China launched new “Measures for the Administration of Electronic Seals” (effective as of 27 September 2025) that recognize the legal validity of electronic seals in electronic legal, business and administrative processes. These Measures mark a major step in China’s broader digital transformation, but they also introduce new compliance responsibilities and potential legal risks for organizations operating in the PRC. This article outlines how businesses can protect themselves from seal-related legal issues and stay ahead in China’s digital transformation.
Physical seals have for decades played an important role in Chinese legal and administrative practice: in many situations whoever controls the company seals controls the company - a concept unfamiliar in many other jurisdictions.
Now, the new electronic seals offer the option of executing electronic documents with electronic seals. Electronic seals are data in specific cryptographic format that represent a seal based on digital technologies to realize reliable electronic signatures for electronic documents. The electronic seals typically contain data related to the seal image, name of the seal, seal owner information (= entity to which the seal is issued), electronic signature certificates and electronic signature production data.
These new electronic seals on electronic documents enjoy the same legal effect as physical seals affixed to tangible documents. They can hence be used for contracts, accounting/invoicing documents, employment/payroll matters and other internal and external documents in electronic formats.
Companies seeking to obtain electronic seals can apply to the officially designated electronic seal creation entities who will create and file the seals for record. Only legally established electronic certification service providers (for business use) or e-government certification providers (for government use) may issue the digital certificates supporting the electronic seals. In case of any change/expiration of the registered information pertaining to the electronic seals, the electronic seals must renewed or cancelled and the relevant applications must be made by the seal owner to the competent authorities without delay.
In China, company seals are more than administrative tools. Seals serve as legal representation of a company’s will, carrying the primary binding force in commercial transactions and official procedures. Whereas other jurisdictions where handwriting signatures or fingerprints are the main form to express legal will, PRC law presumes that a document bearing a company seal reflects the company’s authorized intention. Thus, managing the handling of seals is a very critical aspect of corporate compliance. This applies to physical as well as to the new electronic seals.
Since company seals are the core tool for an enterprise to exercise its legal rights and assume obligations, the main functions of seals include:
Validating Contracts and Agreements: Most commercial contracts (e.g., sales, investment, and employment agreements) require the company seal to be legally enforceable, especially for high-value or complex transactions.
Authorizing Official Documents: Official communications, financial statements, tax filings, banking instructions, court correspondence and regulatory filings must bear the company seal to be recognized by authorities, courts and other receiving parties.
Certifying Corporate Actions: Decisions approved by the board of directors or shareholders, such as mergers, acquisitions, or asset disposals, often require the company seal to confirm their validity.
Under the PRC Civil Code and the PRC Company Law, the company seals are presumed to reflect the company’s true intent even if the individual affixing the seal acted without proper authorization. Hence, a third party acting in good faith may still hold the company liable for actions validated by the company seal - highlighting the critical importance of robust seal management.
Chinese Company seals are strictly regulated by authorities and follow standardized specifications to ensure authenticity. Physical seals usually conform to the following specifications:
Most company seals are circular, with a diameter between 3.8 cm and 4.5 cm. . Company seals typically include the full Chinese legal name of the company arranged around the outer circle of the seal and a five-pointed star in the middle of the seal. Seals are typically also embedded with a unique 13-digit registration code issued by the Public Security Bureau that is the authority in charge of seals engraving. The engraving of official company seals requires strict approval regime and must be processed by units designated by the local Public Security Authority.
In addition to the primary company seals (公章), also other specific seals such as customs seals, contract seals, finance seals and legal representative seals exist that are used for specific purposes only. Still, the company seal is the most important among these seals.
Given the apparent authority of the company seal, improper management of company seals can lead to severe adverse legal consequences, including financial liability, reputational damage, administrative penalties and even criminal liability and the directly responsible persons of the seal owner (company) can be exposed to personal liability. Core risk areas of seals mismanagement include:
Unauthorized Use or Forgery: If a company seal is stolen, forged, or used by individuals beyond their authority (e.g., signing contracts without proper authorization), the seal owner (company) may be held liable for resulting debts or legal disputes. Under the PRC Criminal Law, forging a company seal constitutes a criminal offence and may even lead to imprisonment.
Inappropriate Usage of Seals: Using the wrong type of official seals (e.g., affixing a customs seal to an employment contract) may lead to invalid transactions.
Careless Seal Usage Recordation: Any usage of the official seals shall be properly documented, recorded and authorized by the company and its in-charge staff. Failure to maintain accurate records— of company seal usage (e.g., no log of who used the company seal, when, for what purpose and who authorized the usage, etc.) may constitute negligence on the side of the company and undermine the company’s legal position.
Thus, implementing adequate and proactive measures to ensure a compliant seal management regime is mandatory. Companies must appoint dedicated company seal keepers and implement proper approval procedures for company seal usage. Official seals shall be kept in secure locations (e.g. a locked safe) with access restricted to selected authorized personnel.
In addition, compliance officers and designated senior managers shall regularly audit the company seal usage records and conduct random checks to detect any misuse at an early stage.
In case of loss or theft of any official seals, the company as the seal owner must immediately report the incident to the Public Security Bureau and a public notice invalidating the missing seal shall be made.
Thus, it is paramount for each company to develop, implement and monitor an Official Seal Management System with clear rules outlining company seal usage procedures, approval hierarchies and storage protocols. These rules shall be incorporated into the company’s internal rules and regulations and must be lawfully adopted through the statutory process to make them binding on all employees.
It is important that all staff (in particular those who have not been previously exposed to the particular seal regime in China) understand the legal significance of the official seals and the consequences of improper usage. Thus, related training is required as well.
Given the new option to obtain and use electronic seals, all companies shall update their Official Seal Management Systems to properly accommodate digital usage protocols, including but not limited to compliance with mandatory legal provisions such as the PRC Cyber Security and Data Security Laws and the PRC Cryptography Law.
The new Measures for the Administration of Electronic Seals express the principle that “whoever owns the electronic seal shall exercise control, and whoever affixes the seal shall bear responsibility”.
Thus, it is necessary for each company’s Official Seal Management System to include rules and regulations governing the proper and standardized custody and use of the electronic seals. Particular care shall be taken to ensure that appropriate IT and procedural safeguards are implemented to regulate access and signature authorizations for electronic seals, as well as to ensure proper recording of such usage regimes.
