Wednesday, January 24, 2007

FAQ: California Corporate Seal

In this post, I will address the first of many frequently asked questions (FAQs) I receive from client and potential clients regarding California business law:

Do I need a corporate seal for my California corporation or LLC? Where do I get one?

Historically, a company's official seal or stamp was applied to documents to indicate that the contract was a corporate act. Wax and a stamp was used. In modern times, the wax was replaced by a stamp that made only an impression on the paper.

California Civil Code Section 1628 states:
"A corporate or official seal may be affixed to an instrument by a mere impression upon the paper or other material on which such instrument is written."
The term "may" in the statute indicates that the use of a seal is permissive, rather than mandatory. Lest anyone interpret this code section to mean only that a modern seal must be used, instead of an old-world wax seal, Section 1629 makes it clear:
"All distinctions between sealed and unsealed instruments are abolished."
This is consistent with the laws of most if not all U.S. states which have abolished the use of seals as a requirement for corporate contracts.

Thus, while a corporate seal may be applied to a document, its legal signifigance is zilch. If your company still desires to have one, or in the rare circumstance that a third party will not complete a transaction without one (occasionally encountered in lending situations), custom seals can be purchased at most office supply stores and from many online outlets. For our clients that prefer to have one, we can also arrange to have one made as part of a corporate kit at the time of incorporation or LLC formation.

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