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THE DRAFT OF LAW ON AMENDMENTS, SUPPLEMENTATIONS TO NUMEROUS ARTICLES OF THE LAWS ON INVESTMENT AND ENTERPRISES (THIRD DRAFT)

THE DRAFT OF LAW ON AMENDMENTS, SUPPLEMENTATIONS TO NUMEROUS ARTICLES OF THE LAWS ON INVESTMENT AND ENTERPRISES (THIRD DRAFT) – Several new points related to the Law on Enterprises 

After more than four (04) years of enforcing the Law on Enterprises, relating to the provisions on establishing and administrating enterprises, exercising the rights of shareholders… there arise some obstacles. Accordingly, the Ministry of Planning and and Investment is currently drafting the Law on amendments, supplementations to numerous articles of the Laws on Investment and Enterprises (the “Draft”) in order to amend provisions found to be incompatible with the aim of turning enterprises into a cheaper and more secure business tool for investors.

The following is a number of new provisions on the Law on Enterprises in the Draft:

  • Business households are supplemented to be within the scope of the Law on Enterprises;
  • The Draft abolishes several provisions which are found to be impractical, unnecessary, time-wasting and prone to incurring financial burdens for enterprises, such as: Requiring enterprises to disclose their stamps to business registration agencies before using; Disclosing changes in information of the managerial persons of enterprises; Requiring directors/general directors to be knowledgeable in their areas of expertise, experienced in business administration, etc.;
  • Partnership companies and limited liabilities companies are no longer required to attach a copy of their charters to their enterprise registration dossiers;
  • The Draft also clarifies that in the case of a LLC or a joint-stock company having more than one legal representative and the Company’s Charter does not stipulate otherwise or said companies have no decisions on dividing the rights and obligations of their legal representatives then any of the legal representative is considered to be a fully competent representative per the request of a Court, arbitrator or third party;
  • A supplemented provision requires single-member LLCs owned by organizations to have at least one legal representative who holds the position of either Chairman of the Member’s Council or President of the Company; Director or General Director;
  • Provisions on minority shareholders are now amended; accordingly, shareholders or groups of shareholders only need to own 1% or more of the total number of common shares (or a smaller percentage if stipulated by the charters) to be able to exercise several specific rights, instead of 10% or more of the total common shares for at least 6 consecutive months (if the charters do not stipulate otherwise) as before;
  • Letters of Authorization for representatives to attend the meeting of the General Meeting of Shareholders are made in accordance with the provisions of the Civil Code only, not necessarily with the forms issued by Companies.

The Draft is expected to be discussed at the 8th Meeting and passed at the 9th Meeting of the Fourteenth National Assembly.

Best regards,