(i) What do you mean by 'Common Seal'? Is it necessary for a company to have Common Seal? Discuss as per provisions of the Companies Act, 2013. (3…

Provisions of Law: (i) Meaning of Common Seal Common seal is the official signature of a company, which is affixed by the officers and employees of the company on its every document. The common seal is a seal used by a corporation as the symbol of its incorporation. Is it necessary for a Company to have a Common Seal? Having a common seal is optional now. The Companies (Amendment) Act, 2015 has made the common seal optional by omitting the words "and a common seal” from Section 9 of the Companies Act, 2013 so as to provide an alternative mode of authorization for companies who opt not to have a common seal. This amendment provides that the documents which need to be authenticated by a common seal will be required to be so done, only if the company opts to have a common seal. In case a company does not have a common seal, the authorization shall be made by two directors or by a director and the Company Secretary, wherever the company has appointed a Company Secretary. (ii) Whether the phrases 'Company Limited by Shares" and "Company Limited by Guarantee" are same? No, the phrases 'Company Limited by Shares' and 'Company Limited by Guarantee' are not same. Distinction between "Company Limited by Shares" and "Company Limited by Guarantee" is tabulated as under: S. No. Company Limited by Shares Company Limited by Guarantee 1. It is defined under Section 2(22) of the Companies Act, 2013. It is defined under Section 2(21) of the Companies Act, 2013. 2. It is a company when the liability of the members of a company is limited by its Memorandum of Association to the amount (if any) unpaid on the shares held by them. It is a company having the liability of its members limited by the Memorandum to contribute to the assets of the company in the event of its being wound up. 3. The members may be called upon to discharge their liability only after commencement of the winding up and only subject to certain conditions. The members may be called upon to discharge their liability at any time, either during the company's life-time or during its winding up. 4. This company can raise its initial working funds from its members. This company does not raise its initial working funds from its members. 5. For meeting the debts of the Company, the shareholder may be called upon to contribute only to the extent of the amount which remains unpaid on his shareholdings. His separate property cannot be encompassed to meet the Company's debt. The liability of a member of a guarantee company is limited to a stipulated sum mentioned in the memorandum. Members cannot be called upon to contribute beyond that stipulated sum.