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

Law on Enterprise 2020 officially taking effect from January 1, 2021, stipulates that businesses 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 businesses, their branches, representative offices or other units of the business that has its enforced seal.

Businesses do not have to notify the seal sample before using as before. Previously, it was considered as 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 businesses do to ensure the legality of the seal? PL and Partners Law Firm would like to provide our readers and businesses with useful information on HOW TO ENSURE THE LEGALITY OF THE SEAL.

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

  1. Carry out the procedures for registrating and engraving of the seals at the seal engraving establishments issued a business license.
  2. The decision of using the company seal. This is a valid document confirming the seal sample used by the business, 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, there were many suggestions to remove the business seal resulting from the following points of view:

  • The first view: The legal representative is responsible for the operation of the company, and signature of the legal representative is considered to be valid on behalf of the business to perform the transaction. Therefore, putting the company seal on the signature of the legal representative is redundant. This by chance requires the business to confirm up to 02 times on the same transaction causing 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 seal it. Therefore, the management of the seal to comply with the regulations also causes many difficulties for businesses. In addition, the 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 to general development trend of the world, according to statistics, there are 110 countries not using the company seals, 72 countries allow businesses 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 the fact that allowing businesses to self-determine the form and content of the seal, allowing the use of digital signatures, as well as abolishing the procedure for notifying the seal sample to the business registration authorityy. It is considered as a stepping stone to a larger reform in the use of the business seal in Vietnam in the near future.

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

The answer is that the business has 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: Businesses are not required to seal on the application for business registration, notice of changes on business registration, resolutions and decisions, minutes of the meeting in the business registration profile.

 A problem arises that some banks still require businesses to provide verified seal sample document. 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 on 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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