Voting authorisation by a Board director in a Vietnamese joint stock company

The Enterprise Law 2014 provides that in a meeting of the Board of a joint stock company (JSC), a Board director may authorise another person to attend if such authorisation is approved by the majority of members of the Board. However, the Enterprise Law 2014 is silent about the ability of a Board member to authorise another person to vote for such Board member if the Board decides to pass its decision by way of collecting written opinion of Board members.

One may argue that authorisation for voting by way of collecting written opinion of Board members is permissible since:

·        The provision on a face-to-face meeting of the Board could apply by analogy;

·        The general rules on authorisation under the Civil Code 2015 could arguably allow a Board member to authorise another individual to conduct the work of Board member; and

·        No provision under Enterprise Law 2014 specifically prohibits a Board member from authorising another person to act on his/her behalf.

On the other hand, since a Board member has certain fiduciary duties, one can argue that a Board member can only delegate such duties if expressly permitted by law. Under Enterprise Law 2014, the procedures and formalities for the Board of a JSC to pass a resolution by collecting opinion in writing must comply with the company’s charter and Vietnamese law. Accordingly, if the charter explicitly allows a Board member to authorise another person to act on his/her behalf to vote by way of getting a written opinion, then such authorisation should be valid.

 This post is contributed by Le Minh Thuy, a trainee at Venture North Law.

Issues in selecting arbitration to settle construction disputes in Vietnam

Under the Law on Construction 2014, a dispute relating to a construction contract can be resolved through mediation, by a commercial arbitration or court “in accordance with law”. This standard wording seems to allow parties to a construction dispute in Vietnam to select arbitration to settle the dispute. However, Circular 26/2016 of the Ministry of Construction provides that a dispute relating to quality of a construction work will be resolved in the following steps:

(1)         negotiation between disputing parties;

(2)         engaging an organisation or individual who has capacity to carry out evaluation of the quality of parts, items of construction works, and propose remedies; and

(3)         referring the dispute to a court for settlement.

Sine (3) only refers to courts, the above requirements could be interpreted to mean that disputes relating construction quality in Vietnam can only be resolved by courts not arbitration. On the other hand, it is arguable that (a) an arbitration tribunal could be considered as “an organisation, individual who has capacity to carry out evaluation” the construction dispute described at (2). Accordingly, if the parties have referred to arbitration by virtue of (2) then arguably (3) is not necessary. That said, the provisions of Circular 22/2016 regarding dispute relating construction quality still give rise to unnecessary risk.

This post is contributed by Ha Thi Dung, a partner at Venture North Law.

Regulations on digital wallets in Vietnam

Digital wallets are an important tool for the development of e-commerce and fintech industries. The State Bank of Vietnam (SBV) has issued certain regulations on digitial wallets. However, these regulations seem to be inadequate.

Under Decree 101/2012, a digital wallet is regarded as a payment intermediary service (dịch vụ trung gian thanh toán) whereby the wallet user is issued a digital account associated with an electronic media (e.g., a mobile phone) and containing a monetary value. The monetary value in a digital wallet is secured by monies transferred from the user’s bank account to the wallet service provider’s account. User can only inject and withdraw cash from a digital wallet through the user’s account. Monies in the wallet service provider’s account can only be used to pay for goods or service providers or to return to the wallet user. The Law on Anti-money Laundering 2012 requires a digital wallet service provider as a financial institution with new technology to meet face-to-face with its clients when the clients first make a transaction with the service provider.

In light of the above regulations,

  • An user without a bank account cannot have a digital wallet in Vietnam. This could hinder the growth of digital wallet.
  • Direct money transfers between two digital wallets are not permitted. In practice, the SBV is allowing certain digital wallets to conduct direct monies transfer on a pilot basis.
  • An user cannot withdraw cash or inject cash directly to his/her digital wallet. This must be done via a bank account.
  • Monies in a digital wallet may not be used as security for lending.
  • A digital wallet provider is required to meet face to face with its customer whenever a wallet is issued. 

5 September 2018 - Update to reflect the requirements under Anti-money laundering regulations.

New amendments to regulations on foreign investment in education sector in Vietnam

In June 2018, the Government issued Decree 86/2018 on cooperation with and investment by foreign investors (Decree 86/2018). Decree 86/2018 replaces Decree 73/2012 as from August 2018. In comparison with Decree 73/2012, Decree 86/2018 introduces certain notable changes as follows:

  • Decree 86/2018 no longer applies to foreign investment in vocational education (đào tạo nghề).  
  • For the first time, joint cooperation with foreign investors is permitted at all level of education including preliminary schools, secondary schools and high schools. Under Decree 73/2012, joint cooperation is only permitted for university education.
  • Decree 86/2018 expressly provides that a foreign investor to invest in education sector by contributing capital or to purchase shares and capital contribution from (1) a Vietnamese educational institution or (2) a foreign-invested business entity that establishes an educational institution in Vietnam. Decree 86/2018 also defines a foreign-invested educational institution as an education institution invested by foreign invested business entity.
  • Decree 86/2018 increases the cap on number of local students that a foreign-invested primary, secondary school, or a high school can enrol to 50% of the total students. Under Decree 73/2012, the cap is 20%.
  • Decree 86/2018 makes it more difficult for foreign investors to invest in universities in Vietnam by increasing the minimum investment amount to VND 1,000 billion (from VND 300 billion).

This post is contributed by Ha Kieu Anh, a legal trainee at Venture North Law.