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Post by Deleted on Mar 3, 2011 8:37:20 GMT -5
What is a corporate seal used for and what does it mean?
My boss just asked me what our risk is if we give a corporate seal to the division managers in one of our sales offices. I honestly don't know the risks.
Can anyone help?
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Post by Deleted on Mar 3, 2011 8:41:01 GMT -5
Legal Uses # While most modern corporate laws make corporate seals unnecessary, they are still used, if rarely. Corporate seals may be used in the execution of deeds (this is not to be confused with simple business contracts), though, again, the enforcement of such deeds in most cases do not necessarily require seals. Other legal purposes that use seals include share certificates, which are often issued to shareholders with the corporate seal embossed on the documents. In international corporate law, some companies are required to legitimize certificates under a common seal. While seals are not necessary to open a bank account in most states, some states do consider it a precondition. The signatures of legal documents are sometimes accompanied by the corporate seal as a means to convey through the legal process that the person signing the document is doing so as a proxy for the corporation's interest, though again seals are not necessary to legitimize these documents if the person signing them is legally capable of doing so. Read more: What Is the Purpose of a Corporate Seal? | eHow.com www.ehow.com/about_5033397_purpose-corporate-seal.html#ixzz1FXlbXP1tThis is what I found on ehow. This is sort of what I thought. The seal is used for more show than anything else.
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hoops902
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Post by hoops902 on Mar 3, 2011 8:43:13 GMT -5
What is a corporate seal used for and what does it mean? My boss just asked me what our risk is if we give a corporate seal to the division managers in one of our sales offices. I honestly don't know the risks. Can anyone help? My understanding is that it's basically like a rubber stamped signature of your corporate officer. It's a way to indicate that something is officially sanctioned by the corporation. It's a way to show that whoever is doing the signing is doing so in an official capacity for the company.
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hoops902
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Post by hoops902 on Mar 3, 2011 8:44:44 GMT -5
The risks I would assume are not that great. The division managers are already acting in an official capacity representing your company. This just certifies it, which probably means next to nothing in the long run.
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michelyn8
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Post by michelyn8 on Mar 3, 2011 9:05:49 GMT -5
Corporate seals are often required on government bids and contracts.
When I worked for a highway company a few years ago, every bid submitted (even when they went to electronic bidding) had a portion to be signed by the company president and secretary, had to have the corporate seal affixed and the signatures notarized. This document became part of the contract if we were low bidder on the project.
this is what I found when I did a search and sounds about right (based on my experiences).
Company seal From Wikipedia, the free encyclopedia
A company seal (sometimes referred to as the corporate seal or common seal) is an official seal used by a company. Company seals were predominantly used by companies in common law jurisdictions, although in modern times, most countries have abrogated the use of seals.[1]
Traditionally, the seal was of some legal significance because the affixing of the seal signified that the document was the act and deed of the company, whereas when a document was merely signed by a director, then that was deemed to be an act carried out on behalf of the company by its agents, which was subject to applicable restrictions and limitations under the ordinary law of agency.
Corporate seals are generally only used for two purposes by corporations today:
Documents which need to be executed as deeds (as opposed to simple contracts), may be executed under the company's common seal Certain corporate documents, for example share certificates are often issued under the company seal (and some countries required that share certificates be issued under the common seal) Physically, seals used to be used to make an impression on melted wax on the relevant document, although modern seals will usually only leave an indentation or impression on the paper (although sometimes a red wafer is used to imitate old red wax seals, and to make the sealing show up better on photocopies).
[edit] References ^ For example, in the United Kingdom, see section 36A of the Companies Act 1985 abolishing the requirement to affix company seals to a deed. Also see the
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sunuva
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Post by sunuva on Mar 3, 2011 9:57:47 GMT -5
I didn't even know they are actively used, anymore.
As far as I can remember, my corporate seal was granted when I incorporated. I have been asked to provide the seal (photocopy) as proof of a legitimate company when pursuing contracts - but that's it. But that in no way exposes the coporation to risk in the manner your boss seems to be asking. It doesn't even bear any proprietary information.
I'd say there is no risk. It may simply be to assist the Divisional Manager in his duties if he is required to provide proof as necessary for bidding or being awarded projects or contracts (speed up the process).
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cronewitch
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Post by cronewitch on Mar 3, 2011 11:43:10 GMT -5
We keep ours in a safe and I think we use it when we issue new shares only. We are a small company so only issue new shares when a shareholder dies or distributes to his/her kids or a trust.
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Tiny
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Post by Tiny on Mar 3, 2011 11:54:00 GMT -5
I don't think it was a "corporate" seal - but rather a signature stamp/seal that was used by the Payroll and Payable departments... it was closely gaurded and used for checks cut on the fly... I think it also got used on Official letters/memos and such when the Big Chief wasn't around to sign his name. This was along time ago for a small company (fewer than 100 employees). What would the regional managers be using the Seal for? Or what things get stamped with the Seal? I suspect it's mostly "decorative" but I'm no authority.
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Post by Deleted on Mar 3, 2011 12:20:27 GMT -5
What would the regional managers be using the Seal for? Or what things get stamped with the Seal? I suspect it's mostly "decorative" but I'm no authority. Mostly performance and payment bonds related to construction contracts.
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ihearyou2
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Post by ihearyou2 on Mar 3, 2011 12:31:43 GMT -5
He shouldn't have it but instead request it as needed. From a safeguard perspective this prevents him using it to sign/seal documents that were not approved.
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Post by Deleted on Mar 3, 2011 12:34:30 GMT -5
He shouldn't have it but instead request it as needed. From a safeguard perspective this prevents him using it to sign/seal documents that were not approved. That is what we do now, but we are trying to streamline the process.. He already has authority to sign documents (up to a certain $ amount) on behalf of the company.
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ihearyou2
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Post by ihearyou2 on Mar 3, 2011 12:39:57 GMT -5
He shouldn't have it but instead request it as needed. From a safeguard perspective this prevents him using it to sign/seal documents that were not approved. That is what we do now, but we are trying to streamline the process.. He already has authority to sign documents (up to a certain $ amount) on behalf of the company. I would then require two signatures for approval of the contracts maybe him and his immeidate supervisor? It is problematic if he is working in a bubble on the approvals.
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Post by Deleted on Mar 3, 2011 12:41:59 GMT -5
That is what we do now, but we are trying to streamline the process.. He already has authority to sign documents (up to a certain $ amount) on behalf of the company. I would then require two signatures for approval of the contracts maybe him and his immeidate supervisor? It is problematic if he is working in a bubble on the approvals. The company has only given him authority to sign contract up to a certain $$ to try and mitigate that risk. Do you think that is not strong enough? Do you think giving him a corporate seal increase our exposure?
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ihearyou2
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Post by ihearyou2 on Mar 3, 2011 12:45:36 GMT -5
Yes I don't think the minimum amounts is enough of a safeguard unless they are truly low. The corporate seal is your signature as far as approval of business, if this guy goes wildass either trying to do his own thing or sign a contract that your CEO actually didn't want, responsibility is partially yours for not setting up segregation of duties. Now if CEO is cool with this exposure then go for it. We have everything approved over here by a senior person or board for any contracts that are signed.
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hoops902
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Post by hoops902 on Mar 3, 2011 13:54:36 GMT -5
Yes I don't think the minimum amounts is enough of a safeguard unless they are truly low. The corporate seal is your signature as far as approval of business, if this guy goes wildass either trying to do his own thing or sign a contract that your CEO actually didn't want, responsibility is partially yours for not setting up segregation of duties. Now if CEO is cool with this exposure then go for it. We have everything approved over here by a senior person or board for any contracts that are signed. I agree with you on the segregation of duties and verification with 2 signatures...but do you really think giving him the corporate seal INCREASES the exposure they already have? I would argue the current process sounds lacking in controls perhaps and the decision of giving him a corporate seal is a good time to revisit those controls. But if he decides to go wild signing things "on behalf of the corp" or going wild and slamming the corporate seal on things...I don't think that's going to be much different. Am I wrong? Is the corporate seal that magical? Or is it just that the current process poses risk in and of itself?
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Post by Deleted on Mar 3, 2011 14:01:10 GMT -5
Yes I don't think the minimum amounts is enough of a safeguard unless they are truly low. The corporate seal is your signature as far as approval of business, if this guy goes wildass either trying to do his own thing or sign a contract that your CEO actually didn't want, responsibility is partially yours for not setting up segregation of duties. Now if CEO is cool with this exposure then go for it. We have everything approved over here by a senior person or board for any contracts that are signed. Am I wrong? Is the corporate seal that magical? Or is it just that the current process poses risk in and of itself? that is what I was wondering, and from the sounds of it, it is not. It is more for looks than for substance.
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