Streamline your business setup in Vietnam


On January 01st, 2021, Law on enterprise No. 59/2020/QH14 (Law on enterprise 2020) dated June 17th, 2020 takes effect. One of the most common questions asked is whether enterprises need to use seals?

According to the provisions of the current law, Law on enterprise 2014, every enterprise is entitled to decide the form, quantity, and contents of its seal, but must ensure that a seal must specify the enterprise’s name and the enterprise’s ID number. After a decision, the enterprise must notify the seal design to the business registration authority.

However, there are many opinions regarding the proposal to remove the enterprise’s seal from the following points of view.

Firstly, the operation of the enterprise is responsible for the enterprise’s legal representative. And the signature of the legal representative is sufficient on behalf of the enterprise to implement the transaction. Therefore, the need for an additional seal is redundant and unintentionally, which requires the enterprise to confirm twice on the same transaction, wasting time and unnecessary.

Secondly, the management of the seal and the authenticity of the seal is still a rather complicated matter for enterprises. Normally, the legal representative does not keep the seal with him/her but assigns it to the administrative department, assistant or secretary to keep and seal documents. Therefore, the physical management of the seal and the management of the seal to comply with regulations also cause many difficulties for enterprises. It is also not to mention that seal forgery is quite common and it is very difficult to distinguish the real and fake seal to the parties at the time of the transaction.

Thirdly, in the current 4.0 era, it is necessary to simplify procedures to integrate into the general development trend of the world. Currently, according to statistics, there are 110 countries that do not use enterprise’s seals, 72 countries allow businesses to choose whether to use a seal or not. Some countries even digitize all legal documents without having to print, sign or stamp to take effect. Therefore, in order to approach the general trend of the world, Vietnam should abandon the use of enterprise seals.

However, unlike previous expectations, the Enterprise Law 2020 retains the tradition of using the seal but simplifies some regulations.

Accordingly, the new Law on enterprise regulates enterprises to decide on the form of their seal in two ways: The enterprise’s seals can be physical or digital signatures as prescribed by e-transaction laws. Thus, the Law on Enterprises has recognized digital signatures as a form of enterprise’s seal.

In fact, according to our experience, the seal in the form of a digital signature is still quite new for many enterprises, even some enterprises believe that the signature on the scanned document and sent via email is a digital signature. A digital signature is considered an enterprise seal if it meets the requirements of the law, specifically the Law on e-transactions 2005, accordingly, a digital signature, also known as an “E-signature”, is “established in the form of words, letters, numerals, symbols, sounds or other forms by electronic means, logically attached or associated with a data message and capable of certifying the person who has signed the data message as well as the approval of such person to the content of the signed data message.”

E-signatures may be certified by an e-signature certification service providing organizations. In addition to being considered as a replacement for the traditional seal of an enterprise, a digital signature is also used as a signature of the legal representative of the enterprise to sign on electronic documents and has the same legal effect as a printed document, signed and sealed.  Digital signatures are often used in e-commerce transactions, such as customs, tax declaration, online purchases, etc. Currently, Vietnam has a number of licensed agencies providing digital signature services such as Viettel, VNPT, etc, for enterprises to choose.

Regarding the seal’s content, the current Enterprise Law stipulates that the seal content must show the enterprise name and enterprise code. However, the new Enterprise Law also makes it easier to manage by allowing businesses to decide on the content of the seal, which means that the enterprise has the right to decide what to write on the seal, as many businesses only design their own enterprise logos on seals or other distinctive signs for identification.

The new Law on enterprise also allows Enterprises to decide on the form, quantity, and content of the seal of the enterprise, its branches, representative offices and other units.

In addition, before using the seal, the enterprise does not need to notify the seal to the enterprise registration agency to publicly post it on the National Information Portal about enterprise registration as it is now. Even, according to the provisions of Decree No. 108, when registering for business, an enterprise is not required to seal in the application for business registration, notice of changes in business in registration information, resolutions or decisions and meeting minutes in the enterprise registration dossier.

The management and saving of the seal shall comply with the provisions of the charter or regulations issued by the enterprise, branch, representative office or other units of the enterprise having the seal.

In conclusion, although the new Law on Enterprises has not completely abolished the use of seals, but by allowing enterprises to have the right to decide on the form and content of their seals, do not notify the seal to the business registration authority, as well as allowing the use of digital signatures as a form of enterprise’s seal is considered a stepping stone to open the door to greater reform in the use of seals in Vietnam in someday.