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Articles

date: 07-09-2016 14:51:09

Battle surrounding the stamp of an enterprise


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The article written by our Le An Hai, titled "Battle surrounding the stamp of an enterprise".

For more information about Mr. Hai, please click here

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The stamp of an enterprise: where the knot is untied...

One of the reforms of the Law on Enterprises 2014 which many enterprises are in favour of is to allow enterprises to decide themselves the quantity, content and use of the stamp.

Depending on their needs, enterprises may consider if a stamp is necessary, how many stamps there should be and how to use them in business operations.This fresh regulation simplifies an enterprise’s daily business activities, especially in respect of electronic transactions. It also helps to change the old business beliefwhere stamped documents of an enterprise will be viewed by others as legally binding; in fact,the legal validity of these transaction documents are not affected by whether they are stamped or not.As a result, enterprises have gradually developed a more careful habit of evaluating and conducting due diligence on their business partners rather than believing in their stamps. Recently, enterprises have made little use of the stamps on their own documents.

“Relieving the enterprise stamp of its sacred power” is aligned with the common international practice and should beincreased. Unfortunately, not every enterprise is able to escape from such entanglement.

. . .and where the knot remains tied

Decree 99/2016/NĐ-CP (“Decree 99”) on management and use of the stamp for enterprises and organizations not incorporated under the Law on Enterpriseshas been newly enacted, andwhich supersedesDecree No. 58/2001/NĐ-CP (“Decee 58”) dated 24/08/2001. Pursuant to Decree 99, enterprises are still required to have their stamps if they are incorporated under such laws as those for notarization, lawyers, judicial review, insurance business, securities and co-operatives. These enterprises will have to make their own stamps and register them with the police department like before the advent of the Law on Enterprise 2014. The police continue to reserve the right to perform periodical or unscheduled inspections of management and use ofstamps by enterprises as stamp receivers. In other words, these enterprises do not have the right to freely use the stampswhich is still an improvement.

What impulses are lurking behind a corporate stamp?

From a legal perspective, Decree 99/2016/NĐ-CP governs the management and use of stamps by enterprises that are not incorporated under the Law on Enterprises;of which this Lawdoes not cover. This is the basis for its birth; however, it stirs up some matters surrounding the corporatestamp.

Firstly, the Decree maintains a form of discrimination among enterprises. Whether incorporated under the Law on Enterprises or other laws, all enterprises are legal entities recognized by law and are incorporated under one of the corporate forms governed by the Law on Enterprises. These including private enterprises, limited liability companiesor joint stock companies (except for co-operatives outside the scope of the Law on Enterprises).As such, what is thedifference between the stamps of enterprises incorporated under the Law on Enterprises and those established by other laws?

Secondly, it raises questions about if there is any difference between the stamps issued by the police department and by any other authority, and if the police department really has to take on this duty of stamp engraving.

It is ironicthat Decree 58 considers the stamp to be “a symbol of the legal status and affirming the validity of documents, papers issued by State agencies, organizations and titles.” On the contrary, the Civil Code and the Law on electronic transactions state that the validity of a document does not depend on whether it is stamped or not. Perhaps owing to this statement, Decree 99 does not regulate the legal effect or validity of a stamp-affixed document, and simply states instead: “the stamp is a special means which is registered with and managed by a competent State body and is used to affix documents issued by State agencies, organizations and titles”.This means its function is only for stamping without affirming any legal position or validity of the documents. Changes in Decrees 58 and 99 once again raise questions about the necessity of a stamp, which the Law on Enterprises 2014 has denied.

Thirdly, because of its duty to engravestamps, the police will have the right to periodically or unexpectedly inspectan enterprise’sstamp management and use. This inspection will obviously affect the business operations of an enterprise, not to mention that this mechanism may be abused to harassenterprises.

In addition, pursuant to the draft Law on amendments and supplements of the laws on investment and business, including the Law on Enterprises 2014, the incorporation of an enterprise will abide by the common regulations of the Law on Enterprises. Specialized laws will be applicable only in case of unique regulations on when they specifically regulate the structuring, management, re-structuring, dissolution and operation of enterprises.In other words, maybe in the near future, most enterprises will be incorporated under the Law on Enterprises, and there is a question as to whether Decree 99 will be stillborn at that point?

Eventually, the battle isnot just around the corporate stamp but a more serious issue: when will enterprises really be released and when will the State (or State authorities) stop interfering in corporate operations?

To read the article, please click here

 

 

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