A corporate seal is no longer required by LLCs or Corporations and any state in the United States. Although both a corporate seal and official stock certificates were once required for corporations, like spurs on a boot, these remnants of the past are no longer functional or relevant. States still generally recognize the legal power of a corporate seal and official stock certificates, however, modern technology has led the diminishment of these powers and ultimately, the corporate seal and official stock certificates may end up becoming merely symbolic gestures by a corporation.
Corporate Seal
Similar to a state seal, the corporate seal was the official mark of the corporation. Since a corporation is considered a separate entity, the corporate seal acted as the signature of the corporation. Any legal or official document that emanated from the corporation was required to include a company seal.
Individuals were not allowed to authorize certain corporate acts and so a corporate seal was necessary to prove corporate authority. However, as business became more fluid and as technology ushered in the digital age, the corporate seal became obsolete and to a certain extent, a hindrance. Today, a corporate seal may be used for deeds and for bank accounts, but even these uses of the corporate seal are becoming more and more rare. Rather than a corporate seal, state laws recognize the signature of an individual(s) with actual authority (i.e. CEO, director) as binding upon the corporation.
Corporate seals in the past were imprinted on wax upon a document. As time passed, rubber stamps were preferred and today, most corporate seals are embossed upon a document. Although no longer required, the corporate seal still retains a sense of authenticity and a mark of identity for a corporation.
Why Should You Have a Corporate Seal?
A corporate seal provides a formal and professional way to authenticate important documents, making them legally binding. It symbolizes the authority of the company, offering added credibility and security for official paperwork.
Corporate Seal Example, Uses, and What Companies Use Them For
Corporate seals are often used by corporations to endorse key documents such as contracts, resolutions, and certificates. Typically, they are employed by established companies, LLCs, and nonprofit organizations to signify official approval and to authenticate legal documents, ensuring they are recognized as legitimate and binding.
Official Stock Certificate
Official stock certificates have also lost some of their value and power over time. Official stock certificates were originally used as title to a corporation's stock and issued to all stock holders. Made official by the corporate seal, these certificates were necessary to show proof of ownership of corporate shares.
Today, the onset of brokers and electronic filings has made official stock certificates unnecessary. State corporation laws have done away with requiring corporations to issue paper stocks, and as a result, many publically traded corporations no longer issue paper certificates and have transitioned to electronically filing all corporate shares.
Stock certificates are no longer considered title, but merely evidence of title and courts will generally recognize the corporation's stockholder register as the official record of true shareholders. Like the corporate seal, official stock certificates are no longer required, but the certificates still provides an aura of authenticity, although the effects are purely psychological and not legal.
Corporate Seal Requirement
While not legally required in all states, having a corporate seal can be beneficial for businesses. It is often used to formalize and authenticate important documents, providing an extra layer of security and professionalism.
Legal Requirements for Corporate Seals
The legal requirements for corporate seals vary by state and jurisdiction. Some states require specific elements in a seal, while others may not mandate its use at all. It is important to check local regulations to ensure compliance.
Common Elements of Corporate Seals
Corporate seals typically include the company's name, the state of incorporation, and the year of establishment. Some seals also feature symbols like an emblem or logo. These elements help to clearly identify the company and its official status, adding to the seal's authenticity and authority.
Conclusion
Corporate seals serve as a valuable tool for businesses, adding formality and authenticity to important documents. While not always required by law, they can enhance the credibility of your company's official paperwork, reinforcing its legal standing.
