.jpg)
1. Why Company Seals (or Corporate Chops) Matter in China
In many Western countries, signatures are the standard form of legal acknowledgment. A signed contract, whether on paper or electronically, signifies an individual's or entity’s agreement to its terms.
In contrast, Chinese business practices place legal weight not on signatures, but on official company seals. The affixing of a company seal—registered and approved by the Public Security Bureau (PSB)—is treated under Chinese law as prima facie evidence of the company’s consent. In practice, this means that a stamped document can be legally binding even if it lacks any individual signature.
A company seal in China is not just symbolic—it carries the full legal authority of the business. Whoever holds and uses the seal has the power to commit the company to contracts, financial obligations, or regulatory filings. As a result, seal misuse can cause serious operational, legal, or financial consequences.
Whether you are incorporating in China, partnering with a local supplier, or managing a subsidiary, understanding the legal implications and operational risks associated with company seals is a core compliance issue.
2. The Main Types of Company Seals and Their Functions
Chinese companies may use multiple types of seals, each serving a unique purpose. Some are legally required, while others are commonly adopted for risk management and internal control.
(1) Company Seal (or Corporate Chop)
It is called "公司公章" in China.
The official company seal is the most authoritative and widely used chop within a company. It is mandatory for all businesses and is employed in various scenarios, including:
- Signing contracts and agreements.
- Issuing official company documents, such as internal policies and notices.
- Handling administrative affairs with government agencies.
Affixing this seal to a document signifies the company's endorsement and legally binds the company to the document's terms. Due to its broad authority, strict internal controls are necessary to prevent misuse.
In sum,
- Legal Status: Mandatory.
- Function: Used for most core activities—contract signing, issuing company policies, HR documents, board resolutions, etc.
- Authority Level: Highest—equivalent to the legal voice of the company.
- Risk: Misuse can bind the company to significant legal and financial obligations.
(2) Financial Seal (or Chop)
It is called "财务章" in China.
The financial seal is primarily used for financial transactions and matters, including:
- Opening and managing bank accounts.
- Authenticating financial documents, such as tax filings and compliance reports.
- Issuing checks and processing fund transfers.
This seal must be registered with both the Public Security Bureau (PSB) and the company's bank. Implementing robust internal controls is crucial to safeguard against unauthorized use.
In sum,
- Legal Status: Mandatory for financial dealings.
- Function: Required for opening bank accounts, processing payments, issuing financial documents, and dealing with tax authorities.
- Bank Registration: This chop must be registered with the company’s bank.
- Safeguard Tip: Typically held by the finance team or outsourced to a neutral third party custodian.
(3) Legal Representative’s Personal Seal (or Chop)
It is called "法人代表专用章" in China.
This personal chop belongs to the company's legal representative—the individual authorized to act on behalf of the company. It is often used in conjunction with the financial seal for:
- Approving significant financial transactions.
- Signing official documents requiring the legal representative's authorization.
The legal representative's seal is registered with the PSB and the company's bank. Given its association with the legal representative's authority, its use should be meticulously controlled.
In sum,
- Legal Status: Optional but widely used.
- Function: Represents the personal authority of the legal representative (CEO or general manager).
- Typical Usage: Major contracts, regulatory filings, bank-related activities.
- Control Risk: If this seal is held by a disgruntled employee or outgoing executive, it may create legal and operational paralysis.
(4) Contract Seal (or Chop)
It is called "合同章" in China.
While not legally mandatory, many companies opt to use a contract seal specifically for executing contracts and agreements. This seal serves to:
- Delegate authority to specific departments or individuals for contract signing.
- Limit the use of the official company seal to high-level agreements.
The contract seal provides a layer of internal control by restricting the authority to bind the company in contractual obligations to designated personnel.
In sum,
- Legal Status: Optional.
- Function: Used specifically to execute contracts, particularly by commercial or procurement teams.
- Purpose: Delegates contract authority to specific personnel while keeping the company seal reserved for high-level matters.
- Risk Control: Often limited by company policy in terms of deal size or counterparty type.
(5) Invoice Seal (or Chop)
It is called "发票专用章" in China.
The invoice seal is used exclusively for issuing official invoices (fapiao). In China, an invoice without this seal is not considered valid for tax or accounting purposes. Companies engaged in regular issuance of invoices must ensure this seal is affixed to all official invoices to maintain compliance with tax regulations.
In sum,
- Legal Status: Required for issuing valid Chinese invoices (fapiao).
- Function: Enables businesses to issue official tax-deductible receipts in China.
- Compliance Importance: Without this seal, invoices are not recognized by the tax bureau or as valid business expenses.
(6) Customs Seal (or Chop)
It is called "报关专用章" in China.
For companies involved in import and export activities, the customs seal is essential. It is used for:
- Customs declarations.
- Processing import and export documentation.
This seal facilitates smooth operations in cross-border trade and ensures compliance with customs regulations.
In sum,
- Legal Status: Required for import/export operations.
- Function: Used in customs declaration documents, export paperwork, and other cross-border trade documents.
- Compliance Risk: Incorrect or missing customs seal can delay shipments and incur penalties.
(7) Electronic Corporate Seal (or Chop)
It is called "电子公章" in China.
With the advancement of digital transactions, electronic seals have become increasingly prevalent. These digital equivalents of physical seals are used for:
- Online contract signings.
- Electronic document authentication.
Electronic seals are encrypted to ensure security and are legally recognized in China. Companies adopting digital workflows should consider implementing electronic seals to streamline operations.
In sum,
- Legal Status: Legally recognized for online transactions.
- Function: Used in digital contracts, cloud-based workflows, and e-invoicing.
- Security Feature: Typically encrypted and issued through a licensed third-party electronic seal provider.
3. How to Legally Obtain and Register Corporate Seals in China
Only licensed seal engraving companies may produce official corporate seals in China, and each seal must be filed with the Public Security Bureau (PSB) for legal recognition. Informal or unregistered seals are invalid and may compromise business agreements.
Steps to Register a Seal:
(1) Prepare Documentation
- Business license (original and copy)
- Legal representative’s ID (Chinese ID or passport)
- Power of attorney (if handled by a delegate)
- Detailed application form specifying types and number of seals
(2) Choose an Authorized Seal Maker
- Only certified engravers approved by the PSB may produce legal seals
- Some districts require using designated providers linked to the PSB
(3) Filing and Approval
- Seals are digitally filed with the PSB
- A seal registration certificate is issued to confirm legal validity
4. Best Practices for Seal Management and Risk Mitigation
Due to the legal weight of seals, strong internal protocols are critical to preventing misuse, fraud, or internal disputes.
Recommended Internal Controls:
- Secure Storage: Keep seals in locked safes, cabinets, or with professional custodians
- Authorization Procedures: Define who is allowed to use each seal and under what conditions
- Usage Logs: Require written documentation for each use, including date, purpose, user, and document type
- Dual Sign-Offs: Implement multi-level approvals for high-value or sensitive documents
- Periodic Audits: Conduct internal audits to ensure logs and actual usage align
- Restrictions on Offsite Use: Prohibit seals from being removed from the office without formal written approval
5. What to Do If a Seal Is Lost, Stolen, or Misused
Seal loss or theft can severely impact business operations and must be addressed swiftly.
Response Protocol:
- Report Immediately to the PSB: File an official report and document the circumstances
- Public Declaration of Invalidation: Publish a seal-loss notice in a designated local legal journal
- Apply for a New Seal: After a waiting period (varies by district), submit an application with the business license and original report
- Notify Stakeholders: Inform banks, clients, and regulatory authorities that the old seal is no longer valid
6. Common Seal-Related Risks for Foreign-Invested Companies
(1) Internal Power Struggles
Disputes involving founders or executives can result in a company losing control of its seals. If a terminated executive retains possession, the company may face operational gridlock, especially if the individual is also the legal representative.
(2) “Catch-22” in Company Registration
To register a business in China, you need a seal—but you can’t legally obtain a seal until your company is registered. This circularity is typically resolved by engaging a local lawyer or incorporation agent who works with pre-authorized seal-makers.
(3) Delays in Execution
If a seal is unavailable due to travel, absence, or internal bottlenecks, companies may be unable to process payments, execute contracts, or submit filings. Clear procedures and backup custodians can mitigate this.
(4) Contractual Risk in Outsourcing
For international companies that regularly engage with the Chinese market—whether through manufacturing, sourcing, or partnerships—it may be beneficial to create and use a company seal, even if one is not legally required in their home jurisdiction or in other global markets. While corporate seals are not mandatory under Chinese law for foreign companies operating abroad, affixing a company seal to contracts with Chinese counterparties significantly increases the likelihood that the contract will be recognized as legally binding and enforceable by Chinese courts.
In many parts of China, courts regard a contract stamped with a company's official seal—whether domestic or foreign—as strong evidence of intent and corporate authorization. This can be particularly important when enforcing terms related to OEM agreements, NDAs, supply chain obligations, or dispute resolution clauses.
For foreign companies with subsidiaries registered in China, the situation is different: those entities are required to comply fully with all relevant regulations regarding corporate seals. This includes obtaining and registering the necessary types of seals (e.g., company seal, financial seal, invoice seal) and following local compliance and operational protocols as discussed throughout this guide.
Final Thoughts
Corporate seals are fundamental to conducting business in China. For international companies, particularly those in tech, manufacturing, and e-commerce, understanding how these stamps of authority operate—and ensuring proper internal governance—is essential for business continuity, legal compliance, and operational control.
While seals might seem like a procedural formality, they represent real power. Treat them with the same seriousness you would assign to a senior executive’s signing authority. Whether you're establishing a presence in China, managing cross-border transactions, or outsourcing production, mastering the seal system is a practical and legal necessity.