Hong Kong Company Chop Common Seal and Signature Chop Rules Under the Companies Ordinance

Hong Kong Company Chop: Legal Status Under Cap. 622

The hong kong company chop carries a different legal status than many business owners assume. Since the 2014 amendments to the Companies Ordinance (Cap. 622), a private company limited by shares is no longer required to have a common seal unless its articles of association expressly require one.

Hong Kong Common Seal Rules

Under the old Companies Ordinance (Cap. 32), every company was required to have a common seal. The 2014 rewrite changed this. Section 124 of Cap. 622 now provides that a company may, but is not required to, have a common seal. If the articles of association do not mention a seal, the company has no obligation to obtain one.

If a company chooses to have a common seal, the seal must be kept under the control of the directors. The directors must also maintain a seal register recording every use of the seal. That register must capture the date of use, the document sealed, and the names of the persons who witnessed the affixing. The seal must be used only with the authority of the directors or a committee of directors.

The common seal rules under Cap. 622 apply equally to a company that adopts the model articles (Schedule 2 to the Companies Ordinance) or bespoke articles. The model articles do not require a seal. A company that adopts them without amendment has no statutory obligation to obtain one.

Hong Kong Company Chop Requirement

The legal requirement for a company chop depends entirely on the company's articles of association. If the articles state that the company must have a common seal, the directors must procure one and follow the execution procedures set out in the articles and the Ordinance. If the articles are silent, there is no requirement.

Many Hong Kong companies continue to use a company chop because of commercial custom. Banks, landlords, and government departments sometimes expect a chop on certain documents, even though the law does not require one. The chop has no special legal status under Cap. 622. It is simply a method of signing that the company has chosen to adopt. A document properly signed by authorised signatories is as effective as one that bears the company chop.

Hong Kong Company Signature Chop

A signature chop is a stamp that reproduces the signature of an authorised signatory, such as a director or the company secretary. It is distinct from the common seal. The signature chop is not regulated by the Companies Ordinance. Its use is a matter of internal authorisation by the directors.

When a company executes a document using a signature chop, the person whose signature is reproduced must have authorised the use of the chop. The company should maintain a board resolution or a written authorisation identifying the signatories and the circumstances in which the signature chop may be used. Without such authorisation, a document bearing a signature chop may be challenged as not properly executed.

For documents that require execution as a deed, the signature chop alone is not sufficient unless the company's articles permit it and the execution formalities of section 127 of Cap. 622 are followed. A deed executed by a company must be expressed to be a deed, signed by a director and the company secretary (or two directors), and delivered as a deed.

Hong Kong Company Seal Abolition

The abolition of the mandatory common seal was one of the key changes introduced by the 2014 amendments to the Companies Ordinance. Before the amendments, every company was required to have a common seal and to use it for executing deeds and certain other documents. A company can now execute documents without a seal, provided the execution formalities are met.

Section 127 of Cap. 622 sets out the alternative execution method. A document is executed by a company if it is signed by one director and the company secretary, or by two directors. The document need not be under seal. This method applies to both contracts and deeds, although a deed requires additional formalities: the document must be expressed to be a deed, signed in the presence of a witness, and delivered.

The abolition does not prevent a company from continuing to use a common seal if its articles require one. It simply removes the statutory obligation. Companies incorporated before the 2014 amendments whose articles still refer to a common seal should review their articles to decide whether to retain the requirement or amend it.

Execution of Documents Without a Seal

For a private company limited by shares, the most common method of executing documents is by signature of a director and the company secretary, or two directors. This method is valid for all documents the company is authorised to execute: contracts, deeds, and share certificates.

The signatories must sign the document in their own names. A signature chop may be used if the signatory has authorised it, but the company should be able to produce evidence of that authorisation if challenged.

For deeds, the execution formalities are stricter. Section 127(3) of Cap. 622 requires that a deed executed by a company must be expressed to be a deed, signed by a director and the company secretary (or two directors), and delivered. The signature must be witnessed by a person who is not a party to the deed. The witness must sign the deed and provide their name and address.

Practical Considerations for Business Owners

Although the law no longer requires a common seal, many Hong Kong companies continue to use one because of commercial practice. Banks may require a chop on account opening forms and loan documents. Landlords may expect a chop on leases. Government departments may ask for a chop on certain filings.

If your company chooses to use a common seal or a company chop, you should:

• Ensure the articles of association authorise its use.
• Maintain a seal register recording every use of the seal.
• Keep the seal under the control of the directors.
• Obtain a board resolution authorising the use of a signature chop.

If your company chooses not to use a seal, ensure that all documents are properly signed by authorised signatories and that the company maintains a register of authorised signatories.

Reviewing Your Articles of Association

The articles of association govern whether your company is required to have a common seal. If your company was incorporated before the 2014 amendments, the articles may still refer to a common seal. Review the articles to determine whether the seal requirement is still appropriate.

If the articles require a common seal and you wish to remove that requirement, you must pass a special resolution to amend the articles. The amendment must be filed with the Companies Registry on Form ND2A within 15 days of the resolution.

If the articles are silent on the seal, you are free to decide whether to adopt one. Base the decision on commercial practice and the expectations of the parties you deal with.

Summary of Key Points

• A Hong Kong company is not required to have a common seal unless its articles of association require one.
• A document signed by a director and the company secretary, or two directors, is as effective as a document under seal.
• The company chop has no special legal status under Cap. 622 but persists in commercial practice.
• A signature chop must be authorised by the signatory and the company should maintain evidence of that authorisation.
• For deeds, additional formalities apply: the document must be expressed to be a deed, signed in the presence of a witness, and delivered.
• Companies with articles that require a common seal should review whether to retain or remove that requirement.

For further guidance, consult the Companies Registry's guidelines on execution of documents or seek legal advice tailored to your company's articles and commercial arrangements.