An overview of Chinese stamps  China prefers stamps, Germany likes signatures better

The use of seals (stamps) has a long tradition in China. Seals of the Chinese emperors in ancient China were called "Xi" (玺). Even today, company stamps have a legally binding effect in China. Contracts and legal documents are often stamped with the company stamp in China, while in Germany, we usually require signatures.

German law does not have any special requirements for the application of company stamps. It even allows companies to have several company stamps, whereas, in China, a company may only have one company stamp. Thus, in Germany, many German companies also use a company stamp. However, only legal documents signed by the managing director or authorized signatory are legally binding. The company stamp itself is not legally binding and cannot replace a signature. Therefore, legal documents with a company stamp but without the signature of the managing director or authorized signatory are not legally binding in Germany.

In China, according to § 490 (1) of the Civil Code: "Where the parties conclude a contract in the form of a written agreement, the contract is formed at the time when the parties all sign, stamp, or put their fingerprints on the memorandum. Prior to signing, stamping, or putting their fingerprints thereon, where one of the parties has already performed the principal obligation and the other party has accepted the performance, the contract is formed at the time of such acceptance."[1] 

In the absence of an express statutory provision or a separate agreement in the contract, any contract bearing the company stamp is binding, regardless of who has signed on behalf of the company or whether there is a signature at all. 

The signature of the legal representative is legally valid, as is the company stamp. According to § 61 (1,2) of the Civil Code: "The person with the responsibility of representing a legal person in conducting civil activities in accordance with law or the legal person's articles of association is the legal representative of the legal person. The legal consequences of the civil activities conducted by the legal representative in the legal person's name shall be assumed by the legal person."[2]

For example, if a contract is signed by a legal representative, the contract is concluded, even without a company stamp. 

A few different types of business stamps in China, their uses, and the people who keep them are detailed below.

There are six types of business stamps in China:

1. Company stamp 
2. Legal representative stamp
3. Contract stamp
4. Financial stamp
5. Invoice stamp 
6. Customs stamp

1. Company stamp

The company stamp is the most powerful stamp of a company and can be used to conclude and sign contracts and other legal documents. This includes all correspondence, official documents, references, letters of recommendation, purchase and sales contracts, employment contracts, and other company documents issued in the company's name. 

Unlike in Germany, as long as a document bears the company stamp, this signifies the company's approval of the contents of the documents, and the company is legally liable for them.

Custodian: Chairman of the board or managing director

2. Stamp of the legal representative 

The legal representative's stamp is mainly used for company-related resolutions and banking transactions, such as company registration, account opening, and cheques. 

When a company enters into a contract, only the company stamp or contract stamp is required to make it legally valid. The use of the legal representative's stamp is not required unless it is expressly agreed in the contract: "this contract shall not become legally valid until the date of stamping with the company stamp (or the contract stamp) and the stamp from the legal representative".

Custodian: The legal representative himself or the finance department

3. Contract stamp

Contract stamps can be used to conclude and sign contracts with an external party and can also be added to the contract.

Although the use of such a contract stamp is not legally required, it has the same significance as the company stamp for the conclusion and signing of contracts.

Custodian: Legal Department

4. Financial stamp

The financial stamp is normally used in dealing with banks, e.g., for signing various bank documents, payment orders, and cheques. It is also used for handling financial transactions.

Custodian: Finance Department 

Note: Financial and company stamps are kept separately in many companies.

5. Invoice stamp 

In China, the official pre-printed tax invoice, the fapiao, is generally considered the original receipt. Therefore, companies must affix an invoice stamp when purchasing or issuing invoices.  

Custodian: Finance Department

6. Customs stamp

The customs stamp is used for submitting customs declaration documents in paper form to the customs office when importing and exporting goods. 

Custodian: Logistics Department 

Conclusion:

The above information is for information purposes only. There is no specific law regarding the custodian of the stamps, and the custodian can be determined according to the circumstances of the business itself. To avoid legal risks in everyday business, it is advisable not to use the company stamp as the sole means of concluding important contracts. We recommend including the sentence "This contract shall come into force on the date of signature by the legal representatives and the stamping by means of the company stamps of both parties" when drafting the contract.

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