Company Chops in Vietnam: Sealing the Deal
Company chops in Vietnam play an important role and ensure the authenticity of the document. Their use cannot be understated, and its usage gives legitimacy to a signature on a document. Vietnam Briefing explains the use of the company seal and its importance in business transactions.
In Vietnam, an official company seal or chop is used for legally authorizing documentation. A seal gives legal validity to any documents or papers issued by companies, organizations or agencies. Any paper or document showing an official act of a company that contains only a signature of its general director is still considered insufficient. Indeed, the use of the seal of any organization or company in Vietnam is essential.
Like many Asian countries such as China, corporate seals have an important role in Vietnam
Under the Government Decree No.58/2001/ND-CP and Decree No.31/2009/ND-CP, issued in August 2001 and April 2009, respectively, each company or organization is permitted to use only one seal. In case the company or organization needs another seal with content identical to the first one, such second seal must have a specific mark that is distinctive from the original one. Ink for all seals must be red. The Ministry of Public Security has the right to grant seal engraving permits, uniformly prescribe specimens of all seal types, and manage seal engraving activities.
In November 2014, it was suggested to discard the regulation on compulsory usage of the enterprise seals when processing transactions in order to help businesses reduce costs and avoid negative ramifications of events including the loss of seals or seal misuse. According to a survey by the Vietnam Chamber of Commerce and Industry (VCCI), 50 percent of the enterprises agreed that the corporate seals should be abolished, while around 28 percent agreed on keeping the same rule about corporate seals. Nonetheless, the regulation that a company must have its own seal remains, with some changes.
Subsequently, Vietnam’s National Assembly promulgated Law No. 68/2014/QH13 on enterprises, which came into force on July 1, 2015. From that day, companies have the right to freely decide the form, content, and amount of their seals, provided that the contents of seals display the company’s name and ID number.
As per the latest amendment to the Law on Enterprises, which will take effect on January 2021, businesses will no longer need to notify the Business Registration Authority (BRA) of the company seal sample. Additional businesses are allowed to decide on the type, number, form, and content of seals without notifying the BRA.
The use of the company seal
The affixture of seals on any type of documents must comply with the provisions of the law. Decree No.110/2004/ND-CP stipulates that seals shall only be affixed on documents or papers with a signature of an authorized person; also, that seal should be borne on one-third of such signature. A seal on any documents that have no authorized signature, or a seal on a blank paper, is not considered legally valid. The seal shall be affixed on one-third of the signature of an authorized person.
Seal on adjoining edges of pages
When affixing an organization or company seal on adjoining edges of pages that have continuous related content to each other, the seal shall be affixed on either left or right edges. If a document consists of more than one page, it often bears a bridging or integrity seal between the pages. This seal does not confirm the legal validity of the document.
Affixture of a seal on a front page
A company seal is often affixed on the front page of a document in order to confirm such a document is a part of the main document. Such a seal is affixed on part of the company or organization’s name or on the appendix attached to the main document. The seal is often on the top-left-corner of a paper. Nonetheless, this seal on the front page does not confirm the legal validity of the document.
In Vietnam, seals have long been used to ensure security in any business transaction. With such an established custom and habit of using seals in business, it may take much time for Vietnam to totally replace seals with physical or electronic signatures.
Note: This article was first published in May 2015, and has been updated to include the latest developments.