China company seals (chops) consists of official seal, legal representative seal, financial seal, seal for use on fapiao, contract seal and customs seal. Many foreign investors in China are confused about the usage of seals when they doing business in China. The first thing after obtaining the temporary business license is to carve seals. An entity cannot be incorporated without them. Below are some of the most commonly used seals (chops) in China.
Official Seal
A company’s official seal in China has legal authority over the signature of a legal representative and has the power to validate documents and contracts. All companies operating in China are required to have an official seal, which is round in shape and bears the official company name in Chinese, and where applicable, in English.
The company’s official chop is required when any important document is signed, and can provide legal authority when opening a bank account or altering the name or business scope of the company.
Legal Representative Seal
A legal representative seal is used for specific license and certificate applications and banking documents, while the legal representative seal is square in shape and bears the name of the company’s legal representative. It is a personal chop owned by the company’s legal representative, and has the authority to enter into binding obligations on behalf of the company.
Financial Seal
The financial seal is used to validate financial transactions such as cash withdrawals, wire transfers, and bank checks. The company’s financial officer should keep possession of this seal separately from others, with a duplicate stored with the company’s registered bank for verification and anti-fraud purposes. It is a mandatory chop, though the company chop can often be used in its place. Companies will often keep their finance and company chops separate to avoid exposure to misuse.
Fapiao (Invoice) Seal
The fapiao seal is mandatory for issuing official invoices and tax receipts. A chopped invoice is required to declare a purchase as a business expense.
Contract Seal
Many companies in China use contract seal in signing contracts with their employees or executing agreements between salespeople and clients. These companies will be responsible for the contracts with such seal stamped. Carving of contract seal is not statutory requirement. It can be replaced by company seal in all the situations. As for the contracts and agreements, contract seal has the equivalent legal effect with company seal.
Customs Seal
The customs chop is used for customs declarations on import and export goods. It is mandatory for companies engaged in cross-border trade.
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