Corporate Seal Definition

How does someone know whether a legal document from a business is valid and official? Maybe a signature from an officer proves it’s valid. Maybe a notarized signature from an authorized representative makes it official. Sometimes corporations show their legal documents are official and valid with a corporate seal. This guide helps define what a corporate seal is and why a business might use one. 

What is a corporate seal?

The corporate seal definition has its roots in a long history. The seal normally signifies that a corporate action is valid and authorized by that company. A corporate seal can be a unique symbol that represents a particular company, and it can be displayed in many different ways, including:

• A rubber stamp on a document
• An emblem printed in ink
• A sticker affixed to documents
• A mark embossed on paper
• A digital image on an electronic document

In many cases, a corporate seal goes next to a corporate representative’s signature on important legal documents and agreements.

Using a Corporate Seal: The Advantages

States no longer require corporations to have a seal, but it can still be useful. One key benefit of a corporate seal is that using one can help protect a business from fraudulent or unauthorized activities. 

How can the seal protect a business? A company’s corporate bylaws or formation documents can require agreements for major transactions to bear the unique corporate seal to be valid. A business owner can then limit access to the corporate seal to a handful of trusted officers and agents. If an unauthorized individual from the corporation enters an “unsealed” agreement on behalf of the business, it could be argued that the agreement is invalid. In many cases, legal liability for an invalid business agreement falls on the unauthorized individual alone, not the business. 

That said, wise business owners won’t rely on seals and symbols alone for protection. It’s important to speak to an attorney about the best ways to safeguard a business against fraud and unauthorized activity.

Using a Corporate Seal: The Disadvantages

Using a corporate seal can cost a business more money and take up more of the business owner’s time. But sometimes a seal is well worth the inconvenience.

A corporate seal can be costly

Depending on how a business owner chooses to affix their corporate seal to documents, they may need to invest in additional equipment, such as embossers, software, stampers, and ink. The company might also need to hire a graphic designer to create a seal that suits the business’s needs.

A corporate seal can be time consuming

Making sure officers and agents have the corporate seal with them for transactions can take more time out of a business day. It can also take extra time at the beginning to design the seal and create equipment to reproduce it on documents. 

Managing access to a corporate seal can require a lot of effort

A big part of having a corporate seal is knowing who to trust with it. If a company’s seal falls into the wrong hands, someone who misuses the seal could bind the corporation to undesirable agreements. Wise business owners will only entrust the seal to worthy individuals (or on an as-needed basis), keeping the seal locked away at other times. Managing that process can be challenging. 

A Corporate Seal Can Mean More Protection and More Work

A corporate seal is like a fancy signature for a business as a whole. Corporate agents may come and go, but using a seal as a marker for approved business activities can last forever. Requiring a seal on legal documents is a great way to protect a business against unapproved agreements and transactions. However, if a small business doesn’t have the time or money to create and protect a corporate seal, it might not be the best option.

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ZenBusiness Can Help

There are many steps to forming and running a successful business, and ZenBusiness is there to support entrepreneurs through the process from beginning to end. Their ZenBusiness formation plans and other services make it easy to start a limited liability company or corporation and keep it running smoothly. Sometimes what separates the surviving businesses from the thriving ones is the right help and support, and ZenBusiness is ready to provide that support.