Meaning
Physical custody of the official stamping device of a registered company confers the practical power to execute binding documents on the company’s behalf. Through this mechanism, corporate seal possession provides prima facie evidence of authentic corporate assent to contracts and deed actions. Many jurisdictions still require this physical impression on property transfers and deeds of assignment.
Holding this instrument allows the custodian to execute certificates under the common seal.
Execution Authority
Securing corporate authority requires more than a board resolution when dealing with international jurisdictions. Local registrars and foreign banks often demand that deeds be sealed to confirm their validity. Having the seal allows a director to complete registrations without administrative delays.
Transaction Risk
Unauthorized transactions become possible when a rogue executive or disgruntled partner retains control of the physical stamp. They can execute unauthorized borrowings or transfer corporate assets to third parties. These actions bind the company to agreements before the board can intervene or cancel the authority.
Custody Transfer
Merger agreements require the delivery of the physical seal at the closing table alongside share certificates and minute books. The departing officers hand over the device to the buyer’s counsel to finalize the transfer of administrative control.
