Commercial Applications
Answer
The significance of a company's common seal is as follows:
Official Signature — Being an artificial entity, a company cannot act and sign itself. The common seal acts as the official signature of the company on all its important documents.
Authorisation of Acts — All the acts of the company are authorised by its common seal. It indicates that an action has been formally approved by the company through its authorised representatives.
Token of Approval — The common seal is affixed on all important documents as a token of the company's approval. Any document which does not bear the common seal of the company is not binding on the company.
Acts Through Human Beings — Since a company acts through human beings (directors and officers), the common seal binds the company to the acts done by these individuals on its behalf.
Legal Validity — Documents stamped with the common seal carry legal validity and can be enforced in courts of law against the company.
Thus, the common seal is one of the most important features of a joint stock company.
Related Questions
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