How a Company Executes Documents (Common Seal and Its Alternatives)

Before the Companies Act 2016 came into force on 31 January 2017, the common seal was the customary way for a company to execute important documents in Malaysia. Today, that common seal may not exist at all — and a company can still validly sign contracts, loans, and deeds. This change comes from the Companies Act 2016, specifically Section 61 and Section 66, and it often confuses signatories who are still searching for the “company chop”.

Is a common seal still mandatory?

Not anymore. Section 61(1) of the Companies Act 2016 states clearly that a company “may or may not have a common seal”. This is a change from the position under the Companies Act 1965, which has been replaced by the 2016 Act.

If a company chooses to keep a common seal, Section 61(2) requires the company’s name and registration number to be engraved in legible roman letters on the seal. The Act separates two distinct offences here. Under Section 61(3), a company and every officer that fails to meet that engraving requirement (that is, contravenes Section 61(2)) commits an offence. Section 61(4) creates a separate offence: an officer of the company, or a person acting on behalf of the company, who uses or authorizes the use of a seal purporting to be a seal of the company but without the company’s name engraved as required by Section 61(2), commits an offence and may, on conviction, be liable to a fine not exceeding RM50,000.

Although the common seal is now optional, SSM warns that the decision not to have one does not override (“does not override”) requirements under other written laws. For example, dealings at the Land Office may still require a common seal, and a company may adopt one when that requirement arises.

How does a company execute documents under Section 66?

Section 66(1) provides two routes. A document is executed by a company either:

• (a) by affixing its common seal, subject to any condition or limitation in the constitution; or
• (b) by signature in accordance with this section.

The signature route is detailed in Section 66(2). A document is validly executed if it is signed on behalf of the company by at least two authorized officers, one of whom must be a director. For a company that has only one director, that director signs alone in the presence of a witness who attests the signature.

The legal effect is the same. Section 66(3) states that a document signed in accordance with subsection (2) “shall have the same effect as if the document is executed under the common seal of the company”. In other words, the signatures of two officers are fully equivalent to affixing the common seal.

The following table summarizes the valid methods:

Company situation	Valid method under Section 66	Reference
Has a common seal	Affix the common seal subject to constitutional conditions	s.66(1)(a)
No common seal / chooses signature	Two authorized officers sign; one must be a director	s.66(2)(a)
Only one director	Sole director signs in the presence of a witness	s.66(2)(b)
Document requires authentication	Signed by one authorized officer; no common seal needed	s.66(4)

Who is an “authorized officer”?

This term is defined in Section 66(5). An “authorized officer” means:

• (a) a director of the company;
• (b) a secretary of the company; or
• (c) any other person approved by the Board.

This gives operational flexibility. For example, a company may approve a Chief Financial Officer or a particular manager as the second signatory through a Board resolution — but the basic requirement remains: when two signatures are required, one must be a director, not two non-directors.

For a company secretary, this means you can act as one of the valid signatories, paired with a director, without having to find a second director.

Which documents are subject to Section 66?

This is the most frequently misunderstood point. After the 2016 Act came into force, a concern arose that even every invoice, receipt, or purchase order would need to be signed by two officers — an impractical administrative burden.

That concern is unfounded. Section 66(6) defines “document” as a document required to be executed by any written law, resolution, agreement or constitution in accordance with subsection (1). SSM confirms in FAQ Part G that the scope of Section 66 “is intended to cover the execution of documents which are required under any written law/regulations or agreement to be executed under common seal”.

So the two-signatory formality only applies when a law, resolution, or agreement specifically requires formal execution. Everyday letters and ordinary contracts are not subject to it.

For ordinary contracts, the route is Section 64. Section 64(1) allows a contract to be made by the company in writing under the common seal, or on behalf of the company by a person acting under express or implied authority — even orally. Thus an authorized representative can bind the company in a commercial contract without meeting the Section 66 formalities.

What about a deed?

A deed is dealt with separately under Section 67, not Section 66. This matters because many charge documents, guarantees, and property transfers are executed as deeds.

Section 67(1) sets two requirements. A document is validly executed by a company as a deed if:

• (a) it is duly executed by the company (that is, in accordance with the Section 66 methods); and
• (b) it is delivered as a deed.

To avoid disputes about when delivery occurs, Section 67(2) creates a presumption: a document is presumed to have been delivered as soon as it is validly executed, unless a contrary intention is proved. The common practice is to state clearly in the document that it is “executed as a deed”.

Section 67 also permits delegation. Under Section 67(3), a company may, by an instrument executed as a deed, authorize a person to execute a deed or other document on its behalf — whether generally or for a particular matter. A deed executed by that person takes effect as if it were executed by the company itself (Section 67(4)). This is the legal basis for a corporate power of attorney.

Practical checklist before signing

• Identify the type of document. Is it a statutory document subject to Section 66, an ordinary contract under Section 64, or a deed under Section 67?
• Check the number of directors. A sole director requires a witness; two or more directors allow the two-signatory method.
• Confirm signing authority. If the second signatory is not a director or secretary, make sure the Board has approved them under Section 66(5)(c).
• For a deed, state that it is a deed and ensure the Section 67 delivery requirement is met.
• Check the company’s constitution for any additional conditions or limitations on the use of the common seal.

What’s next

Confirm whether the counterparty in your transaction — a bank, the Land Office, or a government agency — has its own execution requirements that go beyond the Companies Act 2016, because Section 66 does not override requirements under other written laws. If your company frequently executes deeds, consider passing a Board resolution that identifies the authorized officers in advance so that signing is not held up. For high-value or complex transactions, obtain qualified legal advice to confirm the correct form of execution before the document is signed.