Prime Minister Nguyen Tan Dung says he regularly reviews documents from the presidents, prime ministers and international business officials that lack a red stamp.
Dung made his remarks during a meeting with the Minister of Planning and Investment in Hanoi early last month before ordering the Ministry of Public Security on September 18 to amend the mandatory use of corporate stamps and “move towards replacing the seals with handwritten and digital signatures.”
“It’s special as the idea of changing the traditional use of corporate seals came from the Prime Minister, not the business community,” said Nguyen Dinh Cung, Director of the Central Institute for Economic Management, during a seminar in Hanoi on Thursday.
Cung said Dung’s order was added to a draft amendment to the corporate law, which will be considered during the upcoming session of the National Assembly – Vietnam’s legislature.
The session is slated to open from October 19 to November 28.
The draft amendment says, among other things, that company seals will become optional. Accordingly, businesses can use a stamp and/or handwritten and/or digital signature of managers to render contracts and other official documents valid and legal.
Businesses which prefer to continue using a seal can have one made in different shapes and colors, according to the amendment.
“I call these revisions ‘a major change in thinking’,” Cung said.
The current law mandates the use of a corporate seal to render contracts valid and legal. A start-up company must apply for an official seal designed to a set of strict specifications (round with red characters) at a local police station.
As business activities become fluid and technology enters the digital age, corporate seals have become obsolete and are a hindrance, says Jean Michel Lobet, a World Bank expert. Photo credit: VCCI
Jean Michel Lobet, a senior specialist at the World Bank, supported the amendment.
“As business activities become fluid and technology enters the digital age, corporate seals have become obsolete and are, to some extent, a hindrance,” Lobet said at the seminar.
He also said that seals are no longer safe as they can easily be forged.
Lobet quoted a recent World Bank survey as saying that only 79 out of 189 economies still require a corporate seal for official documents.
In Vietnam, it takes seven days for a new firm to obtain a corporate seal, accounting for much of the total 34 days required to start a company here, according to the survey.
Lawyer Vu Xuan Tien agreed that corporate seals should not be compulsory as they have caused businesses plenty of trouble.
“This was because Vietnam is too serious about the corporate seal, Huynh Thi Huyen Nhu [a former executive at Vietinbank] was able to swindle several banks, companies, and individuals out of nearly VND4 trillion (US$190 million) [in 2010-11] by forging seals [of Vietinbank and related banks and companies],” said Tien.
He also cited similar cases involving the Huu Nghi Joint Stock Company, Hai Phong Metal JSC, and Hung Vuong University in which executives withheld seals to win concessions from subordinates.
“Recently, a person in the HCMC-based STN Investment Consultancy JSC seized the company seal, freezing the company’s operations for a long time,” he said.
Though the corporate seal has legal significance in Vietnam, the law does not address the act of taking or withholding the seal.
“Police describe the act as ‘relating to civil relationships’ and courts won’t hear these sorts of complaints. So, companies can do nothing when their seals are seized,” said lawyer Truong Thanh Duc.
Nguyen Minh Duc, a representative of the Vietnam Chamber of Commerce and Industry (VCCI), said a recent VCCI survey showed that 52 percent of businesses voted for abolishing the corporate seal.
Meanwhile, 30 percent would like to have the freedom to make their own seals with their favorite shapes and colors. Only 28 percent hoped that matter remain unchanged.