Too soon to cancel the corporate seal

A MED’s draft law On Making Amendments to Article 2 of the Federal Law On Joint-Stock Companies and Article 2 of the Federal Law On Limited Liability Companies is being under consideration with regard to removing the provision which obliges business entities to have the (round) corporate seal.

The laws and regulations of Russia oblige legal entities to have the (round) corporate seal for conducting entrepreneurial activity. The developers of the draft law believe that the corporate seal institution has been outdated, because the currently available techniques and technologies provide advanced means of identification, e.g. the electronic digital signature (EDS).

By the way, the data of the World Bank’s annual report shows that there is no such a seal in the countries (New Zealand, Canada, Australia, Georgia, Ruanda, Great Britain) with top scores on the ease of registering property in the Doing Business ranking.

The seal is required on various reporting forms, document forms, as well as many others official documents. The seal can be canceled through making amendments to numerous by-laws. Furthermore, a document bearing no seal looks a kind of suspicious in practice. It implies that, e.g. financial institutions will require any form of verification of authenticity of signature of companies’ CEOs. The foregoing leads to a conclusion that the issue of cancelling the corporate seal is not critical for the time being.

Brusentsova A. N., a lawyer