Hanko signature seals have been in use in Japan for over two thousand years. Although the Japanese like to think the practice of pressing a red-inked hanko onto a piece of paper in lieu of a signature is uniquely Japanese, in fact it was introduced from China, possibly with the gift of a large, elaborately-carved square seal from the Emperor of China to the chieftain of Itokoku in what is now Fukuoka Prefecture.

In modern Japan, hanko are used to execute contracts and signify an individual’s assent or acknowledgement in a variety of contexts, both formal and informal. Hanko are accepted as more secure than a signature, since it is believed they cannot be forged. Alas, it’s not much of a surprise but modern technology has given rise to near perfect duplicate hanko and there are reports that cases of forgery are on the rise. There have long been cases of someone other than the hanko’s owner getting hold of a hanko and using it for unauthorized transactions that ultimately become the responsibility of the hanko owner.

Even so, most Japanese still have more faith in a hanko than a wet signature. A few years ago, I was signing loan documents at my bank in the presence of my banker (who had duly confirmed my identity before we started), but he made me sign fresh documents when my signature didn’t look enough like the signature he had on file from 20 years earlier.

But are hanko necessary, or even useful, in our modern age? There have been a number of reports of the inconvenience, and even risks, hanko use has caused, during the current pandemic.

The hanko culture and the importance of being “stamped”

In the Japanese work-a-day world, we see predominately two uses for hanko. At the formal level, legally binding documents are commonly executed with them. For example, when two companies enter into a transactional contract, someone from each company will affix its “shaban” (official company seal) to execute the contract. Unlike in the West, where there is often a “closing” in which representatives of each party sit together in a room and simultaneously execute the document, usually the contract is executed by one side and then sent to the other side for their execution. In any event, it is a time-consuming, paper process.

Curiously, often the individual in the company charged with custody and use of the shaban is in a relatively low level administrative position. But this person is instructed to execute documents only upon the presentation of a document evidencing the approval of a chain of responsible people within the company, each of whom has stamped that document with their hanko to demonstrate approval. This is an even more cumbersome and time-consuming paper process. But apparently it gives everyone comfort that all parties who need to know what’s going on have been informed and consent, and possibly avoids any one person taking responsibility.

“Hanko are accepted as more secure than a signature, since it is believed they cannot be forged.”

Similar informal intra-company circulars, known as “kairan,” also frequently make the rounds in companies for the similar purpose of keeping everyone in the know and documenting the fact that people have been duly informed of various matters. That’s a lot of paper moving around and a lot of work time consumed absorbing its contents, stamping it, and passing it on. (Of course, not everyone actually bothers to read everything. Very early in my career in Japan a supervisor taught me the Japanese phrase “mekura-ban”—rubber stamping or not bothering to examine the item being stamped. It must be a fairly common practice if there’s a word for it.)

In-person stamping during a pandemic: A game changer? Or not?

Fast forward to the Covid-19 pandemic of 2020 and suddenly all that paper and the need to physically stamp one’s seal on a document becomes not only burdensome, but also risky. After all, how can this practice be accomplished, except by one’s physical presence in an office, which necessitates travelling in public and potential exposure to the contagion. Many Japanese who continued to commute to work during the recent State of Emergency did so because of the need to stamp documents. 

The absurdity of this situation had prompted some companies even prior to the pandemic to move into the 21st century by adopting online systems that provided for electronic processing, at least of the internal circulars, and in some cases, even of the contract approval process. There is no doubt that such systems are viable. One could argue that they are superior to the traditional paper system, as they electronically store data on both approvals/acknowledgements and also the date and time of the action, allowing companies to identify who’s not staying on top of their review responsibilities as well as to otherwise more rapidly search their records whenever it is necessary to confirm the situation of a particular document.

Most companies, however, seem to follow the “if it’s not broken, don’t fix it” approach, perpetuating the tried and true paper system. Some appear to have made allowances for the work from home situation during the state of emergency, allowing people to use emails to gather the necessary approvals, at least in lieu of the kairan processes traditionally requiring hanko. Hopefully the situation enabled corporate decision makers to see that it’s time to move the system online so that rather than returning to the old way, they will evolve. It’s a great opportunity for an enterprising systems developer. 

“Most companies seem to follow the ‘if it’s not broken, don’t fix it’ approach”

The situation of legal execution of contracts is, perhaps, a bit more challenging. Even during the state of emergency, a friend in a corporate legal department who is responsible for contract execution with the shaban told me that she had to go to her office at least once a week to execute contracts. She explained that her company was unwilling to “trouble” the contract counterparty by suggesting that they execute the document using electronic signatures, even though electronic signatures have been legally-recognized in Japan since around 2000 and just last year the government announced further initiatives encouraging the use of digital procedures for legal and legally binding documents. The legal validity of wet signatures has always existed under the Japanese Civil Code. 

The reticence of my friend’s company was reflected in the results of a survey of 300 Japanese workers in late May. Over 50 percent of respondents said that they believed it would be difficult not to use hanko, mostly because “they have to obey the contract rules set by their clients,” “they worry it could be illegal (not to use hanko),” and “out of safety concerns.” It is notable that 74 percent of respondents nevertheless agreed that the hanko system should be abandoned.  

In Japan, discussions of the need for change often rapidly digress to discussions of the government’s responsibility and/or inability to force change. Yet, time and again we see that companies, being economic creatures, are just as likely to respond to market forces, even without any governmental encouragement. In this case, while the government is trying to lead by example, increasing its own use of digital documents, electronic signatures and online processes, in the end, companies are most likely to make the shift away from hanko/shaban because they recognize that it is in their interest to do so.

Apparently one drag on the impetus for change has been lobbying by hanko makers. A group of lawmakers from the ruling Liberal Democratic Party has recently thrown in with them, demanding that Japan’s hanko seal system is maintained — despite all the known inefficiencies. Some sympathy for the hanko makers is understandable. They are often artisans struggling to hold on to the centuries-old tradition that produces their livelihood. At the same time, the image of the 1950s ice man ruefully looking at an ice box on the scrap heap in the 2005 tear-jerker movie Always: San-chome no Yuhi (Always: Sunset on Third Street) comes quickly to mind. We might feel a bit sorry for him, but who wants to use an ice box if they can have a refrigerator instead?

There will probably always be some extremely official uses for a shaban—after all, even most Western countries still require official corporate seals for certain kinds of documents — but overall, it seems clear that the concept of a signature seal in daily use is outdated, outmoded, and destined for the scrap heap. 

For more information on the nature and history of hanko, see the following articles: