One of the noteworthy new contents of the 2015 Criminal Code (“Criminal Code”) is the criminal liability of the corporate legal entity which has been added to the Criminal Code.
Pursuant to Article 171 of the 2012 Labor Code (the “Labor Code”), foreign employees working in Vietnam must have work permits (the “WP”). The term of the issued WP will comply with the labor contract expected to be signed but not exceed two (02) years in accordance with Article 173 of the Labor Code and Article 11 of Decree 11/2016/ND-CP detailing a number of articles of the Labor Code (“Decree 11”).
The 2014 Law on Enterprises requires shareholders of joint stock companies to contribute shares of capital contribution in full within ninety (90) day from the date of issuance of the Enterprise Registration Certificate (the “ERC”) for the establishment of a joint stock company (“Maximum Duration of Capital Contribution”).
The official permission for foreigners to own residential houses in Vietnam in accordance with the laws on residential housing in recent years has created a strong attraction for foreign organizations and individuals to look for investment, business and work opportunities in Vietnam. However, in practice, in the implementation of regulations governing this issue, there are still some that have unsuitable interpretations and applications regarding the right to receive transfer of commercial house purchase contract (“HPC”) of foreign organizations and individuals, which obstruct the legitimate rights and interests of the concerned parties.
In line with the incentive policy for attracting the foreign investment and employment, quite a few foreigners have decided to choose Vietnam as an ideal place in order to invest and develop their careers. Accordingly, many foreigners wish to own the residential houses in Vietnam to implement the investment activities as well as long-term residence. At present, the laws on residential houses have made significant progress in recognizing and expanding the foreigner’s housing ownership in Vietnam compared to the previous regulations. However, in practice, many foreigners are still struggling to make their wishes come true.
In accordance with Vietnamese law, in addition to negotiation conducted by the parties to a dispute, there are currently three methods of dispute resolution (“DR”) for a commercial or economic dispute: (i) commercial mediation; (ii) commercial arbitration; and (iii) litigation at the Court.
The current investment law contains many new provisions to reform administrative procedures to attract foreign investment, such as shortening the list of the conditional business lines applicable to foreign investors down to 243 business lines, not requiring them to carry out procedures for being granted the investment registration certificate (the “IRC”) when investing in the form of capital contribution or share purchase of an enterprise established in Vietnam, and other new remarkable points. In addition, the spirit of the reform and investment attraction of Vietnam was also deeply expressed at the 2017 APEC Economic Leaders' Meeting held in Da Nang recently, with a new mission of the country and the region, namely “promoting trade, free and open investment in the Asia-Pacific region”. Many experts said that the contents achieved at this Meeting will continue to create new motivation for attracting investment in Vietnam in the coming period.
In labor relations, during the implementation of a labor contract with an employee (the “Employee”), the employer (the “Employer”), due to various reasons, may decide to unilaterally terminate the labor contract contrary to the prevailing Labor Code (the “Labor Code”).
The 2014 Law on Enterprises provides new provisions which allow joint stock companies to choose their organizational and management model instead of complying with a certain model stipulated in the 2005 Law on Enterprises. Accordingly, joint stock companies have the right to choose one of the following organizational models (Article 134 of the 2014 Law on Enterprises):
In April 2017, the People's Court of H. City decided to initiate the bankruptcy process of Hoang Minh Co., Ltd. due to the fact that Hoang Minh was in the bankruptcy status, failing to repay several debts overdue more than three (03) months. Among the debts Hoang Minh was obliged to pay, there was a loan of nearly VND 20 billion which Hoang Minh borrowed from XYZ Bank, secured by the land use right of Mr. Le Quang Tam under the mortgage agreement between Mr. Tam and the Bank.
After the 2014 Law on Enterprises came into effect, the regulations related to the establishment and operation of enterprises are increasingly more open, enabling enterprises to develop freely. Hundreds of thousands of enterprises have been established; however, the truly developed and successful enterprises are not many. Most enterprises were founded by two or more founders with good initial business ideas. However, in the process of putting such ideas into practice, internal conflicts have arisen partly because such founders have not obviously agreed on the rights and obligations of the founding members/shareholders prior to the establishment of the enterprises.
After over two years’ application, the new provisions of the Law on Investment and the related regulations have achieved remarkable positive results. However, besides such positive signals, some inadequacies in understanding and applying the law have caused many difficulties to foreign investors, one of which is how to identify a foreign-invested economic organization in order to apply for a Business License when conducting trading and its directly-related activities ("Commercial Activities").
The new regulations on the seal in the 2014 Law on Enterprises giving the enterprise more liberty at creating the seal has helped the enterprise be more active in making its own seal with specific characteristics and differences compared to other enterprises.
On 21 June 2017, at the 3rd session of Legislature XIV, the National Assembly officially passed Resolution No. 42/2017/QH14 on pilot settlement of bad debts of credit institutions ("Resolution 42"). This is apparently a positive signal for Vietnam’s banking sector, given that the amount of bad debts, amount of implicit debt risk and amount of debt sold to Vietnam Asset Management Company currently unhandled account for 10.08% of the total outstanding loans of the banking sector (equivalent to about VND 600,000 billion, according to statistics reported by the Governor of the State Bank to the National Assembly, as at 31 December 2016).
1980 Vienna Convention of the United Nations on Contracts for the International Sale of Goods (CISG) comes into force in Vietnam on 1 January 2017, opening quite a few opportunities and advantages for enterprises when they conduct international transactions.
With its “open” policies in the field of investment together with a large potential market, Vietnam has attracted many foreign investors in the world (“Foreign Investors”) to come and invest in business. In order to conduct their business, one of the options that the Foreign Investors choose to enter the Vietnamese market is the acquisition of a whole 100% shares, capital contributions (“Charter Capital”) in a target company which has been established in Vietnam (“the Company”).
According to a report of the Foreign Investment Department, in the first five (05) months of 2017, the total of new, increased registered capital and share contribution by the foreign investors was USD 12.13 billion, up 10.4% over the same period in 2016. This is a joyful sign demonstrating that Vietnam's economic market is flourishing, attracting a lot of attention from foreign investors (“Foreign Investors”). However, in addition to the achieved results, the process and procedures for investment into Vietnam still have certain disadvantages, especially the troubles the Foreign Investors encounter in relation to the investment capital account (“Capital Account”).
Thien Tai Joint Stock Company (“Thien Tai Company”) is set up by ten (10) individual founding shareholders. The organizational structure of Thien Tai Company includes: (i) General Meeting of Shareholders; (ii) Board of Directors; and (iii) General Director. On May 1st, 2017, Thien Tai Company submits a notification on change of members of the Board of Directors from three (03) members up to five (05) members attached with new updated Charter to the Department of Planning and Investment (“DPI”). After considering the dossier and the Charter of Thien Tai Company, DPI, based on Article 134.1 of the Law on Enterprises, issued a notification requesting Thien Tai Company to adjust its organizational structure to comply with the Law on Enterprises.
Commercial mediation (CM) is a common dispute resolution (DR) method in the world, especially in the developed countries. In addition to Negotiation and Arbitration, Mediation is deemed to be an Alternative Dispute Resolution (ADR) usually chosen by the enterprises thanks to its outstanding advantages. However, in Vietnam, this DR method is quite new. Decree No. 22/2017/ND-CP (“Decree”) dated April 15th, 2017 on Commercial Mediation, the official and sole document recently issued relating to this matter, defines: “CM is a commercial DR method agreed by the parties and assisted by commercial mediators in DR”.
In early 1970s, the rapid development of the oil producing countries in the Middle East made it possible for them to sign many large contracts with Western companies. For the sake to ensure safety and minimize risks in performing those contracts, a need arose for a guaranteed by a third party with good credibility and strong financial capacity. Therefore, bank guarantee was born as from this time.