Seal Regulations in Draft Decree on Enforcement of Enterprise Law: Controversial

Accelerated by international economic integration, electronic transaction has become a common method. Hence, the corporate seal reform is perfectly appropriate to facilitate business operations. Clause 1, Article 21, Chapter 3 of the Decree stipulates that “Enterprise itself decides the quantity, content and form of seal, cancels or changes the seal specimen, and decides seal use management.” The Clause defines that "Enterprise may make seal or hire seal-making units to make seal instead of having it done at State management agency.”

 

Speaking at the workshop, Dr Pham Van Chat, Lawyer at the Vietnam International Arbitration Centre (VIAC), said the above regulations on corporate seal are consistent with international practices and free enterprises from excessive binding to seals.

 

Concurring with Chat’s viewpoints, Lawyer Tran Thanh Huong, an officer at Legislation Department of PetroVietnam Fertilizer and Chemicals Corporation (PVFCCo), also expressed her consent for corporate seal reform in the Enterprise Law 2014. In case the regulations on the use of seal are not completely rescinded, this is a noteworthy reform. Law on Enterprises 2014 empowers enterprises to decide on the form, quantity and content of corporate seal, coupled with their obligations of notifying seal samples with business registration authorities for public disclosure on the National Information Portal for Business Registration. Not all documents of enterprises must be sealed, except for those required by the law and partners. New seal approach and legal implications will help reduce troubles, costs and time for enterprises and suit electronic transaction development trends and international tendencies.

 

However, Lawyer Tran Thanh Huong noted that the Drafting Committee should review the regulation that businesses are obligatory to express tax code contents on seal because this information is unnecessary. She explained that the tax code is used for State management rather than any other entities in society. Moreover, deal-signing parties will require other parties to write down such information on transaction documents if they find necessary.

 

Regarding provisions on seal management and usage stipulated in Article 24, Chapter 3 of the Decree, Lawyer Phan Thong Anh, Director of Vietnam Partnership Law Firm and Arbitrator at VIAC, said this clause only regulates the use of seal previously granted by the police agency, the remaking of seal and legal representative of a company authorised to notify the seal while it lacks a lot of other contents like seal keeping place, authorisation and change of seal keeper, and seal using methods. In fact, disputes over these contents are quite common, noted Lawyer Anh, adding that there is a need to supplement the contents that “Corporate seal shall be kept at the company’s head office or branch (where the second seal is used) and any act of taking the seal out of such place is illegal” to Clause 5, Article 24, Chapter 3 of the Decree and that “Seal is only used with signatures of legally authorised persons defined by the Law on Enterprises (that is, Chairman of the Board of Members or the Board of Directors, Managing Executive, and legal representative) or persons authorised by the Articles of Association of the Company” to Clause 6.

 

While specialists agree on the use of seal, some attending businesses said that the obligatory use of seal is unnecessary because only a bank card is enough to proceed with an online deal. Individuals and organisations are still transacting without any seal. However, Mr Nguyen Cong Phu, Deputy Director of the Economic Court of Ho Chi Minh City, pointed out that if there is no seal, complicated issues may emerge in public notary service and management. When a company brings an unsealed document to a public notary office, it must certainly go to the notary office for validating signatures. In this case, it must also bring Business Registration Certificate to competent authorities for verification. This not only takes much time from enterprises, but also results in a lot of administrative procedures for them.

 

Lawyer Tran Thanh Huong said “When the law does not have an answer to the question ‘Is it alright if businesses do not use seals?" the corporate seal reform is still incomplete. The use of seal should be likened to the use of product/service brand name of company.”

 

Before the remarks and suggestions from participants and the business community, Mr Phan Duc Hieu, Head of the Business Environment and Competitiveness Department under the Central Institute for Economic Management (CIEM), Ministry of Planning and Investment, and Member of Drafting Committee, said seal regulation is one of important changes of Law on Enterprises of 2014. Specially, Decree is the only document instructing the enforcement of Law on Enterprises. For that reason, the Decree will be carefully reviewed and studied by the Ministry of Planning and Investment (based on opinions contributed by the business community, laws, associations) before submitting to the Government for approval.