Does Your Australian Company Need A Common Seal? Explained

If you’ve ever seen a document embossed with a company stamp, you’ve seen a common seal in action. With the shift to electronic signatures, remote work and updated company execution rules, it’s fair to ask: do you still need a common seal in Australia?

Short answer: no - most Australian companies don’t need a seal to operate or sign documents legally. That said, seals can still be useful in certain situations, especially for cross‑border deals or where legacy documents expect them.

In this guide, we’ll explain what a common seal is, how companies can validly execute documents without one, when a seal may still be practical, and the simple governance steps that help your team sign correctly every time.

What Is A Common Seal In Australia?

A common seal is a physical stamp that represents a company’s official signature. Historically, companies “executed” (formally signed) documents by affixing the seal in the presence of authorised officers, who would then sign to attest to it.

That approach isn’t the default anymore. The Corporations Act 2001 (Cth) sets out modern ways for companies to execute contracts and deeds without a seal, including electronic signing.

Think of a common seal as one permissible method of company execution - not a legal requirement and, for most businesses, not the everyday choice.

Do Companies Need A Common Seal Under The Corporations Act?

No. Australian companies are not required to have or use a common seal. The law provides clear, reliable alternatives that counterparties can trust without needing to look into your internal approvals.

If your company already has a seal and you want to keep it for specific occasions, you can. If you don’t have one, you generally don’t need to buy one unless a particular counterparty or foreign registry requires it for a transaction.

Company Execution Under Section 127

Section 127 of the Corporations Act gives companies a straightforward way to sign documents without a seal. A company can execute by:

• Two directors; or
• One director and one company secretary; or
• A sole director (whether or not they are also the company secretary).

Post‑2022 reforms made it clear that a sole director company can execute under section 127 even if no secretary is appointed.

Counterparties who see a document executed in this way can assume it’s validly signed. For a practical overview, our guide to signing documents under section 127 walks through the combinations and how they work in practice.

Authority To Sign Under Section 126

Section 126 allows a company to enter into, vary or discharge contracts through an authorised representative (for example, a CFO, COO or manager), without needing the section 127 formalities every time.

This is commonly used for operational agreements. The key is to document your delegations clearly so it’s easy to verify who can bind the company, and within what limits. You can read more about this pathway in our explainer on section 126.

Electronic Signing And Deeds: What’s Changed?

The Corporations Act now expressly permits electronic execution by companies, including for deeds, and allows documents to be executed in counterparts. This modernisation means you can usually sign via a reputable e‑signature platform, provided the method identifies the signatory and indicates their intention to sign, and the entire document (including all terms) is accessible to each signatory at the time of signing.

Importantly, a company that executes a deed under section 127 does not need its signatures witnessed. Witnessing may still be relevant for individuals, or in certain state or transaction contexts, but it’s not a requirement for company execution under section 127.

For context on when electronic signing is appropriate versus wet‑ink, see our comparison of wet ink and electronic signatures, as well as our overview of deeds in Australian law.

How Do You Validly Execute Company Documents Without A Seal?

There are a few common scenarios. Your choice will depend on the type of document (contract vs deed), who’s available, and the level of certainty you and your counterparty require.

1) Use Section 127 For High‑Reliance Execution

For important contracts and deeds, section 127 provides a clean statutory pathway. Because counterparties can rely on the assumption that your signatories hold the roles they claim, it often avoids extra verification steps.

If you have two directors, arrange for both to sign (or one director plus your company secretary). If you have a sole director, they can sign alone under section 127, whether or not they also hold the secretary role.

2) Delegate Under Section 126 For Day‑To‑Day Contracts

For routine supplier agreements, SaaS subscriptions or low‑value commitments, it’s practical to authorise specific officers to sign within dollar or category limits. Document those delegations, make them easy to check internally, and update them when roles change. This keeps your operations moving while retaining control at the board level.

3) Understand Deed Formalities (No Witness Required For Companies)

Deeds are often used for settlements, releases and transactions without consideration, so they carry special consequences. If a company executes a deed under section 127, no witness is required. If an individual is a party, local witnessing rules may apply to that person’s signature.

Ensure the document clearly states it is a deed, and that any delivery or dating requirements are covered. For background on how deeds work, see our guide to what a deed is under Australian law.

4) Plan For Logistics: Counterparts, Remote Signers And Timing

If parties are signing from different locations, using counterparts (separate but identical copies) can streamline execution. It helps to include a counterparts clause so the position is clear. Our explainer on signed in counterpart outlines what to include.

Where a signature does need to be witnessed (for example, an individual signatory), make sure the witness is eligible in the relevant state or territory and follows the correct process. If you need a refresher, the basics of witnessing signatures in Australia are covered here.

5) Keep A Paper Trail Of Authority And Approvals

Whatever method you choose, ensure your internal approvals are in order. Board minutes, committee sign‑offs, and documented delegations make it easy to verify authority later.

For recurring decisions, a board resolution is often the cleanest approach. If you need a template, our Directors’ Resolution Template is designed for quick adoption.

When Might A Common Seal Still Be Useful?

Even though a seal is optional, there are real‑world scenarios where having one can save time or avoid friction.

Cross‑Border Deals Or Foreign Registries

Some overseas authorities and counterparties are more familiar with seals and may ask for them. If your company regularly signs documents for foreign registries or transactions, keeping a seal on hand can reduce back‑and‑forth about Australian execution rules.

Legacy Documents That Specify Seal Use

Older constitutions, trust deeds or long‑standing contracts might still require execution by affixing a common seal. If that’s the case, you can either comply for that document or arrange a variation to allow modern execution methods.

High‑Profile Signing Ceremonies

Sometimes formality matters. For milestone transactions or stakeholders who value traditional ceremony, using a seal can be part of the “closing” moment. It’s not legally necessary, but it can align with expectations.

Internal Controls And Visibility

Because a seal is a physical object kept under controlled custody (often by the company secretary), its use can add a layer of friction that some boards prefer for high‑risk documents.

What Should Your Constitution And Policies Say?

Your company’s governance documents can set clear rules about seals and execution, reducing last‑minute confusion when it’s time to sign.

1) Decide Whether You’ll Have A Seal

There’s little downside to owning a seal if you occasionally sign legacy or overseas documents. If you rarely need one, you can defer buying until it’s needed. Either way, record the position in your governance materials.

2) Set Custody And Use Rules

If you use a seal, decide who holds it, where it’s stored, when it may be used, who must be present when it’s affixed and how you’ll record usage (many companies keep a simple “seal register”). These controls help prevent misuse and keep an audit trail.

3) Align With Sections 127 And 126

Make sure your internal policy reflects how you actually execute documents. Many companies state that documents may be executed in accordance with section 127, and also by authorised officers under section 126 for defined categories of contracts. If your rules need a refresh, consider reviewing your Company Constitution or, if appropriate, adopting a new constitution that supports electronic execution and delegations.

4) Standardise Execution Blocks In Templates

Update your contract and deed templates to include the right execution panels - a section 127 block for company parties, deed panels where relevant, and counterparts wording where needed. This avoids last‑minute edits and reduces execution errors.

5) Clarify When Wet‑Ink Is Required

Note which document types must be signed in wet‑ink (for example, certain registry forms, or a specific lender’s requirements) and which can be signed electronically. This saves time during closings and keeps your team on the same page.

6) Capture Third‑Party Authority

If someone outside your company needs to act on your behalf (for example, a consultant or project manager), keep a short written instrument on file so it’s easy to evidence their authority later. A simple Authority to Act form usually does the job.

Common Seal Vs Other Execution Methods: Pros And Cons

Using A Common Seal

• Pros: Can satisfy foreign or conservative counterparties; aligns with legacy requirements; adds a deliberate step for high‑risk documents.
• Cons: Slower and less flexible; requires physical custody and logistics; rarely required by law.

Section 127 Signatures

• Pros: Clear statutory pathway counterparties can rely on; efficient for important contracts and deeds; expressly supports electronic signing and counterparts.
• Cons: Requires availability of the right officers (two directors; a director and secretary; or a sole director).

Delegated Authority (Section 126)

• Pros: Practical for day‑to‑day operations; speeds up routine contracting; scales with good internal controls.
• Cons: Requires well‑drafted delegations and discipline to keep them current; some counterparties may still prefer section 127 for high‑value deals.

Deeds And Special Formalities

• Pros: Deeds are powerful for settlements and releases; company execution under section 127 avoids the need for witnesses.
• Cons: Extra formalities and delivery concepts can apply; individuals may still need witnesses; some counterparties or registries may insist on wet‑ink for particular documents.

Practical Tips To Avoid Execution Headaches

• Map your workflows: Decide which documents use section 127, which fall under delegated authority and which need special handling (for example, certain deeds, lender templates, or foreign filings).
• Build reliable execution blocks: Include section 127 panels, deed wording, and a counterparts clause so signing is smooth. Our guide to signed in counterpart can help with the wording.
• Plan around availability: If you require two directors for key deals, factor in travel and leave so documents don’t stall at closing.
• Use clear instructions: Send a short “how to sign” note with documents, especially where an individual needs a witness or where timing is critical.
• Keep your board approvals tidy: Use a standard format for resolutions and retain supporting documents - a ready‑to‑use board resolution template saves time.
• E‑sign where permitted: Most company contracts and deeds can be executed electronically; where a counterparty insists on wet‑ink, set expectations early about couriering originals.

Key Takeaways

• Australian companies don’t need a common seal - most documents can be validly executed without one under the Corporations Act.
• Section 127 offers a clean, reliable way to sign contracts and deeds: two directors; a director and secretary; or a sole director (no witness required for companies).
• Section 126 lets authorised officers sign day‑to‑day contracts, provided your delegations are clearly documented and kept current.
• Companies can execute electronically (including deeds) and in counterparts, which supports remote work and faster closings.
• A common seal can still be handy for foreign registries, legacy documents or ceremonial signings, but it’s optional.
• Update your governance: set clear rules in your Company Constitution, standardise execution blocks, and keep approvals and delegations on file.

If you’d like tailored advice on company execution, constitutions or whether to keep a common seal for your Australian company, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no‑obligations chat.