copy or an electronic copy, as long as the method identifies the signer and shows their intention, under s 110A.
The Act also protects the other side of the deal. Under s 129, a person dealing with a company is entitled to assume that a document has been duly executed if it appears to be signed in accordance with s 127(1), or if the seal appears to have been fixed and witnessed in accordance with s 127(2). In other words, a counterparty who sees a properly witnessed seal can assume the execution is valid without investigating the company's internal affairs.
None of this removes the need for sensible governance. Good practice, and some constitutions, require a board resolution authorising each specific use of the seal before it is applied, and a register recording every use with a cross-reference to the authorising minutes. These records are what allow the company to prove later that a particular document was properly authorised.
A common seal in practice: a worked example
Consider Meridian Fabrications Pty Ltd, a Melbourne metal manufacturer incorporated in 1996. Its constitution has never been updated and still says the company must execute formal documents with its common seal. The company owns a brass seal, kept in the safe in the managing director's office.
Meridian needs two things done at once: a new equipment loan with a bank guarantee, and a renewal of its factory lease. For the bank guarantee, the board passes a resolution authorising use of the seal for that specific transaction. The managing director retrieves the seal, and in a meeting of two directors the seal is pressed onto the guarantee, with both directors signing as witnesses next to the seal. The company secretary records the use in the seal register, noting the resolution number and the date. The bank receives a document it can rely on, and the s 129 assumptions mean it does not need to investigate further.
The lease renewal is handled differently. The landlord's solicitor is comfortable with Australian execution practice, so Meridian executes the lease electronically: the two directors sign an electronic copy of the lease using a signature platform. That execution is valid under s 127(1) and s 110A without any seal at all, and because the lease is expressed to be a deed, it does not even need to be witnessed under s 127(3A).
The example shows the two ends of the spectrum. The bank guarantee needed the seal because the constitution demanded it and the bank expected it. The lease needed no seal because the Act does not require one and the counterparty accepted modern execution. The same company, the same week, using two perfectly valid methods.
Common misconceptions about common seals
Several beliefs about common seals are common but wrong:
- "My company must have a common seal": Not since 1 July 1998. The only way a seal is compulsory is if the company's own constitution requires it, which mainly affects older companies whose constitutions have never been reviewed.
- "Stamping the seal is enough to execute a document": The stamp alone binds nothing. Under s 127(2) the fixing must be witnessed by the prescribed officers, and a document that misses this step does not attract the s 129 assumption of due execution. A counterparty who later wants out of the deal can point to the defective execution.
- "A deed always needs a seal": Since the 2022 amendments, a deed executed under s 127(1) needs no seal and no witnessing. The old common law fuss about parchment and sealing is gone.
- "Any seal with the company name on it will do": A seal that does not carry the correct name and ACN or ABN details is non-compliant, and using or authorising it is a strict liability offence under s 123(3). A common trap is a seal that still shows a company's old name after a name change.
- "Electronic execution is weaker than a seal": The Act treats them equally. A document signed electronically by the right officers under s 110A and s 127(1) is executed by the company to the same effect as one fixed with a witnessed seal.
When a lawyer can help
The questions around common seals are usually quick to answer but expensive to get wrong, which makes them ideal to run past a corporate lawyer. A practitioner can pull your company's constitution from the ASIC record and tell you definitively whether your company is one of the minority still bound to use a seal. For a company incorporated before 1998, that review often uncovers other outdated provisions that should be updated in the same exercise, and a lawyer can draft a new constitution that removes the seal requirement if you want to retire it.
Where a company keeps its seal, a lawyer can put the governance around it in place: a standing board resolution framework, a seal register template, and an execution policy that tells staff when the seal is used and when director signatures suffice. That structure is what prevents a badly executed guarantee or deed from being challenged years later.
A lawyer is also the right person when execution has already gone wrong, for example where a document was stamped without witnesses or signed by an officer whose authority is unclear. The options in that situation depend on the document and the parties involved, and a practitioner can assess whether the defect can be cured, whether the other party can be estopped from denying the document, or whether the document needs to be re-executed. For cross-border transactions, where a foreign counterparty insists on a seal, a lawyer can confirm that the seal-based execution meets both Australian requirements and the counterparty's expectations before the document is sent.
Check your constitution before you buy a seal
If your company does not have a common seal, the most useful question you can answer is not whether to order one from a stationery supplier but whether your constitution requires one at all. For most companies the answer is no, and the money is better spent on a reliable electronic signing process. If your company does have a seal, the question that matters is different: can you point to the last time the seal was fixed with the right officers witnessing it and a resolution behind it? The companies that lose on this issue are not the ones that skipped the seal. They are the ones that treated it as a decorative stamp and discovered, when a counterparty wanted out of a deal, that it never actually executed anything.