Vietnam's Prime Minister calls for replacement of the Red Seal for businesses

The Vietnamese Prime Minister Nguyen Tan Dung has publicly announced that the mandatory use of corporate stamps should be amended

October 27, 2014

The Vietnamese Prime Minister Nguyen Tan Dung has publicly announced that the mandatory use of corporate stamps should be amended

By Vietnam Briefing
The government should “move towards replacing the seals with handwritten and digital signatures.” The PM made the comments during a meeting with the country’s Minister of Planning and Investment.
PM Dung’s proposal has been added to a draft amendment to the corporate law and will be considered during the upcoming session of Vietnam’s National Assembly, which is scheduled to last from October 19 to November 28.
Analysts have pointed to the fact that, since this decision has emanated from the PM himself, it is a clear sign that this amendment will occur.
Key points of the amendment include:
Company seals will be made optional
Businesses will be able to use a stamp and/or handwritten or digital signature of managers
Businesses which prefer to continue using a seal can have one made in different shapes and colors
Under current law, the use of a corporate seal is mandated in order to certify contracts as legal and valid. A newly formed company is required to apply for an official seal at their local police station. The seal, which must be designed according to exacting specifications, is round with red characters. It takes seven days to obtain the seal, thus removing this requirement would drastically shorten the time it takes to set up a business in Vietnam (~34 days).
The foreign business community in Vietnam hailed the PM’s move as very timely. These businesses have often complained that the old seal made little sense in the digital age and that they could be easily forged.
In a clear indictment of the current system, a recent survey by the Vietnam Chamber of Commerce and Industry (VCCI) found that, among businesses polled:
52 percent voted for abolishing the corporate seal
30 percent would like to have the freedom to make their own seals using their favorite shapes and colors
28 percent hoped that the seal would continue to be used
In recent years, Vietnam has striven in numerous areas to create a more competitive business environment, such as its recent moves aimed at relaxing foreign equity limits. The possibility of doing away with the requirement of the creation of a business seal would be yet another positive step towards improving the ease of doing business within the country.
This article was first published on Vietnam Briefing.
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