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 28, 2022
Thailand’s Board of Investment (BOI) has issued a new investment promotion strategy for the next five years (2023–2027). The strategy was detailed in Announcement No. 8/2565 on December 8, 2022, and will take effect in January 2023. Replacing the BOI’s current eight-year scheme (2015–2022), it will apply to all applications for investment promotion submitted from 8:30 a.m. on January 3, 2023, onward. Under the new scheme, the BOI will shift its focus to three core concepts deemed vital to the country’s future economy: (1) technology, innovation, and creativity; (2) competitiveness and adaptability; and (3) inclusiveness (especially in regard to environmental and social sustainability). This is complemented by a new set of investment promotion policy aims that cover, for example, supply chain reinforcement, conversion to smart and sustainable industry, promotion of Thai SMEs with global connections, and so on. The new strategy does not introduce any significant changes to the fundamental criteria for investment promotion. These include a 20% annual revenue growth projection, use of new machinery (with limited exemptions for used machinery), minimum THB 1 million investment, and 3:1 debt-to-equity ratio threshold, among others. Basic incentives are still divided into groups A and B, with group A granted a corporate income tax (CIT) exemption for a period ranging from 3 to 13 years and group B granted only non-CIT incentives, such as import duty exemption and land ownership for foreigners. The list of business activities eligible for investment promotion will be recategorized, but several traditional categories (including their underlying criteria and conditions) will be maintained. The BOI urges investors to carefully consider and compare the eligible activities, criteria, and incentives for BOI promotion under the current scheme and the new one. Investors who wish to receive investment promotion under the current scheme rather than the upcoming one can still
Read More
December 8, 2022
The rapidly growing middle class in Southeast Asia is bringing with it increased household wealth, increased consumption, and increased investment. As a result, the commercial banking sector has seen a boom in the more economically developed countries of the region—especially in Thailand. A select few foreign banks have also been very successful in Cambodia, Laos, Myanmar, and Vietnam for many years, but as other banks seek to replicate their Thai success in these new markets, the field looks likely to become much more crowded in coming years. Six major Thai banks are active in at least one other jurisdiction in mainland Southeast Asia, with some already operating across them all, and many larger international banks also beginning to take note. Amid that background, this guide examines the legal frameworks for foreign banks seeking to operate in these jurisdictions, and addresses some current and upcoming developments that investors should note. The full guide is available as a PDF through the button below.
Read More
November 14, 2022
On November 8, 2022, the Act Amending the Civil and Commercial Code B.E. 2565 (No. 23)—which Tilleke & Gibbins wrote about last month as the law was poised for enactment—was published in the Government Gazette, completing a lengthy process that had been under scrutiny for over two years. The act is expected to come into effect on February 6, 2023 (i.e., 90 days after the date of publication). New M&A Option The new amendments contain a number of important changes, but perhaps the most notable is the introduction of a new type of business combination. The Civil and Commercial Code (CCC) previously only allowed “amalgamation,” which is a consolidation of two or more companies resulting in the formation of a new entity, with all the amalgamating companies being dissolved. The amended CCC provides more options by introducing “merger” as another possible type of business combination. A merger occurs when two or more companies merge and one of the companies continues to exist while the others companies are dissolved. Like the newly created company in an amalgamation, the surviving entity in a merger assumes the property, liabilities, rights, obligations and responsibilities of all the dissolved entities. Some important considerations for the merger process (which also apply to amalgamations) are specified in the amended CCC as follows: Purchase of shares from dissenting shareholders. The amended CCC allows minority shareholders who disagree with the merger (or amalgamation) to sell their shares to the other existing shareholders at the agreed price. Alternatively, the price may be determined by an appointed valuer if the parties cannot reach an agreement on the purchase price. If the share purchase does not occur within 14 days of the offer date, the shareholder who rejects the offer will become a shareholder of the surviving (or newly created) company
Read More
November 3, 2022
On October 31, 2022, the Department of Trade in Myanmar’s Ministry of Commerce announced that payments for importation at the border are to be made via bank transaction. This announcement comes into force with Import/Export Newsletter No. 10/2022, dated October 31, 2022, issued by the Department of Trade, with the purpose of implementing a systematic payment system for import and export at the border, in accordance with a suggestion made by the Financial Action Task Force (FATF), an international financial watchdog. (This follows the recent news that the FATF has blacklisted Myanmar.) This requirement means that only bank transactions will be accepted for import payments in the border trade. Initially, this system will be applied to trade at the Myanmar-Thailand border only. The new requirement to pay for imports only via bank transaction states that export earnings and other types of foreign currency earnings (including salary and income remitted by Myanmar workers overseas) will be allowed to be used for imports. Importers are required to make the payments for import goods—using these earnings—via their banks. That is, Importers operating in the border trade must have foreign currency earnings received through official banking channels and must make import payments abroad through official banking channels using those earnings. In contrast to previous practices, they are unable to use other sources of income and are not able to make other payment arrangements that do not involve bank transactions. The procedures for importation at the Myanmar-Thailand border are as follows: Companies applying to the Department of Trade for an import license must produce credit advice and original bank statements that prove the receipt of export earnings or other earnings into their bank account. The Department of Trade will scrutinize the reported export earnings or other earnings, and approve the import license for an
Read More