THE PROCESS OF HAVING AUTONOMY FOR ENTERPRISE WITH IT’S OWN “SEAL”

“In the morning of June 17, 2020, with 90.68 percent of votes from National Assembly deputies, the National Assembly has approved the Enterprise Law 2020 (LDN 2020), which will take effect on January 1 2021. Compared with the Law on Enterprises 2014 (current), LDN 2020 has some changes, in which state agencies gradually renounce their binding to have autonomy for enterprises in using their own seals.”

From mindset for managing all

The provisions from the  Private Enterprise Law 1990, the Enterprise Law 1999  and the  Enterprise Law 2005 prove that Vietnam has already begun slow-moving steps of innovation, market opening, the thought of “centralized economy”, the state participates in economic management activities everywhere, including the private sector, still exists. Therefore, the state strictly regulates the management and use of the seal, considering the seal as an important object, for instance issued by Article 8 of Decree No. 58/2001 / ND-CP on the management and use of seals, stipulates as follows: “The Ministry of Public Security shall uniformly prescribe the specimens of seals of all types and the engraving of symbols or foreign languages on seals; grant seal engraving permits, keep seal specimens and grant seal specimen registration certificates; manage the seal engraving activities; inspect the management and use of seals and carry out other works according to the provisions of this Decree”

Afterwards, according to Article 36 of the Enterprise Law 2005, about the enterprise's seal:

“1. Every enterprise shall have its own seal. Enterprises must keep and preserve their seals at their head offices. The design and contents of seals, conditions for making seals and regulations on seal usage shall comply with regulations of the Government.

2. Seal is a property of an enterprise. The representative-at-law of an enterprise must be responsible for managing the use of its seal in accordance with the provisions of law. In case of necessity, an enterprise can have a duplicate of its seal if it obtains approval from the seal-issuing agency.”

 Accordingly, the seal is the property of enterprise, but the enterprise must register with the police agency, in order to use a second seal, the consent of the seal issuer (the Police) is required. Thus, the seal from an information logger of the enterprise (such as the enterprise name, the enterprise number) becomes an object showing the legal position and affirming the legal validity of the documents and papers of the enterprise, agencies, organizations and businesses

Perhaps, the regulators think that it is necessary to strictly manage the seal, to avoid objects using the seal for infringing purposes, or to rely on the seal to identify legitimate transactions. or not. With this management, the state controls from the beginning, however, with the enhancement of legal value, if the seal is managed so strictly, it also causes barriers to the business operation of the enterprise. Because an enterprise has only one seal, if it request for more, it must be really necessary and must be approved by the seal issuer. Thereby if the issuer does not accept, the enterprise may not engrave or use additional seals.Therefore, the inanimate seal naturally becomes a hindrance to the normal operation of the enterprise, the belief in the existence of the enterprise in the arising transactions is based on the seal, the lack of a seal is considered as no implementation in business activities, no means to establish relevant legal relations. This issue also leads to many disputes and lawsuits related to the seal, but if opening space in the management and use of the seal, these unnecessary disputes do not arise.

Typically, an internal dispute related to the seal that has been criminalized. Accordingly, in the 2000s, when the Huu Nghi Joint Stock Company (Hanoi) was equitized, internal conflicts and disputes arose. A group of shareholders convened the General Meeting of Shareholders to remove the old Board of Directors and elect a new BOD. The parties brought the dispute to the Court and the letter throughout the agencies.

 Thereafter at the end of 2005, the People's Committee of Hanoi issued a document recognizing the new Board of Directors and requesting the old BOD to hand over the seal to the new BOD. The old Board of Directors did not accept and file a complaint. The dispute led to a climax when the police agency decided to prosecute the case of "Appropriation of the seal" under the provisions of Article 268 of the Penal Code; ordered an urgent search to confiscate the seal, business registration certificate and all documents related to the legal status of the Company. After a period of investigation, the case is suspended. In the early July 2019, Standing Deputy Prime Minister Truong Hoa Binh asked to re-examine the settlement process of the above mentioned "criminalization of the seal" case.[1]

To viewpoints related to the seal is more open.

According to the World Bank Group, one of 189 countries and economies ranked in terms of business environment in the Doing Business report:[2]

“- There are 79 countries making procedure of business seal that is one of the procedures of process on entring the market. In which, only 7 countries require businesses to have a seal (including: Japan, Russia, China, Vietnam, Myanmar, Korea, and Buhtan), the remaining 72 countries allow enterprises can choose whether to use the seal or not.

- There are 110 countries without using corporate seals: Canada (since 1971), UK (since 1989), California - USA (since 1995), Australia (since 1998), Armenia (since 2010), Hy Greece (since 2013), Hong Kong (from March 2014),… ”

Based on the above statistics, we  probably realize that the general trend of the world aims to create openness, clearness, to create freedom and self-determination process of enterprises in management and use of seals.

Ở nhiều quốc gia, việc sử dụng con dấu rất linh hoạt và thuộc quyền tự chủ của doanh nghiệp. Ví dụ:

In many countries, the use of seals is very flexible and under the autonomy of the enterprises. For example:

- In the UK, the compulsory use of seals has been abolished in the UK since 1989. According to the Law on Companies 2006 of UK, the enterprise is required to have its own seal. However, if the enterprise has its own seal, the content of the seal must comply with some general principles. This Law also stipulates that the enterprise seal and the authorized person's signature are equally valid in asserting the legal validity of documents issued by the enterprise..

- In Australia (or Australia): According to the Law on Company 2001 - Corporation Act 2001, the company is not required to have a seal, if company own  seal, seal must be a common seal of the Company (common seal). As a rule, the seal must include the company name, the company number ACN (Australian Company Number) or the business number ABN (Australian Business Number). The company can sign contracts without using a seal. In case the company duplicates the joint seal, the duplicated seals must be respectively marked as "duplicate seal" or "share seal" or "certificate seal".

- In Hong Kong: According to the Ordinance of Companies (622) - Companies Ordinance (622) of Hong Kong, the company is not required to have a common seal (common seal). As a rule, the seal must be made of metal, engraved company name clearly and easily. If the form of the seal is not in accordance with the regulations, the involved individuals will be violated the law and subject to a fine of level 3. If violations continue, they will be fined $ 300 Hong Kong per day until having corrective action.

In addition, the Company Ordinance allows companies owned common seal may own an official seal to using abroad. The official seal must be a copy of the company's common seal, but clearly engraved the place where the seal will be used.

- In Japan: The seal is used with the signature to confirm the legality of the document. Not only legal entities but also individuals use their seal to stamp important documents. The Japanese use two basic types of seals: unregistered seal (mitomein) and registered seal (jitsuin).

When registering for an enterprise establishment, it is compulsory to use the seal of the legal representative (registered with a competent authority) to stamp the application. Japanese companies use the seal of company and the legal representative, in which, the seal of the legal representative is considered more important because only this seal is required. Register with the competent authority. Japanese law clearly stipulates that the seal is a valuable asset of an enterprise.

The management and use of the seal are strictly regulated to minimize violations of the law related to the seal. The size and form of the seal are specified by the Ministry of Justice.

Types of seals are named according to their meaning and purpose, for example: bridging seal - used to stamp between two adjacent pages, pre-affixed correction seal - stamp before correcting document, correction seal - stamp after repairing document,... The Signification of using the seal must be registered with the state authority.[3]

In the process of building and drafting the Enterprise Law 2014, the state gradually loosed up, allowing businesses to have autonomy in their seals and no need to register their seal samples with the police (except for some specific types. such as Law Firm, Notary Office). Accordingly, at Article 44 of the Law on Enterprises 2014 regarding the seal of  enterprise:

“1. Every enterprise is entitled to decide the form, quantity, and contents of its seal. A seal must specify:

a) The enterprise’s name;

b) The enterprise’s ID number.

2. Before using the seal, the enterprise must send the seal design to the business registration authority in order for the business registration authority to post it on the National Business Registration Portal.

3. The management, use, and retention of the seal shall comply with the company’s charter.

4. The seal shall be used in the cases prescribed by law or agreed by the parties.”

Thus, after a long way, the enterprise has the right to decide on the number, form and content of the seal.

However, before using it, it is still obliged to announce the seal sample to the business registration office, to be publicly posted on the National Business Registration Portal.

Besides that, the content showing "Seal is the property of the enterprise" that the Enterprise Law 2005 showed before,then  in the Enterprise Law 2014, there was no content to record the seal as the property of the enterprise.  Therefore, this is considered as a new point, a new point of view and approach of the Enterprise Law 2014, compared to the 2005 Enterprise Law, which only refers to the enterprise's ownership of the seal.

This viewpoint and change is appropriate, because according to Article 163 of the 2005 Civil Code (Article 105 of the 2015 Civil Code, current), “Property comprises tangible things, money, valuable papers and property rights.". Meanwhile, the seal has the main task, and the main purpose is to confirm and identify the person who signed the documents and documents to represent the business or to confirm that the closed transaction papers belong to the enterprise. Which helps to preventing from tampering document , is a tool to monitor and distinguish real and fake documents, creating trust for partners, customers to feel secure in transactions and purchases. The seal is also not wealth or material used for production and consumption purposes, and no feature in property of an enterprise. Therefore, it is completely appropriate not to record "The seal is the property of the enterprise".

Affirming for the enterprise have autonomy with its own seal

According to Article 43 of the Enterprise Law 2020, regarding Enterprise’s seal:

“1. The seal includes the seal made at the stamp-engraved establishment or the seal in the form of digital signature in accordance with the law on electronic transactions.

2. The enterprise decides on the seal type, quantity, form and content of Enterprise’s seal, branches, representative offices and other units.

3. The management and retention of the seal shall comply with the company's charter or the regulations promulgated by the enterprise, branches, representative offices  and other units of the seal issued. Enterprises use seal in transactions according to the provisions of law.”

The above mentioned provisions show that the Enterprise Law 2020 has completely removed the procedure for announcing the seal sample to the business registration authority, the enterprise decides to eliminate the seal, the quantity, the form and the content of the seal. This means that enterprises have the right to decide, disobey any standards, can use the seal in the form of a digital signature in transactions.

Enterprises also do not need to announce the seal sample to the business registration authority, they have removed one administrative procedure for enterprises, the state officially changed the way of management from control to self-initiative. and take self-responsibility

With these changes, we have gradually approached the legal standards in business for the world. The enterprise's seal returned to its use and original purpose was an identification mark of an enterprise rather than a key factor showing the legal status of the business.

Currently, the industrial revolution 4.0 has been taking place strongly, the ways to establish transactions, recognize the will of the parties in transactions have changed, economies has connected without borders. Therefore, the requirement for "fresh signatures" "red marks" in transactions will gradually be replaced by electronic signatures or electronic seals.

 Moreover, Enterprise Law 2020 still inherits and recognizes the content and spirit of the Enterprise Law 2014 that it is not required to use a seal in transactions. Specifically: Article 44 of the Law on Enterprises 2014 stipulates: “The seal shall be used in the cases prescribed by law or agreed by the parties.”. Article 43 of the Enterprise Law 2020 states: "Enterprises use seals in transactions according to the provisions of law."

This provision of the Enterprise Law 2020 and the Enterprise Law 2014 are new points compared to the Enterprise Law 2005. Because, before the 2005 Enterprise Law was introduced, regulations on management and use of seals were regulated in Decree 58/2001 / ND-CP and enterprise is one of the subjects governed by the Decree. Accordingly, in Article 1 of Decree 58/2001 / ND-CP the expression: “The seal shows the legal position and affirms the legal validity for documents and papers of agencies and organizations. and state titles. The seal is managed in accordance with this Decree ”.

Therefore, when making and signing documents in transactions, the enterprise must affix a stamp on the document to show the legal position and confirm the legal value of the documents and papers. Unless using steal, the text or transaction will have no legal value.

As the 2005 Enterprise Law was enacted, in Article 36, there was a provision: "The regime of using the seal complies with the Government's regulations" and Decree 58/2001 / ND-CP remained in effect, only to be replaced. according to Decree 99/2016 / ND-CP (effective July 1, 2016). In Decree 99/2016 / ND-CP, showing the management and use of the seal of an enterprise registered and operating under the provisions of the Law on Enterprises 2014 and the Law on Investment without being subject to general adjustment by Decree on seal management as before.

Thus, it can be seen that before the Enterprise Law 2014 and the Enterprise Law 2020 take effect, the transactions that were previously established must have a stamp to recognize the legality. However, at present, the use of a seal is not required in transactions, subject to the agreement of the parties and mandatory legal transactions.

This change has changed thinking, perceptions which have been deeply ingrained in the subconscious of businesses, of state management agencies that the seal is a legal evidence of the transaction. Meanwhile, in order to determine whether a transaction is legal, valid or not between an enterprise and other entities, the important point is to consider the agreement, unanimity of the will, and voluntariness in the transaction. The content is not contrary to the provisions of law, is the capacity of the subject when entering into and performing transactions.

Currently, in addition to autonomy for businesses to use "physical" and "material" seals, the state also has regulations in the use of "electronic seals". Accordingly, in Article 8 of Decree No. 130/2018 / ND-CP, a digital signature has legal validity if the safety data message is met. Thus, when establishing transactions, they can use electronic signatures and electronic seals to record their transactions.

When the enterprise has been given the autonomy of its seal by the State, it also means that the enterprise must be responsible for the management and use of the seal; proactively informing partners. And the fact that it is not required to have a stamp in the documents and contracts when performing the transaction, the law is confirming the legal value of the signature of the legal representative. When there is a dispute related to the use of the seal, or the enterprise's transaction, the enterprise is the responsible party and the proving party. Therefore, it is completely appropriate that the state does not manage and intervenes deeply in these disputes.

On January 1, 2021, the Law on Enterprises 2020 will take effect, time is also nearing, for the regulations on the enterprise's seal to come to life, enterprises will promote their ownership effectively. With the seal, the businesses themselves must also have thoughtful preparations to receive the new regulations given by the Enterprise Law.