Western executives sign documents; Chinese companies chop them. The difference is not ceremonial. In China, a document bearing the registered company chop is presumptively an act of the company — largely regardless of who pressed it onto the page. Understanding this single fact prevents two recurring disasters: contracts you thought were signed but were not, and a company you own but cannot control.
The chop family: what each seal does
A typical WFOE holds five or six seals, each registered and each with a distinct function:
- Company chop (公章). The round seal with the registered name encircling a star. The most powerful instrument the company owns: it can execute contracts, board resolutions, bank documents and government filings. Carved by a licensed maker and recorded with the Public Security Bureau.
- Legal representative chop. A small personal seal of the legal representative, used mainly for banking and certain filings — usually alongside the financial chop.
- Financial chop (财务章). Controls bank account operation, cheques and payment instructions. Best practice: never stored with the company chop or held by the same person.
- Invoice chop (发票章). Required on every fapiao the company issues.
- Contract chop (合同章). Optional; lets a company execute routine commercial contracts without exposing the main chop. Useful for delegating sales-contract authority within limits.
- Customs chop, for import-export declarations, where relevant.
Why courts care about the chop, not the pen
Chinese judicial practice treats a genuine company chop as strong evidence that the company intended to be bound. Conversely, a contract signed by a manager without a chop invites the company to argue the signer lacked authority. The counterparty may still win on apparent authority — especially if the signer is the legal representative — but you have converted a clean document into a litigation issue.
Practical consequences when you contract with Chinese counterparties:
- Get the chop, and the right chop. The impression must show the counterparty's exact registered Chinese name. A chop reading a slightly different name — the affiliate, the Hong Kong cousin, the "international" entity — means you contracted with someone else, possibly someone with no assets.
- Chop plus signature of the legal representative is the gold standard. Each cures the other's weaknesses; fake-chop defences run into the signature, and authority defences run into the chop.
- Chop every page or use a fan-paging seal (骑缝章) across page edges on important contracts, so pages cannot be swapped later.
The hostage problem
Because possession is power, chop custody is a governance issue, not an admin task. The classic crisis: a dispute with your general manager, who locks the chops, licences and bank tokens in a drawer and goes home. The company cannot pay salaries, file taxes or even chop the documents needed to replace him. Replacing lost or hostage chops is possible — police report, newspaper announcement, re-carving — but takes weeks at exactly the wrong moment.
Preventive rules we give every WFOE client:
- Split custody. Company chop and financial chop with different people; neither with the legal representative if that person is also the GM.
- Keep a chop-use register. Every impression logged: date, document, approver. Standard practice in well-run Chinese companies, and powerful evidence if misuse is alleged.
- Written chop policy defining which documents need which seal and whose approval, adopted by board resolution.
- Headquarters holds a copy of nothing — but controls appointments. Ensure the parent, not local management, controls who the legal representative is and can pass shareholder resolutions quickly.
One closing rule
If a Chinese counterparty tells you a chopped document is "just a formality" while a signed one is "more serious," reverse it. In China the chop is the contract.