NEW POINTS ON THE CORPORATE SEAL UNDER THE LAW ON ENTERPRISES 2020
Nguyen Huy Hoang, Partner, BROSS & Partners
Ho Thi Le Tran, Legal Advisor, BROSS & Partners
As is customary in Vietnam, the corporate seal is an important tool to verify the legality of documents issued by enterprises. However, as practice shows, it is not necessary to have too detailed intervention of state agencies in the use and management of the corporate seal. On that basis, the Law on Enterprises 2020 (effective from 01 January 2021) takes the direction of expanding the right of enterprises to self-determination related to the corporate seal.
1. Application scope of corporate seal regulations under the Law on Enterprises 2020
Article 43 of the Law on Enterprises 2020 provides for regulations on the corporate seal in general, however, the use of the corporate seal of some specific enterprises must comply with Decree No. 99/2016/ND-CP, including enterprises established and operating under the laws on notaries public, lawyers, judicial expertise, insurance, and securities trading.
2. Digital signature is also a type of corporate seal
Previously, the corporate seal could only be physical seals made by the enterprise itself or provided by a seal maker. As from 01 January 2021, besides the physical seal, digital signatures can also be used as the corporate seal.
In fact, digital signatures have been used by many enterprises to carry out procedures for tax declaration, online tax payment, electronic customs clearance and declaration. If the enterprise uses a digital signature as its corporate seal, it is necessary to use the digital signature services of qualified suppliers under Decree No. 130/2018/ND-CP detailing the implementation of the Law on Electronic Transactions and other relevant legal documents.
3. Enterprises have the right to self-determination of all issues related to the corporate seal
Previously, enterprises are entitled to decide on the form, quantity and content of the corporate seal, but the seal must show information about the enterprise’s business name and business code. As from 01 January 2021, such mandatory contents have been abolished.
In addition, the use of the corporate seal is not only limited to the enterprise, its branches, or its representative offices, but the enterprise also has the right to use the corporate seals uniquely made for any other units within it. The management and keeping of the corporate seals shall comply with the provisions of the company's charter or regulations issued by the enterprise, its branches, representative offices, or other units of the enterprise which use the seals.
4. Enterprises are not required to publish the seal sample before using
The Law on Enterprises 2020 has abolished the procedure for publishing the seal sample through the business registration authority before use. There are concerns that dropping this procedure will make it difficult for businesses to verify their partner's seal. However, we believe that the sample publication procedure is not necessarily an effective measure if the seal sample is not updated by the partner in a timely manner, instead, the enterprise needs to actively verify with partners to ensure validity of the signed documents.
5. Use of the corporate seal is mandatory if the law so provides
Article 43.3 of the Law on Enterprises 2020 stipulates that "Enterprises use seals in transactions in accordance with the law". This regulation should mean that enterprises will be required to use the corporate seal if the relevant law requires so.
Normally, cases of mandatory use of the corporate seal will be clearly regulated which enterprises can easily find out, as in Article 24.2 of the Law on Accounting 2015 on the marginal seal (dấu giáp lai) requirement for accounting books, or Article 7.4 of Decision 1789/2005/QD-NHNN stipulating that paper accounting documents made by a bank or converted from electronic versions used for transactions and payments with external organizations and individuals, if sent to other parties, must bear the seal of the relevant banking unit (e.g. branch, transaction office), etc.
It should be noted that at the end of some regulatory templates issued by state agencies, the signature part is usually the annotation of “signature and seal”, e.g. Form No. 01/PLI on the report on the situation of labor use (made by the employer) issued under Decree No. 145/2020/ND-CP. We believe that in such cases, the enterprise is required to affix the seal. As such, in order to carry out procedures and papers quickly and promptly, enterprises should actively look up the relevant regulations or request state agencies for guidance. In case of uncertainty, enterprises should stamp the documents that they issue, just in case.
Above is our opinion on the new points on the corporate seal under the Law on Enterprises 2020. Please note that this article does not constitute any comprehensive legal opinion for any particular case. Please take expert advice should you encounter related legal issues.
BROSS & Partners is a Vietnamese law firm proposed by Legal 500 Asia Pacific, Chamber Asia Pacific, AsiaLaw, IFLR1000, Benchmark Litigation, with experience and capacity to advise and resolve disputes related to Investment, Enterprise and Commerce, Mergers & Acquisitions, Labor & Employment, Real Estate & Construction, Finance – Banking, Securities, Capital Markets, and Intellectual Property.
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