Do Companies in New Zealand Still Need a Common Seal?

If you run a company in New Zealand, you've probably seen the phrase common seal pop up in older documents, bank forms, or supplier contracts. It can feel like one of those "corporate" things that only large organisations worry about.

But for most small businesses, a common seal is not something you need to stress about day-to-day.

That said, the common seal still exists as a concept in NZ company law, and it can still be useful in a few situations. The real issue is knowing when it matters (and when it doesn't), so you don't slow down deals, sign incorrectly, or agree to outdated paperwork requirements.

Let's break it down in plain English.

What Is A Common Seal (And Why Did Companies Use One)?

A common seal is essentially a company's official stamp. Traditionally, companies used it to "execute" (formally sign) important documents by stamping the seal onto the document, instead of (or in addition to) having a person sign.

Historically, the idea was:

• a company is a separate legal person (not a human)
• so it needed a formal way to show "the company agrees"
• the seal was that formal proof

Seals were especially common for things like:

• property transactions
• deeds
• large lending arrangements
• long-term commercial agreements

These days, however, company signing has largely moved on. New Zealand law generally allows companies to sign documents through authorised people (like directors), and most businesses operate perfectly well without ever owning a seal.

Do NZ Companies Still Need A Common Seal?

In most cases, no - your company does not need a common seal to operate, enter contracts, hire staff, open a bank account, or run day-to-day transactions.

Under the Companies Act 1993, a company may have a common seal, but it's not a universal requirement for all companies.

So as a small business owner, the better question is usually:

"When would I actually need a common seal?"

The answer depends on what you're signing and what the other party asks for (sometimes because they're using an old template).

It's also worth checking your own internal company rules. If your Company Constitution says you must use a common seal for certain documents, then you'll want to follow that as a governance matter - but it's important to understand that an internal breach doesn't automatically mean the document is invalid against an external party (particularly where that party is dealing with the company in good faith and is entitled to rely on the Companies Act "assumptions" when dealing with a company).

If you're not sure what your company constitution requires (or whether you even have one), it's worth getting it checked early - it's one of those "set and forget" documents that becomes very important when you're signing bigger deals.

How Can A Company Sign Documents Without A Common Seal?

Most modern NZ company documents are signed by people, not stamped by seals.

Common signing approaches include:

1) Signing Through Directors

Many contracts can be signed by a director (or directors) on behalf of the company, depending on:

• your company's internal rules (constitution and resolutions)
• any limits on authority (for example, you might require two directors for large commitments)
• what the contract itself requires

Practically, many documents are executed in the way set out in the Companies Act 1993 (for example, by two directors, or by one director with their signature witnessed if the company only has one director). This is often the simplest way to satisfy counterparties, because it's a well-recognised statutory execution method.

When your company's ownership or control changes, signing authority can become a real pain-point. If you're reshuffling shareholders, onboarding investors, or buying out a co-founder, it's smart to align the signing rules with your governance documents, like a Shareholders Agreement.

2) Signing Through An Authorised Person (Authority To Act)

Sometimes you don't want a director signing everything - especially if you've got managers handling suppliers, contractors, or routine agreements.

In those situations, the company can authorise someone to sign on its behalf (for example, through a written delegation, board resolution, or a specific authority given for the transaction). The key is making sure the authority is clear, documented, and matches what the contract requires.

This can help if:

• your director is overseas or unavailable
• you're scaling and need quicker turnaround on contracts
• you want clear internal controls for approvals

3) Electronic Signing

Electronic signing is widely used in New Zealand (think digital signing platforms or secure electronic signatures). Whether it's appropriate depends on the type of document, any witnessing requirements, and what the parties agree to.

Some documents still have stricter formalities - and deeds in particular can raise extra execution and witnessing issues depending on how they are drafted and how they're intended to be used (for example, where an overseas counterparty expects wet-ink execution, or where the document will be lodged or relied on in a process that won't accept e-signing). It's worth getting advice before assuming "e-sign is always fine".

If you're signing something high-stakes - like a lease, a long-term supply arrangement, or a funding document - it's best to have it reviewed as part of a broader legal due diligence process so you know the execution clause is actually workable.

When Might A Common Seal Still Be Useful For Your Business?

Even though most companies don't need a common seal, there are scenarios where having one can still be practical - mainly because some organisations still expect it.

Here are the most common situations where a common seal may come up.

1) When The Other Party Insists On A Common Seal

Occasionally a bank, lender, overseas counterparty, or government-style form will ask for the company seal.

This doesn't automatically mean the seal is legally required - sometimes it's simply an outdated process or template language.

But practically, if they won't budge, you may choose to use a common seal to keep the deal moving (especially if it's a one-off transaction and you don't want delays).

2) If Your Constitution Requires It

Some constitutions (particularly older ones) contain rules like:

• the company must keep a common seal
• the seal must be stored securely
• the seal can only be used with director approval
• two directors must witness the sealing

If you have these rules, and you ignore them, you could create internal compliance issues - and in more serious disputes (for example, shareholder disputes), problems with signing processes can be used to challenge decisions internally.

However, even where internal requirements weren't followed, external parties dealing with the company may still be protected in many situations (for example, where they acted in good faith and were entitled to assume the company's internal rules were complied with). This is one reason it's better to fix outdated signing rules early, rather than trying to untangle them mid-transaction.

If you want to modernise this, you can often amend your constitution, but it's worth doing properly so you don't accidentally create new governance gaps.

3) When You're Signing A Deed Or A High-Value Transaction

Some businesses prefer the extra formality of using a seal for major transactions - such as:

• large borrowing or security documents
• high-value business purchases
• long-term commercial arrangements

This is usually about risk management and internal controls, rather than a strict legal requirement. In many cases, deeds and other significant documents can still be validly executed without a seal if signed in accordance with the relevant statutory execution requirements and the document's execution clause.

If you're entering something significant - like selling or buying a business - it's worth ensuring the signing method aligns with the agreement terms and settlement requirements. This often comes up when documents like a Asset Sale Agreement are being signed alongside multiple ancillary documents.

Common Seal vs Director Signature: What's "Better?"

For most small businesses, a director signature is simpler and more practical than using a common seal.

But "better" really depends on what you're trying to achieve.

Using A Director Signature Is Usually Better For Speed

Director signing is usually:

• faster (no need to locate the seal)
• easier for remote work
• more consistent with modern contracting (including e-signing)

If you sign lots of routine agreements (supplier contracts, contractor arrangements, client terms), a streamlined signing process is crucial.

As your business grows, you'll often want to pair this with well-drafted contracts that reduce the need for constant legal renegotiation - for example, having a solid Service Agreement for recurring client work.

Using A Common Seal Can Be Better For Internal Control

A seal can be useful where you want to enforce a stricter "gatekeeping" process for major commitments.

For example, you might decide:

• only your CFO holds the seal
• it can only be used after a board resolution
• it must be witnessed by two directors

This can reduce the risk of someone signing big commitments too casually - but it also adds friction, so it's not right for every business.

Practical Tips For Small Businesses Handling Common Seal Requests

If a contract lands on your desk with a "common seal" signing block, you don't need to panic. It usually just means the document template is old or designed for larger organisations.

Here's a practical approach.

1) Check The Execution Clause Carefully

Before you sign anything, look at the signature section. Does it say the company must sign:

• "under its common seal?"
• by "two directors?"
• by "one director and one witness?"
• by "an authorised signatory?"

This matters because if you sign incorrectly, the other side may later argue the contract wasn't properly executed - which can create disputes when something goes wrong.

2) Don't Assume The Other Party's Signing Rules Match Yours

Even if you don't use a seal, the other party might. What matters is that your company signs in a way that is valid for your company, and that the contract recognises that signing method.

If you're negotiating, it's often possible to amend the execution block so it reflects director signing rather than a seal (or another appropriate statutory method of execution).

3) Make Sure Your Internal Approvals Are Clear

From a business owner perspective, the bigger risk is usually not "do we have a seal?" - it's "who is allowed to commit the business?"

As soon as you have:

• more than one director
• external shareholders
• a manager negotiating deals
• any kind of investor funding

?you should make sure your internal rules are crystal clear (and written down), so you don't end up with unauthorised contracts.

4) Keep Your Company Records In Good Shape

If you ever need to prove a contract was properly approved, good record-keeping helps. This can include:

• director resolutions
• shareholder resolutions (where required)
• delegations of authority
• signed copies of agreements

This becomes especially important when your company is raising capital, changing ownership, or selling. Buyers and investors will often scrutinise whether key agreements were properly signed and approved.

Key Takeaways

• A common seal is a traditional company stamp used to formally execute documents, but most NZ companies don't need one for everyday business.
• New Zealand companies can generally sign agreements without a common seal (often via director execution in accordance with the Companies Act 1993), as long as the signing method is valid and matches the contract's execution clause.
• You may still want (or need) a common seal if the other party insists, if your Company Constitution requires it, or if you want extra internal controls for major transactions.
• If a document includes a common seal signing block, you can often amend it - but you should check the execution clause carefully to avoid signing disputes later.
• As your business grows, clear signing authority (including when someone can sign on the company's behalf) becomes just as important as having the right contract terms.
• For high-value or high-risk agreements, it's worth getting tailored advice so the signing method, approvals, and documents all line up properly.

This article is general information only and isn't legal advice. Execution requirements can vary depending on the document type, your company's constitution, and the transaction context.

If you'd like help reviewing a contract, updating your company's signing processes, or making sure your governance documents match how you actually run your business, you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.