On 17 June 2020, the National Assembly of Vietnam passed the new Law on Enterprises1 (“New Enterprise Law”), which will take effect on 1 January 2021. It will replace the current Enterprise Law No. 68/2014/QH13. The New Enterprise Law introduces several important changes to regulations overseeing corporate governance, business activities and administrative procedures applicable to enterprises in Vietnam.
1. New regulations on digital seal
Under the New Enterprise Law, there are two types of company seal, including a physical seal made by the seal-making establishment and a digital seal made in the form of a digital signature in accordance with laws on electronic transactions. An enterprise can freely decide on the seal’s type, quantity, form and content that they will use. The management and use of the seal will be provided for in the enterprise’s charter or other internal policies.
2. Further guidance on time limits for capital contributions in kind
The New Enterprise Law retains the requirement that charter capital must be contributed within 90 days from the date of establishment of the enterprise. However, in case of capital contributions in kind, the time for transportation, import (i.e., customs clearance) and other administrative procedures for the transfer of ownership of assets will not be included in the 90-day limit.
3. New regulations on online enterprise registration
Under the New Enterprise Law, the application related to enterprise registration can be submitted by one of the three ways below:
The New Enterprise Law provides that an online application made through NBPR shall have the same validity as an application submitted physically to the provincial business registration authorities. However, it is unclear whether the authorities will still combine the requirements for both online and physical submissions in practice.
4. Voting thresholds and quorum requirements in the joint-stock company (“JSC”)
The New Enterprise Law has amended the quorum required for the General Meeting of Shareholder (“GMS”) to be conducted and the voting ratio required for the resolution of the GMS to be passed in the JSC, specifically as follows:
5. Changes to regulations on the corporate governance of a JSC
The New Enterprise Law amends and supplements the following regulations on the corporate governance of a JSC:
6. Private placement of bonds by a non-public JSC
Under the New Enterprise Law, the private bond placement by a non-public JSC means corporate bonds that were not issued through mass media to less than 100 investors (excluding professional securities investors). The private bond placement must meet conditions on the bond holders, as follows:
Under the New Enterprise Law, the private placement of bonds by a non-public JSC must meet the following conditions:
7. Re-defining of state-owned enterprises
Under the current Enterprise Law, a state-owned enterprise (“SOE”) is defined as an enterprise in which 100% of the charter capital is held by the State. However, under the New Enterprise Law, an SOE is defined as an enterprise having more than 50% of its charter capital or voting shares held by the State.
In terms of corporate governance regime, SOEs wholly owned by the state will follow separate regulations (set out in Chapter IV of the New Enterprise Law), which are generally stricter than those applicable to a single member limited liability company with no state capital. Meanwhile, SOEs having state capital proportion of more than 50% up to less than 100% will follow the regulations applicable to multi-member LLC or JSC stipulated in the New Enterprise Law.