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The Right To Manage The Enterprise Seal

The Right To Manage The Enterprise Seal

“Since the Law on Enterprises 2020 took effect (from January 1, 2021), certain changes were made with respect to the management and use of the enterprise’s seal. These changes promote the autonomy of enterprises over the enterprise’s seal. This comes from the more open thinking of the legislators in stipulating regulations on management and use of enterprise’s seal.”

According to the provisions of the Law on Enterprises 2020, “The enterprise’s seals can be physical or digital as prescribed by e-transaction laws. The enterprise shall decide the type, quantity, design and content of its seal and the seals of its branches, representative offices and other units”.

The current regulations have completely erased the procedure of announcing the seal specimen to the business registration department. This is considered a new regulation and is in line with the trend of simplifying administrative procedures. It saves time and effort in the process of carrying out enterprise-related procedures.

In addition, the enterprise completely has the right to decide on the type, quantity, design and content of its seal and the seals of its branches, representative offices and other units of the enterprise. This means that the enterprise will have the full right to decide on the content of its seal without being bound by the law. This change improved the legal standards in business, whereby the enterprise seal is used for its original purpose of identifying the enterprise rather than just showing the legal identity of an enterprise. Current law recognizes that an enterprise seal can be in the form of a digital signature in accordance with the law on e-transactions, which is in line with the popular practice of e-transactions. This also gives more choice to enterprises to use different forms of enterprise seal instead of just ordinary engraved seals.

Management and use of enterprise seal

According to the provisions of the Law on Enterprises 2020, the management and keeping of the enterprise seal shall comply with the provisions of the promulgated company’s charter or the regulations signed by the enterprise, branch, representative office or other unit of the enterprise. Thus, enterprises can freely choose who has the right to manage and keep the enterprise’s seals in accordance with the company’s charter or regulations. In other words, the person who has the right to issue, amend or supplement the company’s charter or regulations issued by the enterprise, or its branch, representative office or any other unit of the enterprise, will have the right to decide who will manage and keep the enterprise’s seal(s). According to the provisions of the Law on Enterprises 2020, the right to issue, amend and supplement the company’s charter vests with:

  • The owner of a sole proprietorship company,
  • Board of Members for partnerships companies,
  • Board of Members or Company President for limited liability companies,
  • General Meeting of Shareholders for Joint Stock Companies.

The enterprise’s seal is usually used to confirm the status of an enterprise on documents issued by the enterprise or in transactions. However, it does not mean that a document has no validity of the enterprise’s commitments on this document when it does not contain the enterprise’s seal. The validity of the transaction depends on the will of the parties during the transaction.

In fact, enterprise seals are only required on enterprise’s documents according to the provisions of the Law on Accounting, or required in accounting documents or banking documents as per bank’s requests. However, since the issuance of ‘Decree No. 130/2018/ND-CP’ detailing the implementation of the ‘Law on electronic transactions on digital signatures and digital signature certification services’ and ‘Decree No. 119/2018/ND-CP’ detailing the procedure for e-invoices when selling goods or providing services, tax authorities have been allowing enterprises to choose to include either the seal or digital signatures on accounting invoices and documents (except for accounting books where it is still required to be affixed with overlapping seal on the pages according to the provisions of the Law on Accounting).

In general, enterprises now have full authority to decide the management of their enterprise seals without intervention from competent authorities. Therefore, the enterprise can actively decide who has the right to manage the enterprise’s seal. This makes the responsibilities of the parties related to the enterprise’s seal much clearer.

Date of writing: 25th May 2021

This article is based on the current laws at the above recorded time and may no longer be relevant at the time readers access this article due to changes in applicable law and specific cases which the readers want to apply. Therefore, this article is for reference only.

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