Sealing the Deal in Vietnam: Company Chops Necessary
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 seal in any organizations or companies in Vietnam is essential.
Under the Government decree No.58/2001/ND-CP and 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, in a course of discussion of National Assembly Deputies about revising Law on Enterprises and Investment, 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 of Vietnam Chamber of Commerce and Industry, 50% of the enterprises agreed that the corporate seals should be abolished, while around 28% agreed on keeping the same rule about the corporate seals. Nonetheless, the regulation that a company must have its own seal remains, with some changes.
In the same month, the National Assembly promulgated Law No. 68/2014/QH13 on enterprises, which will come into force on July 1, 2015. From that day, companies shall have the right to freely decide the form, content and amount of their seals, provided that the contents of seals display company’s name and ID number. Companies must inform the business registration authority about the design, number and content of its company seal before using it. In addition, when the law takes effect, the Ministry of Public Security shall no longer manage and grant seal engraving permits.
The use of the company seal
The affixture of seals on any type of documents must comply with the provisions of 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 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 appendix attached to a main document. The seal is often on the top-left-corner of a paper. Nonetheless, this seal on front page does not confirm legal validity of the document.
In Vietnam, seals have long been used to ensure security in any business transactions. 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.
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