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VietNamNews

Experts: company seals outdated

Update: October, 10/2014 - 08:54

Lawyer Vu Xuan Tien of VFAM Vietnam said in HCM City that firms spend between VND6.4 billion to VND8.4 billion ($301,800-396,200) annually to make and keep seals. — Photo bizlive.vn

HA NOI (VNS) — Viet Nam should end the use of company seals in its legal system to reduce the costs and procedures for businesses and to increase security.

The issue was discussed at a meeting in Ha Noi yesterday. In accordance with the Prime Minister's guidance, head of the Central Institute for Economic Management Nguyen Dinh Cung proposed that the use of company seals should be made optional. "It is an important change in mindset," he commented.

According to a survey by the institute, 52 per cent of the people agreed that corporate seals should be abolished, while 30 per cent alleged that companies should have the freedom to make their own seals .

"Company seals have been a popular area of reform in the past seven years," said Jean Michel Lobet, senior World Bank expert. Many countries have even eliminated the use of seals. "However, it is still in common practice," he added.

The World Bank Group's data shows that the lower a nation's income, the more company seals it uses.

Seals can be forged and take a relatively long time to make, taking up about 20 per cent of the total procedures, according to Lobet.

Former Vietinbank's official Huynh Thi Huyen Nhu reportedly forged eight company seals and appropriated VND4 trillion (US$188.6 million) from 2007 to 2011.

Lawyer Vu Xuan Tien of VFAM Vietnam said in HCM City that firms spend between VND6.4 billion to VND8.4 billion ($301,800-396,200) annually to make and keep seals.

"As business activities become fluid with technology entering the digital age, corporate seals have become obsolete and are, to some extent, a hindrance," Lobet added.

He suggested the use of electronic signatures or recognising the director's signature as legally binding authorisation.

Lawyer Cao Ba Khoat noted, "The company seal is simply an identification. For long, we have mistaken it to be legal signature."

Meanwhile, seals have not helped solve internal conflicts.

In addition to electronic signatures, enterprises can switch to fingerprint or iris identification of their directors, Khoat suggested.

In general, the lawyers who attended yesterday's meeting thought that the State gives particularly high validity to corporate seals, causing incalculable damage if the seal gets lost or stolen.

They also agreed that enterprises are accustomed to using seals, and that it will be a challenge to eliminate the practice.

Cung said Viet Nam will have to undertake large-scale reform and change current laws that regulate the use of corporate seals. — VNS


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