You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

May 11, 2020

Amendments Proposed to Vietnam’s Law on Investment and Law on Enterprises

Subscribe to Updates

Amended versions of Vietnam’s 2014 Law on Investment and 2014 Law on Enterprises, two of the key laws governing companies (including foreign companies) doing business in Vietnam, will be considered at the 9th session of the National Assembly in May 2020. If passed, the draft laws will come into effect on January 1, 2021.

The amended laws are currently in the proposal stage. The Ministry of Planning and Investment recently submitted drafts, as verified by the Economic Committee of the National Assembly, to the Standing Committee of the National Assembly for its opinions.

Proposed Amendments to the Law on Investment

According to Notice No. 3530/TB-TTKQH of the Secretary General of the National Assembly of Vietnam dated March 30, 2020, the Standing Committee, at its 43rd session, concluded the following points on proposed amendments to the Law on Investment:

List of Conditional Business Lines

One of the proposed amendments to the Law on Investment is an update of the list of conditional business lines. Specifically, 12 business lines will be removed (including commercial arbitration, franchising, and logistics services), 19 business lines will be amended, and six new business lines will be introduced: architectural services, data center services, electronic identification and authentication services, import press distribution services, fishing vessel registry, and training crew members of fishing ships. The Standing Committee recommended further review to assess the possible impact of these changes.

Debt Collection Services

There are still two streams of opinion with respect to debt collection services. Some argue that the provision of such services should be prohibited, while others support the notion that debt collection services are still necessary, but strict conditions/requirements for provision of such services must be established. The Standing Committee agreed to submit both opinions to seek further opinions from the National Assembly.

Proposed Amendments to the Law on Enterprises

On March 10, 2020, the Economic Committee issued Report No. 1850/BC-UBKT14 to report to the Standing Committee some key proposed amendments to the Law on Enterprises. The Standing Committee offered no further comments on these amendments.

Corporate Seals

Under proposed amendments to reduce unnecessary administrative procedures and costs relating to corporate seals, companies would have the right to decide whether to have a seal or not, and would no longer be obliged to notify the relevant licensing authority of their seal samples. Instead, the seal samples could be published on company websites, or electronic signatures could be used.

Protection of Minority Shareholders

Under the current Law on Enterprises, a shareholder or a group of shareholders holding at least 10% (or a smaller percentage as stipulated in the charter of the company) of the total ordinary shares has the right, among others, to request the convening of a General Meeting of Shareholders in some specific cases and ask the Board of Inspection to investigate issues relating to the management and administration of the company. A proposed amendment would reduce this percentage to 5%, to enhance protection of the minority shareholders’ rights.

Private Placement of Bonds by Non-Public Companies

A proposed amendment would add new regulations on conditions and procedures for private placement of bonds by non-public companies. Under these regulations, non-public companies would only be allowed to offer corporate bonds to professional securities investors, such as commercial banks and securities investment funds.

***

Should you have any questions or concerns, please reach out to us at [email protected] for further assistance.

Related Professionals

Practices

Banking and Finance

Corporate/M&A

Location

RELATED INSIGHTS​ 

December 7, 2023
Thailand’s Securities and Exchange Commission (SEC) has updated its regulations regarding public initial coin offerings (ICOs) that exhibit debt-like or infrastructure-backed characteristics. These new regulations are set to transform the landscape for digital fundraising, ensuring enhanced investor protection and risk mitigation. The introduction of these regulations is a major move toward cultivating a more transparent and secure digital token market in Thailand. It highlights the importance of comprehensive information disclosure and aligning digital-asset fundraising practices with established financial standards. The adjustments require more collaboration between token issuers and ICO portals to comply with the developing regulatory environment. The key features of the new regulations, which took effect on November 16, 2023, are summarized below. Debt-Like ICOs Debt-like digital tokens are digital tokens for which a fixed rate of return is predetermined. The rate does not vary based on the performance of the project or enterprise, but it may be supplemented by extra returns. To ensure that investors have access to adequate and essential information prior to making informed investment decisions, and to evaluate the risk of default by the issuer, the regulation requires disclosure of the project’s creditworthiness and risk assessment factors, as detailed below. Project creditworthiness. Disclosures about project creditworthiness should include information about the credibility assessment of the project, which should be conducted reasonably by an ICO portal or an independent expert. Risk assessment factors. Disclosures should include information about the factors considered in the assessment of risks—particularly the financial capability to repay the investment project’s debt. Infrastructure-Backed ICOs Infrastructure-backed digital tokens are issued for investment in infrastructure assets or to earn a share of the revenue stream from infrastructure projects. The regulations for the ICOs of these infrastructure-backed tokens have been revised to align with those for infrastructure trusts. These regulatory updates cover various aspects: Definition
Read More
December 6, 2023
Over the past two years, Laos has experienced a sharp depreciation in the value of the kip (LAK) against foreign currencies. To thwart this depreciation and get its currency back on track, the government took a series of measures and issued the Law on Foreign Exchange Management No. 15/NA of July 7, 2022 (the “FX Law”) to improve management of the foreign currency and reiterate restrictions on foreign currency in the country. The amended law also aimed to strengthen foreign exchange liquidity and increase the reserve of foreign currency held in Laos. This year, the prime minister of Laos issued the Order on the Implementation of Foreign Exchange Management, which came into force on July 14, 2023. The order addresses foreign currency use, movement, and possession and clarifies administrative roles regarding the FX Law. This article outlines some of the key points related to the FX Law and the prime minister’s recent order. Use of Foreign Currency Other than a major relaxation regarding remuneration for foreign employees, the amended FX Law retains Laos’ strict regulatory approach to the use of foreign currencies. The general rule is that foreign currency payments for goods, services, debt, dividends, or taxes are prohibited; these payments must be in LAK. The amended law also seems to prevent suggestions that a price in LAK may be adjusted based on another currency. One of the few exceptions to these requirements is for the export of goods and services abroad, in which case it is acceptable to receive payment in foreign currencies. Similarly, the import of goods may allow payment in foreign currency. Announcements or advertisements of the price of goods or services in a foreign currency are likewise prohibited, as is offering a salary in foreign currency when advertising a job in Laos. Similarly, employees’ remuneration,
Read More
December 4, 2023
Thailand’s Ministry of Industry (MOI) has issued a notification adopting the polluter-pays principle for generators of industrial waste in factories. The Notification of the Ministry of Industry on Management of Waste or Unused Materials B.E. 2566 (2023), enacted under the Factory Act B.E. 2535 (1992), marks a pivotal shift in the responsibilities and liabilities of factory operators as waste generators, which under the new notification no longer end when the waste is collected by a third-party waste processor. The notification, which was first issued in May 31, 2023, took effect on November 1, 2023, after the expiration of a grace period set by the MOI. The new MOI notification extends waste generators’ responsibilities and liabilities for management and disposal of waste from the time the waste is generated until it is properly and completely disposed of. These responsibilities include delivering the waste to the waste processor and overseeing the waste disposal processing, as well as undertaking proper measures in the event of failure by the waste processor, accident, or loss of the waste. Similar to the rules under the previous MOI notification on factory waste, the transport of waste outside the factory premises for disposal still requires permission from the Department of Industrial Works (DIW). However, the permission under the new MOI notification can now be applied for either electronically via its customer registration system (“i-Industry system”) or in person at the DIW. The MOI’s adoption of the polluter-pays principle for industrial waste heralds a significant shift in waste management liability and the costs of pollution prevention to the waste generators, who now need to ensure compliance with the rigorous criteria and compliance procedures outlined in the new MOI notification. For more details on the new rules, or on any aspect of Thailand’s waste management or environmental regulations for
Read More
November 17, 2023
On October 3, 2023, Thailand’s Board of Investment (BOI) issued a new regulation clarifying the eligibility criteria for investment promotion under the BOI category “5.10 Development of software, platforms for digital services, or digital content.” To be eligible for BOI promotion under the digital activity category, projects must meet criteria related to local development, minimum investment amount, machinery and equipment, and development processes. These criteria for category 5.10 activities, along with the latest clarifications from the BOI, are detailed in the table below. Tax Incentives The BOI also clarified the method for calculating corporate income tax (CIT) exemptions. The CIT cap amount is calculated on an annual basis from the prescribed expenses incurred after applying for BOI promotion and occurring during the year for which the CIT exemption is claimed. The allowances include 100% of expenses for salaries for newly hired Thai IT personnel, technology-related training, and obtaining quality standards (such as ISO 29110). The revenue of projects that qualify for CIT exemption must be from sales or services directly related to software, platforms for digital services, or digital content developed as promoted by the BOI, including licensing fees, subscription fees, pay-per-use expenses, in-app purchase fees, usage fees, revenue sharing, advertising fees, and so on. For more details on BOI promotion for digital activities, or on any aspect of investment promotion in Thailand, please contact Athistha (Nop) Chitranukroh at [email protected] or +66 2056 5600, Napassorn Lertussavavivat at [email protected] or +66 2056 5662, or Thammapas Chanpanich at [email protected] or +66 2056 5561.
Read More