What are new on Law on Enterprises 2020 and Law on Investment 2020 of Vietnam?

New on Law on Enterprises and Law on Investment 2020

New points of Law on Enterprises 2020

On 17 June 2020, the National Assembly has passed the new Law on Enterprises No. 59/2020/QH14 (“LOE”), which shall be effective on 01 January 2021 with some new points as follows:

1. Home-based (household) business is no longer governed by the LOE

2. Enterprise registration procedures

a. Adding entities banned from establishing enterprises

  • Persons with limited cognition or behavior control;
  • Persons working in agencies or units of the People’s Public Security of Vietnam; and
  • Organizations which are commercial entities prohibited from doing business and operating in certain fields according to the Penal Code.

b. Recognizing the legal validity of online business registration dossiers being the same as the hard copies

Enterprises shall only need to complete the online business registration application on the National Business Registration Portal without supplementing the hard copies.

c. Recognizing the legal validity of electronic seals

Enterprises can decide the content and form of seals themselves, and concurrently do not need to execute the procedure of notifying the seal specimen to the business registration agency.

d. Removing the regulations on reporting changes of enterprise managers to the business registration agency.

3. Rights of minority shareholders

Removing the regulation on the minimum term of owning shares and reducing the percentage of shareholding to 5% to exercise the rights of minority shareholders.

4. Enterprise conversion

In addition to the form of limited liability companies, sole proprietorship can be converted into joint stock company.

5. Business suspension

Enterprises must notify in writing to the business registration agency within at least 03 working days before the date of business suspension or resume their business before the notified period.

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Doing business of foreign investors in Vietnam

New points of Law on Investment 2020

On 17 June 2020, the National Assembly issued the Law on Investment No. 61/2020/QH14 (“LOI“) being effective on 01 January 2021 with some new points as follows:

1. Procedure of investment, investment assurance

Regulating the applicable priority of the LOI and specific laws of some specific fields such as public investment, construction, insurance business, securities, etc.

After getting the approval on investment project, the execution of such project shall follow the specific laws.

2. Requirements of market access

Supplementing the requirements of market access towards foreign investors. Accordingly, the Government issues detail regulations about which case is not allowed to access the market, which one can access with conditions on owning rate, investment form, ability of investor, etc. The cases out of such list shall be opened to access.

3. Investment incentives

Applying the investment incentives to the projects having huge effect on the development of economy and society.

4. Administrative procedures

Reduce the approval of investment projects from Government level to Provincial level.

5. Business lines

There are some changes:

  1. Adding debt collection service to the list of business lines prohibited from doing business or investing. Any enterprises, contracts doing such service shall be closed from the effective date of the Law;
  2. Removing some conditional business lines such as: franchise, logistic service, services of arbitration organization, etc.;
  3. Adding some conditional business lines, including business of clean water (domestic water), service on architecture business, rehabilitate service, etc.

6. Extension of investment project

Not applicable for the projects negatively affected the environment.

7. Termination of investment project

Projects violating the regulations on investment assurance, fake projects could be terminated.

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