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​ 

June 2, 2023
In April 2022, Myanmar’s State Administration Council established the Foreign Exchange Supervisory Committee (FESC) to approve foreign currency conversion, make exemptions to foreign exchange restrictions, and permit overseas foreign currency transfers. Because of the FESC’s establishment and related regulatory changes, companies that would like to transfer funds out of Myanmar for capital reduction, share capital for liquidated companies, share transfers, or share dividends must abide by the FESC’s requirements, which vary depending on the type of company. The Myanmar Investment Commission (MIC) has announced that companies permitted by or endorsed under the Myanmar Investment Law must submit various supporting documents when applying to transfer foreign currency internationally. These documents, which must be addressed to the MIC chairman, include the following: Prescribed form for transfer of foreign currency; Application letter giving a specific reason for the transfer; Original board of directors’ resolution; Audited financial statements for the relevant financial year; Up-to-date bank statement of the company; Tax assessment confirmation letter for the relevant financial year; Tax clearance certificate for the relevant financial year, in the case of liquidated companies; and Copy of the updated quarterly performance report using the form prescribed by the MIC. If the transferor cannot submit the documents in person, the required documents need to be accompanied by a power-of-attorney or appointment-of-representative letter. Though the FESC has not announced its own documentation requirements, experience shows that MIC companies must submit an application to the MIC Investment Monitoring Division before submitting their offshore remittance application to the FESC. Once the MIC has received a complete application, it will request a recommendation from the Central Bank of Myanmar (CBM). With this recommendation in hand, the Investment Monitoring Department will then seek FESC approval internally. Aside from MIC companies, DICA companies (i.e., companies that do not require approval from the
Read More
May 19, 2023
On May 15, 2023, Vietnam’s Deputy Prime Minister Tran Hong Ha signed Decision No. 500 of the Prime Minister approving the National Power Development Plan for the period 2021-2030, with a vision to 2050 (“PDP VIII”), following extensive public consultations and multiple rounds of review since the first draft version was circulated in 2021. The plan was approved in the context that in the past few years, a number of large power projects have been behind schedule for operation, while new projects have not been able to be implemented due to waiting for additional planning. PDP VIII is the master plan for the development of the power source and transmission grid at 220kV or higher; services in renewable energy and new energy in Vietnam; and works connecting the power grids of Vietnam and neighboring countries. We set out below some quick updates regarding PDP VIII. 1. Development Targets Key development targets are summarized in the table below: Investors in coal, domestic gas, and LNG projects may need to have a conversion plan ready given the 2050 targets to convert to other sources of energy. 2. Solar Projects A list of 27 solar power projects that were planned for the period of 2021-2030 but which have not been assigned to investors are not allowed to be deployed but can be considered after 2030, except in the case of deployment in the form of self-production and self-consumption (Appendix IV). These projects represent 4,136.25 MW of capacity that will be left on the sidelines until 2030. 3. Hydropower Projects A list of 14 potential hydropower projects can be considered if economic and technical conditions allow for more hydropower development (Appendix III). These projects represent 1,244 MW of capacity that can be added to the hydropower targets for 2030. 4. Projects Prioritized for
Read More
May 18, 2023
Thailand’s Office of the Securities and Exchange Commission (the “SEC Office”) has revamped various rules relating to private placements by listed companies with a view to streamlining the offering process and reducing the documentation required for submission to the SEC Office. Most of these rules were revised by the Capital Market Supervisory Board on December 28, 2022, and will come into effect on July 1, 2023. The key amendments in the new rules are summarized below. Elimination of Application Requirement Issuers are no longer required to apply to the SEC Office prior to offering their shares via private placement, according to new rules laid out in the Notification of the Capital Market Supervisory Board No. TorChor 28/2565 Re: Permission for Listed Companies to Offer Newly Issued Ordinary Shares via Private Placement (the “TorChor 28/2565 Notification”). The rules detailed in this notification will replace the current private placement rules under the Notification of the Capital Market Supervisory Board No. TorChor 72/2558 Re: Permission for Listed Companies to Offer Newly Issued Ordinary Shares via Private Placement. Under the TorChor 28/2565 Notification, issuers may offer their shares via private placements that are share offerings to no more than 50 high-net-worth or ultra-high-net-worth investors within 12 months, share offerings valued at no more than THB 20 million within 12 months, or share offerings to institutional investors (excluding share offerings to the issuer’s directors or employees), so long as the issuer complies with its information disclosure and corporate approval requirements, which remain mostly unchanged under the new notification. To fulfill these requirements, notice of a shareholders’ meeting must be submitted to all shareholders at least 14 days in advance, and the offering must be approved by a supermajority vote of the shareholders, which means approval by at least three-fourths of the shareholders present and
Read More
May 16, 2023
On April 25, 2023, Myanmar’s Ministry of Planning and Finance issued a standard operating procedure (SOP) requiring entities and individuals remitting foreign currency equivalent to more than USD 10,000 out of Myanmar to clear their tax payments prior to the remittance. The SOP took effect on May 1, 2023. This is the latest development since Myanmar began imposing restrictions in April 2022 on the remittance of foreign currency out of the country, implemented by the Central Bank of Myanmar and the Foreign Currency Supervisory Committee. The SOP requires the remitters described above to obtain certain documents evidencing payment of all requisite taxes and duties, and to submit them to their licensed authorized dealer (AD) bank as part of the remittance process. The documents required as evidence differ depending on the purpose of the remittance. The SOP details three main categories, as summarized below. Payments for Interest, Royalties, Trademarks, Copyrights, or Services A remitter of foreign currency for payment of interest, royalties, trademarks, copyrights, or services, must first apply to the Internal Revenue Department (IRD) for evidence that all applicable withholding tax has been paid. In addition, if the country to which the payments are being remitted is party to an avoidance of double taxation agreement with Myanmar, evidence of the recipient’s tax residency must also be submitted to the AD bank. Payments for Goods A remitter of foreign currency to pay for goods must submit the necessary IRD forms along with evidence that corporate income tax and other applicable taxes have been paid. Evidence may include a tax clearance certificate for the fiscal year, the company name, the taxpayer name, and the taxpayer identification number (TIN). Salary Payments A person remitting, in foreign currency, salary earned in Myanmar must submit the required form showing that they paid income tax
Read More