Nine new points of Vietnamese Law on enterprises 2014

Nine new points of Vietnamese Law on enterprises 2014

  On 26 November 2014, the Vietnamese National Assembly passed the Law on Enterprises 2014 No.68/2014/QH13, which will take effect from 01 July 2015. Compared with the Vietnamese Law on Enterprise 2005, the Vietnamese Law on enterprises 2014 has nine new key points as follows:

1. The first new point of Vietnamese law on Enterprise Law 2014: Limited Liability Company and Shareholding Company may have one or more legal representatives;

2. The second new point of Vietnamese Law on Enterprise 2014 on the organization and management of Shareholding Company:

- A shareholding company may select either of the following models of organization of management and operation: a) A General Meeting of Shareholders, a Board of Management, an Inspection Committee and director or general director or b) A General Meeting of Shareholders , a Board of Management and director or general director.
- A meeting of the General Meeting of Shareholders shall be conducted where the number of attending shareholders  represents  at  least  fifty one (51) per  cent  of  the  total  number  of  voting  slips. This rate is consistent with international practices and be reduced from Vietnamese Law on Enterprise 2005 which was 65%;
- An Independent member of the Board of Management who is not directly involved in managing businesses, owned shares in accordance with the criteria and conditions stipulated in Sub Article 151.2 of Vietnamese Law on Enterprise 2014.
- Vietnamese Law on Enterprise 2014 annuls certain provisions in accordance with of Vietnamese Law on Enterprise 2005:
  + To annul the provisions "The director or general director of the company cannot be simultaneously the director or general director of another company”
  + To cancel the provisions "Shareholders owning 5% or more of the total number of shares must be registered with the business registrar within 7 days from the date of acquiring that amount of shares”.
  + Annul the provision that Chairman of the board of management will be elected by the
Shareholders’ Meeting. New law stipulates that Chairman of the board of management will be only elected by the Board of Management.

3. The third new point of Vietnamese Law on Enterprise 2014 on the enterprise’s seal: An enterprise has the right to decide on the form, number and contents of its seal. Before  use,  the  enterprise  is  obliged  to  notify the  business  registration  office  of  the  sample  seal  for the purpose of publicly publishing it on the national enterprise registration information portal.

4. The fourth new point of Vietnamese Law on Enterprise 2014 on information technology: Enhancing the application of information technology on the  national  enterprise  registration  information  portal; All  meetings  of  the  Members’  Council  must  be  recorded  in  minutes and  may  be  sound recorded or recorded and stored in other electronic forms;

5. The fifth new point of Vietnamese Law on Enterprise 2014 on enterprise code numbers: Enterprise code number is used as a tax code number.

6. The sixth new point of Vietnamese Law on Enterprise 2014 on enterprise registration certificate: the contents of enterprise registration certificate only record four contents without  business lines, legal capital etc which is realizing the right to conduct business freely in the sectors and industries not prohibited by law as stipulated by Article 33 of the Constitution.

7. The seventh new point of Vietnamese Law on Enterprise 2014 on the enterprise establishment:  The investor establishes enterprises in accordance with the provisions of Law on Enterprise, including foreign investors are granted a certificate of registration of investment. Along with the Law on Investment 2014, Law on enterprise 2014 officially abolishes the provision that Certificate of investment registration is also business registration certificate.

8. The eighth new point of Vietnamese law on enterprise 2014 of capital contribution: it allows a limited liability company with one member to reduce charter capital.

9. The ninth new point of Law on enterprise 2014 of M&A: Enterprises which are consolidated, mergered, divided, separated does not require theses these enterprises being the same enterprise type (i.e the same limited liability one member or multi member etc), the new law also clears the rules on the rights, interests, responsibility, procedures, application files for M&A etc.  This new point will certainly contribute to the development of M&A market rapidly (M&A).

   Vietnamese Law on enterprise 2014 is an important event marked a major innovation-related businesses. The new rules of Law on enterprise 2014 to be implemented, the Government, Ministries, Departments, localities and businesses shall promptly coordinate to issue the guidelines for implementation so that it will contribute Vietnam and help businesses developing strongly and sustainably.

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