{"id":5417,"date":"2020-07-30T08:00:16","date_gmt":"2020-07-30T07:00:16","guid":{"rendered":"http:\/\/focus.cbbc.org\/?p=5417"},"modified":"2025-04-23T10:06:37","modified_gmt":"2025-04-23T10:06:37","slug":"how-to-use-chinese-company-chops","status":"publish","type":"post","link":"https:\/\/focus.cbbc.org\/how-to-use-chinese-company-chops\/","title":{"rendered":"Everything you need to know about company chops and seals in China"},"content":{"rendered":"

China has used carved seals known as chops, seals or stamps, for centuries. Whilst they have been replaced by signatures in the west, whoever holds the \u2018company chops\u2019 holds the keys to the company, writes Fabio Stella<\/strong> of Hawksford<\/strong><\/h2>\n

Unlike most of the rest of the world, the use of carved seals (or chops) is still part of the business environment in China, owing to a longstanding tradition with its roots in the imperial history of the Middle Kingdom. The importance of seals comes from a historical mistrust of signatures as a result of the study of calligraphy and the number of forgeries that could occur in a territory as huge as this one, where written official orders could rule the destinies of hundreds of thousands, even millions, of people. As with signatures, seals have distinctive traits, but these have to be registered at the Police Security Bureau right after being issued as part of the post-incorporation formalities for Chinese corporate entities, both domestic and foreign-invested.<\/p>\n

\"launchpad<\/a><\/p>\n

To add to the complexity, seals are only available in one style for each type of seal, with five or six different types of seal needed – each one with a different use. If a seal is lost, a public announcement has to be made in a local newspaper to notify anyone who may be affected.<\/p>\n

If a seal is lost, a public announcement has to be made in a local newspaper to notify anyone who may be affected.<\/p><\/blockquote>\n

Considering their importance and the extreme trust that custodians need to have from business owners, anybody who\u2019s in possession of these items is deemed as authorised to use them and can, therefore, bind the company and its representatives with rights and obligations. However the fact that they are usually used to verify a required signature in person (for example in a notary public\u2019s procedures), means that foreign investors can always entrust the physical control and safeguarding of these tasks to third-party service providers.<\/p>\n

What are corporate seals used for and when?<\/strong><\/h2>\n

The below analyses each type of Chinese company chop one by one, in descending order of importance:<\/p>\n

\"Company<\/p>\n

Company seal<\/strong><\/h4>\n

Available in an oval or round shape, the company seal is the main chop on which all the other seals depend and are carved. It is the company\u2019s official sign of validation of official documents. Businesses use the company chop for all legal documents as it can cover almost all the functions of other chops, except for the customs chop and the invoice chop.<\/p>\n

The official company chop can be used for all letters, official documents, employment and commercial contracts, and introduction letters, certificates, documents to open bank accounts or for the submission of any official documents at any governmental office.<\/p>\n

The company seal usually features (and acts as the only official record of) the English name of a company, which will then be shown on each and every document certified using it. Apart from any records including this reference, English trading names are neither shown nor registered anywhere else in the jurisdiction of mainland China, since simplified Chinese is the only official and accepted language.<\/p>\n

Legal representative seal<\/strong><\/h4>\n

The most important role in corporate governance (according to Chinese Company Law), and the only individual that can represent the company in public hearings or actions, is its legal representative. Holding their own seal with their name on it, always in a square or rectangular shape, the legal representative of a company can use it to exercise any relevant rights and obligations. It\u2019s very rare to have a legal representative seal on its own on documents, as either the company seal, finance seal, legal representative seal are usually required as additional ‘signatures’. It is frequently used in banking operations, since a company’s legal representative can either use an original signature or<\/em> their personal chop to authorise bank transactions.<\/p>\n

As legal representative seals feature the name of the individual you\u2019ve appointed to that role in Chinese characters, the moment your legal representative is replaced, their seal needs to be destroyed and re-issued in the name of their successor. Due to its relevance to the individual acting as a legal representative, this seal is either in their possession at all times or stored with a third-party provider if their domicile is not in the People\u2019s Republic of China. Given their great importance, whenever holding both seals in-house, it\u2019s highly recommended to not store them in the same safe or under the same employee\u2019s custody.<\/p>\n

The moment your legal representative is replaced, their seal needs to be destroyed and re-issued in the name of their successor.<\/p><\/blockquote>\n

Finance seal<\/strong><\/h4>\n

As the name suggests, the finance chop is mostly required in treasury and banking operations, including bank account openings or closings, the issuance of checks (although this is becoming less and less popular), and certifying any statutory document in the finance department. These include accounting books, tax filings and compliance communications with the SAT (The State Administration of Taxation). Always in a square shape, the finance seal features no English characters, showing only the company\u2019s Chinese name.<\/p>\n

Customs seal<\/strong><\/h4>\n

Trading and manufacturing entities with filings at the General Administration of Customs are entitled to a seal that can certify their import or export declarations when clearing their goods in or out of China. Just like the company seal, this usually comes in either a round or oval shape, and only features the entity\u2019s Chinese name.<\/p>\n

Invoice (fapiao<\/em>) seal<\/strong><\/h4>\n

Among the few official documents for which a company doesn\u2019t need either the company seal or the legal representative seal are official invoices \u2013 also known as VAT Special Invoices. Paper version invoices are only valid when showing an invoice seal on the lower left side of the document.<\/p>\n

Contract seal<\/strong><\/h4>\n

Among the non-compulsory seals available for corporate entities is a separate \u2018contract seal\u2019, which is used to execute commercial agreements as long as the parties involved recognise its validity. Despite its flexibility, it still cannot be used for employment contracts or rental tenders \u2013 the company seal is irreplaceable for these types of agreements.<\/p>\n

In many cases, companies use their contract chop for signing other types of contracts with their employees or executing agreements between salespeople and clients. Overall, the contract chop grants less authority than the company chop, so it’s a more useful one to give to others for delegating authority<\/a>.<\/p>\n

Safeguarding the usage of seals<\/strong><\/h2>\n

Just like a company\u2019s payment threshold authority and purchasing limitations, procedures for the application and the usage of seals should be integrated with an entity\u2019s standard bylaws.<\/p>\n

Corporate entities can also establish additional layers of security for minor chops by ensuring that each stamping request is confirmed by affixing the company seal or requiring one or more senior executives\u2019 original signatures next to it.<\/p>\n

Keeping a record of all applications for using or affixing corporate seals can definitely help investors in making sure that staff misuse doesn\u2019t go unnoticed or unreported. The officer in charge of such procedures should be one who does not handle or hold any seals in order to obtain a healthy maker-checker flow.<\/p>\n

What could go wrong?<\/strong><\/h2>\n

Local and international business news outlets are full of examples of seals causing trouble when fights erupt over the control of a company, or when senior executives are sacked while being the ones physically holding seals in their hands.<\/p>\n

The best advice when considering the use of outsourced solutions to trusted providers is to not put all your eggs in one basket, and to learn to hedge against risks. This can be made part of a local subsidiary\u2019s culture from day one by empowering several departments and executives with a bonus-malus system paired with internal control channels to spot and immediately report any anomalies.<\/p>\n

Hawksford<\/a> is an established provider of company registration<\/strong><\/a> and outsourced corporate services in China. Hawksford offers a company secretarial service that will manage your chops by implementing a usage procedure tailor-made to your needs to strengthen internal controls and protect your business.\u00a0<\/em><\/p>\n

Call +44 (0)20 7802 2000 or email enquiries@cbbc.org<\/a> now to connect with CBBC staff who can advise on company chops and other Chinese legal requirements.<\/strong><\/h4>\n

 <\/p>\n

\"\"<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

China has used carved seals known as chops, seals or stamps, for centuries. Whilst they have been replaced by signatures in the west, whoever holds the \u2018company chops\u2019 holds the keys to the company, writes Fabio Stella of Hawksford Unlike most of the rest of the world, the use of carved seals (or chops) is still part of the business environment in China, owing to a longstanding tradition with its…<\/p>\n","protected":false},"author":11,"featured_media":5419,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"_lmt_disableupdate":"","_lmt_disable":"","footnotes":""},"categories":[207,128],"tags":[2019,135,241,2427],"class_list":["post-5417","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-law","category-services","tag-chops","tag-law","tag-legal","tag-paywall"],"yoast_head":"\nEverything you need to know about company chops and seals in China - Focus - China Britain Business Council<\/title>\n<meta name=\"description\" content=\"In China, signatures don't work, it's all about the company seal - all 6 of them! 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