A Company being an artificial person cannot sign documents. The law has provided for the use of a common seal, with the name of the company engraved on it, as a substitute for its signature.
No document issued by the Company shall be binding on it unless it bears the company seal, which is duly witnessed by at least two directors of the Company or by a Company Secretary and a director.
A Company Seal is also referred to as a Common Seal.
What is the use of a Company Seal?
The powers and duties of the secretary depend on the size and nature of the company and the personal contractual arrangements that it makes with him/her. A Company Secretary has the power to countersign instruments to which the Common Seal has been affixed.
The custody of the Common Seal should be taken very seriously. Noting that the officers of the Company i.e. the directors or the Company Secretary should have access to the Common Seal or give authorization for its use. Whenever the Common Seal is used, a Director should sign and a Company Secretary or another director.
However, the SPECIAL ISSUE Kenya Gazette Supplement No. 26 (Acts No. 1) that was published on 20 March 2020 is amended by the deletion of the words “under its common seal” in Section 35 which relates to Company Contracts and Section 495 of the Companies Act, 2015 is amended by deleting the words “under the common seal of the company” and substituting the words “duly executed in accordance with section 37” which relates to Share certificates issued.
In Summary, contracts and share certificates are now valid and duly executed without the Common Seal.
Further, Companies that have Common Seals may use Official Seals outside Kenya. Noting that a Company’s Official Seal has when duly affixed to a document, the same effect as the Common Seal of the Company.