A company seal is a device for stamping the company’s name in paper. At common law, any contract entered into by a company had to be under seal, subject to some minor exceptions. From 1875 until 1989 a document had to be executed under seal if this would be the case if executed by an individual. Since the 1989 Companies Act abolished the requirement for a seal, not even a deed has to be executed under seal, provided it is signed by a director and secretary, or two directors, of the company and is expressed to be executed as a deed. CA 2006, sec45 now provides that a company may have a seal but is not bound to do so.
In practice many companies still use a company seal for deeds, share certificates and other important documents. After all, a company seal is a good authenticating device and it was only in 1875 that the requirement for all contracts executed by a company to be under seal was repealed. Habits die hard in the legal profession.
The statutory position on the execution of documents by companies is now set out in CA 2006 sec44
(1) Under the law of England and Wales or Northern Ireland a document is executed by a company-
(a) by the affixing of its common seal, or
(b) by signature in accordance with the following provisions.
(2) A document is validly executed by a company if it is signed on behalf of the company-
(a) by two authorised signatories, or
(b) by a director of the company in the presence of a witness who attests the signature.
(3) The following are “authorised signatories” for the purposes of subsection (2)-
(a) every director of the company, and
(b) in the case of a private company with a secretary or a public company, the secretary (or any joint secretary) of the company.
(4) A document signed in accordance with subsection (2) and expressed, in whatever words, to be executed by the company has the same effect as if executed under the common seal of the company.
CA 2006 sec48 provides that, for the purposes of Scottish law only, a document signed by or on behalf of the company, in accordance with the provisions of the Requirements of Writing (Scotland) Act 1995, will be properly executed. Schedule 2, paragraph 3 of this Act provides that, except where otherwise provided by an enactment, a document is signed by a company if it is signed by a director, or the company secretary, or a person authorised to sign the document on its behalf, with the document being sealed or by the signature being witnessed.