Pursuant to Civil Code 2015, a commercial entity means a juridical entity whose primary purpose is seeking profits, and its profits shall be distributed to its members. Previously, Vietnamese law did not regulate criminal responsibility of commercial entities until the Penal Code 2015.
Brief introduce about provisions on criminal responsibility of commercial entities
There have been 33 economic offenses that a commercial entity may be subject to criminal liability under the Penal Code 2015 (as amended in 2017). They included: Smuggling (Article 188); Illegal transport of goods or money across the border (Article 189); Manufacturing and trading of banned goods (Article 190); Possession and transport of banned goods (Article 191); Manufacturing and trading of counterfeit goods (Article 192); Manufacturing and trading of counterfeit food or food additives (Article 193); Manufacturing and trading of counterfeit medicines for treatment or prevention of diseases (Article 194), etc.
In the meantime, the Penal Code 2015 has provided 02 main types of penalties and additional penalties applicable to a commercial entity committing crimes. Firstly, main penalties include fine, suspension of operation for a definite period of time, and suspension of permanent operation. Secondly, additional penalties include prohibiting business, banning activities in certain areas, prohibiting capital mobilization, and fine, when not applicable as the main penalty.
On 14 June 2019, Vietnam promulgated the Law on Execution of Criminal Judgments (“Law on ECJ”). Law on ECJ mainly regulates matters of execution of criminal judgements. Among others, Article 165 of Law on ECJ is remarkable with contents that “if the sentenced commercial entity engages in the partial or total division, consolidation, acquisition, or conversion of business, the successor commercial entity which takes on rights and obligations of the sentenced commercial entity (predecessor) shall discharge the judgment execution obligation and other regulations of relevant laws. The commercial entity may not misuse the partial or total division, consolidation, acquisition, conversion of business entity, dissolution, or bankruptcy to evade the judgment execution obligation”.
Then on 22 May 2020, the Government of Vietnam issued Decree No. 55/2020/ND-CP (“Decree 55”), be effective from 15 July 2020, regulates provisions of Law on ECJ on judgment execution against commercial entities, especially the matter of transferring of judgment execution obligations in case of restructuring.
Thus, BLawyers Vietnam would have some notes of Decree 55 for your considerations before deciding to restructure a commercial entity, which may lead the assignment of judgment execution obligation:
1. A commercial entity, when having a restructure plan, must send written reports to competent agencies. Those reports are about the expected fulfillment of judgment execution obligations during the reorganization to resolve the sentence execution procedures. They must clearly state the situation and results of judgment execution, direction and responsibility of judgment execution of commercial entities after restructure.
2. If a commercial entity is divided or separated, obligations of executing judgments are as follows:
- If the contents or fields of judgment execution are entirely assigned to a new commercial entity, the new one shall have to fulfill the entire judgment execution obligation.
- If the contents or fields of judgment execution are entirely assigned to different new commercial entities, such entities shall comply with the assigned obligations.
- The period for complying sentences of a commercial entity before being divided or separated shall be counted in the complying period of commercial legal entities receiving the judgment execution obligation.
3. If a commercial entity receiving a sentenced commercial entity upon consolidation or merger, it must accept the judgment execution obligations of the consolidated or merged entity. The period for complying sentences of a commercial entity before being merged or consolidated shall be counted in the complying period of commercial legal entities receiving the judgment execution obligation.
4. If a commercial entity receiving an obligation to execute a judgment having its headquarters within the same administrative division of the province or a military zone of the entity before being divided, separated, consolidated or merged, the criminal judgment execution agency currently being executed against commercial entities before being divided, separated, consolidated or merged shall continue organizing the judgment execution. If it is not the case, there will be 02 circumstances as follows:
- Regarding the case of dividing or separating commercial entities, the agency where the commercial entities receiving the obligations having headquarters shall set up a dossier and hold execution.
- Regarding the case of consolidating or merging commercial entities, the agency shall hand over judgment execution dossiers to the one where commercial entity receiving obligations having headquarters.
5. In case a commercial entity changes its type of enterprise, it does not change the judgment execution obligation and it must report to the criminal judgment execution agency about the transformation of enterprises.
Administrative procedure of execution of criminal judgments
Within 03 working days from the date of receiving a judgement execution decision, a criminal judgment execution agency must examine its contents. Then, this agency creates a dossier of execution of criminal judgment and send summons to the legal representative of such commercial entity. The commercial entity must announce the judgement execution decision on its websites and publications, post it publicly on its headquarters and business locations, and announce to relevant competent authorities.
After completing sentence and judicial measure, criminal judgment execution agencies, commercial entities and management agencies of sentenced commercial entities shall announce and post publicly certificates of completing complying sentence and certificates of completing complying judicial measure within at least 30 days.
Commercial entities must report in writing to the criminal execution agencies on the status and results of judgment execution once every 3 months (except for cases where the judgment execution term is less than 3 months).
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