Tuesday, February 10, 2015

What's new in Vietnam's Law on Enterprises 2014

The new Law on Enterprises (2014) was passed by the National Assembly in November 2014 and shall be effective as of 1st July 2015. New and existing foreign investors in Vietnam may be curious to have a look at what’s new in the Law and how the regulatory changes shall affect their business operations in Vietnam. A news article from VCCI has noted major legal updates to come into effect in the next few months.

The new law is said to provide just a general frame governing the operations of enterprises; meanwhile it seems to let enterprises to decide many details of how to organize themselves and operate accordingly.

The new Law seems to make room for information technology to take a much bigger role in the business life; the National  Business Registration Portal (currently at http://dangkykinhdoanh.gov.vn), for instance, is assigned to be place where enterprises must publicize their business establishment announcement or their dissolution decision. Another example is the legal recognition of electronic, audio minutes of meeting instead of requiring minute book as the sole recognized form.  According to the law, general meeting of shareholders can be organized under the form of video conference (involving many locations, and the place of the meeting chairperson shall be recorded as the meeting’s location) and shareholders may cast their electronic or email votes legitimately.

The format of business registration certificate is regulated to incorporate only 4 items, namely (1) the name and code of an enterprise, (2) its location, (3) information about the legal representative and (3) charter capital instead of 10 items as regulated in the past law (scope of business, list of founding shareholders, name of representative office, branch, business location have been removed from the format).  Enterprises’ operations shall be no longer restricted within certain scopes of business indicated in the business registration certificate as before, so companies seem to able to do whatever businesses which are not prohibited under the National Constitution.

Under the new regulations, enterprises may determine the format, the quantity and the indicated information of their seal at their discretion (but the seal must at least indicate the name and code of company) enterprises shall only be required to report their seal’s shape to the business registration office for the purpose of publicizing the seal shape in national business registration portal. This approach was of much debate during the law drafting process and treated with contradictory opinions among the lawmakers. But eventually the new law regulates a flexible approach to the matters relating to company seal. According to the past regulations, Vietnamese enterprise seals was in a standard shape regulated by Ministry of Public Security (Police) and “being stamped” was widely recognized as the condition for a document issued by the enterprises to be valid and effective, even it was signed by the legal representative.

Enterprises may determine the format, the quantity and the indicated information of their seal at their discretion

In coherence with the Investment Law 2014, the new enterprise law also officially abolishes the past regulation defining that an Investment Certificate served also as the Business Registration Certificate (2 in 1) for the case of companies established by foreign investors. Thereby, under the new legal regime, the foreign investors wishing to establish enterprises in Vietnam must obtain an investment certificate for their project first in accordance with Investment Law 2014 and after that shall register to establish their enterprise under the provisions of the Law on Enterprises 2014.

Compiled by I4G

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