Company Chops: The Small Seals That Hold Real Power

China Field Notes · by Daona · 8 min read

The first time many foreign executives see a Chinese contract signed, they are surprised: the counterparty's general manager may not sign at all. Instead, an assistant brings a small box and presses a red seal onto the signature page — and across the edge of every page. That stamp is the company's commitment.

Seals — usually called chops in English — are working legal tools, recognised by banks, tax bureaus, courts and every Chinese business you deal with. Getting them right protects your company. Getting them wrong is one of the most common ways foreign investors lose control of their own China subsidiary.

Many cities also issue electronic seals (电子印章) for government, tax and e-contract platforms. Issued through recognised systems, they carry the same weight as physical seals — and the same control risks.

Seals are carved by seal-making businesses licensed by the public security authorities, and recorded with the local public security bureau. In many cities, carving is part of the online registration package. The bank keeps a specimen of the financial seal and legal representative seal when you open accounts. These records let a court, bank or counterparty check that a seal is genuine.

A seal from an unlicensed shop is not a recorded seal, and invites disputes. Forging another company's seal is a crime under Article 280 of the Criminal Law.

Signing or sealing forms a contract

Article 490 of the Civil Code provides that a written contract is formed when the parties sign, seal or fingerprint it. In practice the company seal is the most trusted form, and many counterparties will not treat a contract as binding without it — even if your general manager has signed.

But courts look at the person, not only the seal

In its 2019 Minutes of the National Courts' Civil and Commercial Trial Work Conference (the "Ninth Minutes", 九民纪要), the Supreme People's Court told lower courts that in seal disputes the key question is whether the person who stamped had authority at that moment:

Two lessons. When you sign with a Chinese counterparty, get both the company seal and the signature of the legal representative or an authorised signatory. When your seal is in someone else's hands, that person can create situations where a counterparty reasonably believes your company has agreed.

Composite patterns. They do not describe any single company.

The departing general manager. The parent replaces the China GM, who is also the legal representative. The GM keeps the seals and the business licence. Without them, the parent cannot easily change bank signatories, file changes or sign contracts. Recovering control may take a court order.

The JV partner's office. The seals are kept at the Chinese partner's office "for convenience". When the partners disagree, the foreign side cannot act without the other side.

The helpful assistant. An administrator stamps a supplier agreement management never approved. The supplier relies on it, and unwinding takes months.

The lost box. Seals go missing during an office move. Until they are reported and replaced, anyone who finds them can cause problems.

Separate custody

Illustrative custody matrix.

The financial seal and legal representative seal should be held by different people, so no single person can move money.

A usage log and simple rules

Log every use: date, document, copies, approver, who stamped. A bound notebook is enough for a small company. Then four rules everyone knows:

Board-level safeguards

Write seal custody rules into internal policies and, for JVs, into the shareholders' agreement. The parent should have the right to designate the keepers of the company and financial seals, and to require their return on demand.

If a seal is lost

Report it to the police and keep the report; publish a loss notice through the channel your local authorities accept; carve and record a replacement; notify the bank and update its specimen. Act the same day.

If a counterparty stamps with a "project department" (项目部) or "business department" (业务部) seal, ask for the company seal. Such internal seals are often unrecorded and may not bind the company.

"My signature binds the company, just like at home." Legally an authorised signature can form a contract. In practice, counterparties, banks and authorities expect the seal as well.

"Whoever has the seal controls the company." Not in law — but often in practice, at least in the short term. That is why custody matters.

"Seals are an office manager's detail." They are a governance matter for the board.

"An electronic seal is safer." More traceable, but anyone with the device and password can use it. Apply the same separation of duties.

Rules as of October 2026. This column provides general information, not legal advice. For disputes or governance documents, consult a licensed lawyer.

China Field Notes · by Daona