Legal Chops
In July 2020, Tencent Holdings Ltd was embroiled in a legal battle with Lao Gan Ma, the famous Chinese chili oil maker, who had broken off a lucrative advertising deal with the internet giant. Official chops are issued at the request of the Chinese company, either directly by the competent administration or by accredited service providers. Many other chops than those discussed above can be used for different types of transactions. For example, HR departments allow HR staff to perform certain tasks. Corporate, financial and customs chops are the only legally required chops. However, government agencies may require other chops to be registered and used for specific purposes. In practice, third parties, whether contractors or administrations, systematically require Company Chop to be affixed to the documents handed over to them. The reverse does not necessarily apply to the signature of the legal representative. Company Chop is therefore considered the instrument that demonstrates the commitment of the company to the highest degree and indisputably. Any contract with a Chinese company must be executed by a person of the Chinese company having authority and hacked with the official hash of the company (sometimes called the company`s seal). However, there are many types of company chops. Which one should I use? How do you know if the company is genuine? What does a real Chinese company look like? What does Chinese law require of a Chinese company? What are some examples of fake company chops? These chops do not enjoy official recognition and are therefore generally reserved for internal company use.
They are only intended to formalize the fact that a document has been endorsed by the competent body. The company chop is the official chop of the company and acts as the official signature of the company. This chop is mandatory. Companies use this chop for all legal documents as it can be used to cover the functions of other chops with the exception of some specialized chops. Since legal representative seals include the name of the person you have designated for this role in Chinese characters, their seal must be destroyed and reissued in the name of their successor at the time your legal representative is replaced. Due to its relevance to the person acting as legal representative, this seal is either in his possession at all times or kept by a third party if the latter does not reside in the People`s Republic of China. Given their importance, it is strongly recommended that both seals not be kept in the same safe or in the custody of the same employee if both seals are kept in-house. Contract chops can be issued as a replacement for the company`s chop in sales transactions and can improve the management flexibility and efficiency of sales activities in China. A contract chop can be configured with the authority to certify sales contracts, and then the use of that chop can be delegated to a sales manager. Multiple contracts can be set up and delegated to managers in different locations or positions.
A chop (a seal or stamp) is a tool used to validate legal documents in one form or another. There are different types of chops used in companies in China, with the company`s official chop being the largest. The official company cop is a circular or oval stamp that uses red ink that includes at least the Chinese name of the company. It may also include a registration number and, in some cases, a translation of the name into English. The design of the stamps comes in different styles that the average person cannot distinguish. Companies can also set up additional layers of security for small chops by ensuring that each stamp application is confirmed by affixing the company`s seal or requiring the original signatures of one or more senior executives next to it. The rules/requirements for Chinese business chops are different in each city, so there is often no way to know if a company`s chop is a suitable company chop, legally registered and allowed just by looking at it. For this reason, Chinese courts have ruled that they generally don`t care, and if the document is cut out with something claiming to be the company, and if the signatory of the document is either the legal representative of the Chinese company or a person with obvious authority to act on behalf of the Chinese company on the basis of their business card, As a rule, Chinese courts will not invalidate the contract. on the basis of a technical argument related to the validity of the corporate CHOP or the authority of the signatory. The personal chop of the legal representative may be used instead of a signature or next to a signature.
Upon registration, it must be registered with the PSB and the company`s bank. Our firm`s lawyers in China are sometimes hired to perform one or even the two company chop auditors described above, but in order to review company chops for more typical Chinese contracts, we generally recommend that foreign companies do the following: As a result, companies are advised to secure their chops and ensure that they are not used for illegal purposes or stolen by employees. disgruntled. In any event, it is a reasonable idea to let only trusted individuals own chops when needed, and to put in place internal controls to regulate and record their use. With the exception of business owners, it is not advisable to give one individual control of all the chops and be for everyone. Beyond the company`s official chop, a company will likely need multiple chops – each used for different purposes and for different types of official documents – depending on its field of activity. Regardless, any business should consider diversifying its use of chops. The electronic chop is the digital form of another type of chop used in online transactions such as contractual or financial transactions. With technological developments happening at a rapid pace, Chinese companies using electronic chops need to monitor regulatory updates to remain compliant at all times.
The official Chop company has the widest scope of application among all seals and is a symbol of the rights of legal entities. It is a mandatory chop, although the company`s chop can often be used in its place. For this reason, companies often keep their financial and commercial chops separate to avoid abuse. (ii) Unofficial chops, the manufacture and use of which are left to the discretion of the Chinese company, the most common being in practice: However, legal documents usually still need to be hacked in China, so the basic best practices outlined above should be used for all your contracts in China. You can obtain your company`s chops from government-licensed chop manufacturers with permission from the Public Safety Bureau. Not all chops have the same value in terms of commitment or function of the company. A newly appointed officer should conduct a full review of all of the company`s chops and find out who keeps them, where and how they are kept, and submit a copy of their fingerprint. The legal representative is required for many legal documents and applications for business licenses, tax certificates and bank documents. The chop engraved the name of the company`s legal representative on his face. In most cases, this legal representative is either the owner, the managing director or a director of the company. The application is submitted to the Local Administration of Industry and Commerce (工商行政管理总局) (SAIC). The most important chop is the official company chop and is required for most documents that require legal validity.