Vietnam - Highlights Of Draft Law With Amendments, Supplements To The Law On Investment And The Law On Enterprises.
Legal News & Analysis - Asia Pacific - Vietnam - Regulatory & Compliance
7 May, 2019
Currently in the proposal stage, a draft law of amendments and supplements to the Law on Investment and Law on Enterprises is expected to be presented to the National Assembly with the aim of facilitating and simplifying matters in relation to the business environment and investment procedures. If passed, the draft law will be effective from 1 July 2020. Highlights of this draft are as follows:
Amendments, supplements to the Law on Investment
|No.||Law on Investment 2014||Draft law|
|M&A approval must be obtained by foreign investors before contributing capital, purchasing shares or part of capital contribution in an economic organisation operating in conditional business investment industries applicable to foreign investors.||M&A approval must be obtained by foreign investors before contributing capital, purchasing shares or part of capital contribution in an economic organisation operating in conditional business investment industries applicable to foreign investors if such contribution or purchase causes an increase of the ownership ratio of foreign investors.
Further, M&A approval must also be obtained by foreign investors before contributing capital, purchasing shares or part of capital contribution in an economic organisation using the land area on island and commune, ward, township, boundary, coastal area or other areas affecting defence and security.
|2||Security for project performance|
|The investor must provide an escrow deposit as security for performance of the project for land that is allocated, leased out or granted permits by the State for conversion of the land use purpose.||An escrow deposit or a bank guarantee must be provided by the investor as security for performance of the project for land that is allocated, leased out or granted permits by the State for conversion of the land use purpose.|
|3||Principles for application of investment incentives|
|Investment incentives are applied to certain projects and entities.||Application of investment incentives with respect to a project or entity must be implemented on the basis of the project implementation result of the investor. Further, if the investment project satisfies conditions for enjoying different investment incentive rates, then the highest investment incentive rate will be applied.|
|4||Special investment incentives|
|The National Assembly shall decide on whether to apply any special investment incentives in cases where it is necessary to encourage development of an especially important industry or a special economic – administrative unit.||The Prime Minister shall decide on whether to apply a special investment incentive rate which is not higher than 150% of the highest rate prescribed by the law to encourage development of an especially important industry, area or project.|
|5||Periodical reporting regime|
|Investors and economic organisations engaged in investment projects are required to report to the competent authorities of the status of implementation of the investment project on a monthly, quarterly and annual basis.||The requirement of monthly reports is abolished.|
Amendments, supplements to the Law on Enterprises
|No.||Law on Investment 2014||Draft law|
|1||Report of change of information about enterprise managers|
|An enterprise must report to the business registration office if there is any change of information about:
||This requirement is abolished.|
|The enterprise is obligated to notify the business registration office of the sample seal before use.||This requirement is abolished.|
|3||Division and separation of enterprises|
|Division and separation of enterprises are only implemented in cases as provided under the law.||Division and separation of enterprises are implemented in cases as provided under the law or”in cases subject to decision of enterprises”.|
|4||State owned enterprises|
|State owned enterprises only include enterprises in which the State holds 100% of the charter capital.||State owned enterprises include enterprises in which the State holds 100% of the charter capital and enterprises of which the controlling shares or capital contributions are held by the State.|
|Owners and shareholders of limited liability companies and shareholding companies must contribute full capital within 90 days from the date on which the enterprise registration certificate is issued.||The Ministry of Planning and Investment requested the Government to consider the amendment to the extent that there would be no time limit for the capital contribution.
David Lim, Partner, ZICOlaw