What does business need to do in order to ensure the legality of the seal?

Law on Enterprise 2020 which officially takes effect from January 1, 2021, stipulates that enterprises are entitled to self-determination on the type, quantity, form, and content of their company seals. The management and storage of the company seal must comply with the provisions of the company’s charter or regulations by the enterprises, their branches, representative offices, or other units of the enterprises that have seals.

Enterprises do not have to notify the seal sample before using as before. Previously, it was only considered a legal seal provided that it was announced and approved by the business registration authority.

However, with the abolition of the procedure for announcing the seal sample, what should enterprises do to ensure the legality of the seal? PL and Partners Law Firm would like to provide our readers and enterprises with useful information on HOW TO ENSURE THE LEGALITY OF THE SEAL.

Currently, the law gives enterprises the right to self-determine their seal, therefore, to ensure the legality of the seal, enterprises must specifically stipulate issues regarding the seal within the company, in particular, the charter and regulations of the enterprise, including the provisions as follows:

  1. Carry out the procedures for registering and engraving the seals at the seal engraving establishments having business licenses.
  2. The decision on using the company seal. This is a valid document confirming the seal sample used by the enterprise, including the main contents such as:
  • Regulations on the quantity, form, and content of the seals;
  • Regulations on the effective date of the seals;
  • Regulations on individuals/departments in charge of preserving and managing the seals;
  • Other regulations.

SO, IS IT REQUIRED FOR BUSINESSES TO HAVE A SEAL?

When it comes to the draft bill on the amendments of the Law on Enterprise 2014, there were many suggestions to remove the enterprise seal resulting from the following points of view:

  • The first view: The legal representative is responsible for the operation of the company, and the signature of the legal representative is considered to be valid on behalf of the enterprise to perform the transaction. Therefore, putting the company seal on the signature of the legal representative is redundant. This by chance requires the enterprise to confirm up to 02 times on the same transaction which is wasting time and unnecessary.
  • The second view: Normally, the legal representative does not keep the company seal. It is assigned to the administrative department or secretary to keep and use. Therefore, the management of the seal to comply with the regulations also causes many difficulties for enterprises. In addition, seal forgery is quite popular. Distinguishing between real and fake seals is not easy for the parties at the time of transaction.
  • The third view: Currently, with the view from the world’s general trend of development, according to statistics, there are 110 countries not using company seals, and 72 countries allow enterprises to self-determine whether to use or not to use the company seals.

However, as we know the Law on Enterprise 2020 has not completely abolished the use of seals but allows enterprises to self-determine the form and content of the seal, use digital signatures, as well as abolish the procedure for notifying the seal sample to the business registration authority. This is considered a stepping stone to a larger reform in the use of the enterprise seal in Vietnam shortly.

THUS, BACK TO THE QUESTION: ARE BUSINESSES REQUIRED TO HAVE A SEAL?

The answer is that the enterprise shall have a seal, but is not required to seal on all documents, papers, records, and contracts. Specifically, Clause 5 Article 4 of Decree No. 01/2021/ND-CP stipulates: enterprises are not required to seal the application for enterprise registration, notice of changes on enterprise registration, resolutions, decisions, or meeting minutes in the enterprise registration profile.

However, a problem arises that some commercial banks still require enterprises to provide documents regarding verified seal sample. Therefore, in this case, when receiving the seal from the seal engraving establishments, you should ask them to give the Certificate of Seal Sample. After filling in all information and signing this Certificate, you can provide it to the bank.

We have mentioned the topic of how to ensure the legality of the seal.

Hopefully, the above information can partly help you answer questions related to the legality of the company seal under the Law on Enterprise 2020.

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