The Company Chop vs Common Seal - What’s the Difference?

The open economy of Hong Kong and its business-friendly environment make this jurisdiction a favorite choice to open companies. A Hong Kong Private Limited Company is quite a popular vehicle for doing business in the Asia Pacific region due to their low requirements for registering in Hong Kong, as well as the short time to complete the process.

Something that is often overlooked, after the incorporation process has been completed, is the set of official documents of your company, which are issued by the local authorities, such as the Hong Kong Companies Registry or the Inland Revenue Department. Additionally, differently from common practices of Western countries, in Asia, the signatures don't have the same legal or official weight as the chops or seals. Being Hong Kong the bridge between the east and the west, a combination of both is used. However, the company chop has a significant weight. 

In this article, we will be focusing on the use of a company chop or a company seal, as well as other considerations like where to keep it and how to replace them. More details will be shown in the next sections.

What Is a Company Chop?

A company chop is a rubber stamp used to print (with ink) information about a company.  For example, its full name. It’s used in some countries, especially those that have a legal system based on the Common Law, such as the United Kingdom, New Zealand, Australia and Hong Kong. It gives binding legal status to documents related to the company and its business activities. In other words, it serves as proof that a document has an official nature and was approved by a business entity.

Your company will have two types of chops. There’s the rectangular and the circular chop. The company name and a space to include a signature will be printed by the rectangular chop. It’ll mention the words “for and on behalf of” and “authorized signature”. The circular chop only has the company name. It’s also less frequently used 

What Is a Common Seal and What Is It Used For?

A common seal has a very similar purpose to the company chop. However, a common seal is normally attached to a document with wax, and then it’s pressed with the information of the company, such as its address and the full company name. Under the Hong Kong Companies Ordinance of 2014, the use of company seals is no longer needed. If a company chooses to use it, it can still be used as the owners of the company see fit. 

Hong Kong and Mainland China - Do They Have Different Chops?

If a person compares a (company) chop from Mainland China and one from Hong Kong, you can find the differences. It’s important to note that in Mainland China, a (company) chop has a lot of legal weight. It’ll be needed from generating invoices (fapiaos) to approve bank transactions. It’s also registered with the government and has its serial number. A chop from Hong Kong isn’t used in the same way. It’ll help to prove that a business in Hong Kong is official.

A chop from a Hong Kong company can’t be used in Mainland China. They’re not interchangeable. They belong to different jurisdictions and legal systems! When signing a commercial contract, you should check from which system it comes. It’s easy to confuse the jurisdiction of Hong Kong with the one in Mainland China.

Now that we’ve discussed in more depth the uses and the differences of your company chop, we can move into the next section. 

Your Company Chop - Where to Keep It and Maintain It?

After the incorporation process of your Hong Kong company has been completed, a set of chops is normally given to the owners of the company. These chops are carved by a commercial company. Moreover, the chops don't need to be registered with the local government authorities of Hong Kong. Furthermore, they’re made of rubber, and they contain some details of your company, such as the full name of your company. You can also customize your company chop as much as you want.

Although currently in Hong Kong the chops are not as used as before, they still hold important information about your company, and therefore, they must be kept in a safe place. Usually, as most of the business owners of Hong Kong companies are located overseas and run the business from their home country, they choose to delegate the chop-keeping task to their service providers in Hong Kong. For example, to their Company Secretary, their accounts, or their legal advisors. A fee is commonly charged or even included in a package when using some of their services, especially if they also act as the registered address for their clients. 

Keeping your chops at the same address where your company is registered, it’s more convenient! Also, your service provider can have them ready if they’re needed. Otherwise, the chops would need to be sent overseas, and the courier fees could sum up.

Other Considerations

There could be a few situations in which the company chops could be lost, such as by misplacing them or even when changing your service providers. Another scenario is that the chops could become damaged, worn out, or even meltdown. It’s something that could happen! But luckily, if you need a company chop replacement, it’s quite easy to obtain them in Hong Kong. You can get a company chop ready in as little as 1 or 2 working days, and the price for carving out the chops is quite cheap.  Also, there is even the possibility of asking for 2 sets of chops when registering your company, so you can keep one with you and one in Hong Kong.

Conclusion

As we’ve seen in this article, the company chop and to a lesser extent, the common seal, are being less and less used for common practices in Hong Kong companies’ affairs. As the new regulation of the Companies Ordinance took effect in 2014 there is still a practice of having the company chop as part of the formalities. But they aren’t required for most of the official processes in Hong Kong. Nevertheless, it’s important to keep the chops in a safe place. Only give them to someone you can trust!