THE IMPORTANCE OF THE COMPANY SEAL IN VIETNAM
For doing business in Vietnam, beyond concerns on preparing capital charter, making business plan, running marketing projects and et cetera, understanding and complying with regulations of Vietnamese law on formality need also to be focused. Accordingly, one of relevant matters when doing business in Vietnam is on company seal. So, what is a company seal and how important is it in doing business in Vietnam?
1. What is a company seal?
Company seal is a round tool printed name of an enterprise and enterprise registration number (the “Required Information”). It is usually used for affixing on enterprise’s documents, especially contracts and/or official letters in exchanging information between enterprises which require the seal of the company.
Under the former regulations on company seal, except in special cases, an enterprise could only have one seal registered with the local police and renewed each of five years. However, currently, with promulgating Law on Enterprise 2014 in Vietnam, enterprises are free to decide on the form, number and contents of their seals, provided that the seals have the least of the Required Information.
2. How is company seal’s role in doing business in Vietnam?
On the role of company seal in Vietnam, it is not stated clearly on its role under Vietnamese enterprise laws. In fact, the seal is usually used as a signal of “company’s signature” for stating enterprises’ consent or confirm on official documents.
A document issued by a company must be affixed with the company seal in case (i) it is required by law; or (ii) it is agreed by the parties to the document, Law on Enterprise 2014 stipulated.
In fact, the company seal is usually considered as a sign of consent from the company when it comes into a contract with partners even the transactions do not require the company seal as prescribed under Vietnamese enterprise laws. This aspect shows the main role of company seal. In common, company seal is usually evaluated within consideration of authorized person who signs onto the contracts or other documents of the enterprise.
Due to the role of company seal, in the event that transactions of the enterprise are performed without company seal, provided that other requirements are met, there are many risks arising regarding validity of the transactions. Based on that, the transactions might be invalid without company seal. In fact, there are many cases that the transactions between enterprises are considered to be invalid due to lack of company seal.
As mentioned above, due to the lack of cleanliness of provisions under Vietnamese enterprise laws, the risk regarding company seal is possible during performing commercial contracts between parties, in which a party is a company. Hence, for ensuring the validity of the transactions and avoid any risk, company seal should be affixed on official documents. In another word, a support from a professional law firm or an attorney for relevant matters should be considered.
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This article was written by Mr. Nguyen Danh Cong – Partner of DIMAC Law Firm
Email: [email protected] Phone: (+84) 985 820 703