company chop on contract
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What is a Company Chop? Common Seal vs Company Chop Explained

In this article we break down the difference between a company chop and a common seal for business owners to understand, and which chops you should consider getting for your business.

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If you’re a small business owner in Hong Kong, you’ve probably heard the terms “company chop” and “common seal”. But what exactly are they? What are the differences between the two? And why would you need one?

In this article, we’ll examine:

  • What a company chop is
  • What a company chop is used for
  • The differences between a company chop and a common seal
  • How to get a company chop 

Let’s dive in!

What is a Company Chop?

A company chop is a rubber stamp that contains the company’s name in Chinese and/or in English. The stamp may also contain a company registration number. Chops come in round or rectangular shapes, and they can be paired with either blue or red ink.

The round chop is the most common shape, which usually has the company’s Chinese name or logo in the center encircled by the company’s English name. A rectangular stamp on the other hand consists of three parts; A top part that contains the phrase ‘For and on behalf of’ with the company name underneath, an empty middle part with space for a signature, and a bottom part with the phrase ‘Authorized Signature(s)’.

A business owner may consider having several chops for different purposes. Some common types of company chops include:

  • Official company chop: This type of chop is used to sign documents on behalf of the company. An official company chop is often used as a substitute for a signature, generally used for signing introduction letters, official documents, and other legal documents. Only authorized persons can use this chop.
  • Invoice chop: An invoice chop is used on invoices and tax receipts.
  • Financial chop: A financial chop is used to provide legal authority in financial transactions, such as opening a bank account or issuing a cheque. An official company chop can be used to substitute a financial chop if necessary.
  • Contract chop: A contract chop is handy when signing contracts. This chop has less authority than an official company chop, so it’s useful for delegating signing authority to an employee of lower rank.
  • Electronic chop: An electronic chop is a digital version of a company chop used for online transactions. Electronic signatures can only be relied on if they are exclusively owned and alterations are detectable.
  • Legal Representative Chop: A chop that is owned by the legal representative of a company. This chop is commonly used when withdrawing cash from the bank and approving payments.
  • Customs chop: A customs chop is common for companies that frequently ship goods. This chop is used for custom declarations on imports and exports.

All company chops should be safeguarded as they can be misused. It is wise to have a system in place to track who uses the chop and for what purpose. Here are tips for storing and using chops:

  • Store in a locked cabinet or safe when not in use
  • Assign each chop to one authorized user
  • Have controls to regulate who uses the chop and for what purpose

A company chop should be used with care as it represents the company. Improper use of a company chop can result in legal consequences.

What is the Company Chop used for?

A company chop is used as a signature in Hong Kong. This means that it can be used on legal documents, invoices, contracts, and other official company correspondence.

For example, a company chop can be used by a company employee when receiving delivery on behalf of the company. The employee would stamp the document to show that they’ve received the goods on behalf of the company.

Because company chops work as signatures, they are not always required. In many cases, a handwritten signature will suffice. However, there are some situations where a company chop is required, such as when opening a bank account.

Company Seal vs Company Chop

The main difference between a common seal (also known as a company seal) and a company chop is that a company seal is used for legal documents, while a company chop can be used for both legal and non-legal documents.

Another difference is that a company seal is embossed onto the paper while a company chop is stamped onto the paper.

A common seal is a metal seal that has the company name and the words Common Seal engraved on it. A company can also choose to add other business-related information such as registration number or date of incorporation.

When a common seal was a requirement for new businesses, the seal was used for activities such as issuing share certificates and executing deeds.

Effective 3rd March 2014, a company seal is no longer required in Hong Kong. If you had already registered your company before this date, you are not required to get rid of your company seal, but you may do so if you wish.

There are no specific guidelines to follow for companies that wish to cancel their common seal. The cancellation of a company seal should be handled by the company’s directors.

For companies registered after 3rd March 2014, a company chop is sufficient. If you have a contract that needs to be under seal, follow these guidelines:

  • If the company has one director, the director should sign documents on behalf of the company.
  • If the company has two directors, any of the directors or both directors should sign documents.
  • If the company has more than two directors, documents should be signed by any of the directors or the company secretary.

Although company seals are no longer mandatory, some companies continue to use them. This is because a company seal adds an extra layer of security. For example, if a document is embossed with a company seal, it would be more difficult to forge than a document that has been signed with a company chop.

Some of the transactions that may warrant the use of a company seal include share transfer, mortgage, and lease.

How do I get a Company Chop in Hong Kong?

If you’re starting a new company in Hong Kong, you can order a company chop when you register your business. Most companies that offer business registration services will also provide company chops.

You can also order a company chop from a stationery store or online. Whether it’s an online store or an offline store, make sure to order from a reputable source. Also, be sure to specify that you need a company chop and not a common seal.

When ordering a company chop, you will need to provide all the information that should be included on the chop, such as the company name and registration number.

When you receive your company chop, there are a few things you should do:

  • Check that the company name and other business-related information are correct.
  • Check that the size, shape, and design of the chop match what you ordered.

If you’re not satisfied with the company chop, you can return it and get a refund or have it replaced.

Company Chop FAQ

Is a company chop required in Hong Kong?

In Hong Kong, a company chop is not required by law. However, many businesses still choose to use one. A company chop is a physical stamp that is used to mark documents as official. It usually contains the business name and registration number. 

While a company chop is not legally required, it can be helpful in establishing a business’s identity. It can also make documents look more professional and polished. For these reasons, many businesses in Hong Kong still choose to use a company chop, even though it is not technically required by law.

What should be included in the company chop?

The elements that must be included in a company chop vary depending on the jurisdiction, but they typically include the name of the company, the company’s registration number, and the name of the country where the company is registered.

In some cases, a company chop may also include the company’s address or logo. While a company chop may seem like a small detail, it plays an important role in ensuring that contracts and other documents are properly executed.

How do I order a company chop?

The process of ordering a company chop is relatively straightforward. First, you will need to collect some basic information about your company, such as the name and registration number. Next, you will need to submit this information to a registered stamp maker. Once your order has been processed, you will receive your company chop in the mail. 

Finally, you will need to register the chop with the government in order to make it legally binding. Although the process may seem daunting at first, ordering a company chop is a relatively simple task.

Conclusion

A company chop helps in the day-to-day running of a business, so it’s a good idea to get one for your company. Since your company chop is used in validating and authorizing company documents, it’s important to keep them in a safe place.

Having a chop or stamp makes it easy to deal with clients and government authorities in Hong Kong. If your business needs help handling government forms and accounting operations, contact Binery.

Binery will help you run your business smoothly by providing monthly financial reports and CFO reviews.