New Decree on Enterprise Registration in Vietnam

The Government recently issued Decree 1/2021 which takes effect from 4 January 2021 and replaces Decree 78/2015 in terms of enterprise registration procedures. There are certain new regulations and changes under Decree 1/2021 in relation to registration and notification of enterprise information as follows:

  • Decree 1/2021 clarifies “person submitting the application” including the person having the authorization to sign the application (Authorized Signatory) and the person being authorized by the Authorized Signatory.

  • ID number issued to a branch or representative office of an enterprise is specified as tax identification code of such branch or representative office.

  • Language of the application - Enterprise registration application must be prepared in Vietnamese. The translation of documents in a foreign language must be notarized. In case the application is made in the bilingual language of English and Vietnamese, the Vietnamese version will be used for registration procedures. That means, although parties may agree that the English version will prevail as between the parties, parties must take care of the Vietnamese version/translation to avoid any inaccuracy as the authority only review the Vietnamese version of the application.

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Written by Nguyen Quang Vu On In

Unofficial clarifications by Vietnam Competition Authority on merger filing

On 14 January 2021, the Competition Management and Consumer Right Protection Authority (VCA) organized a seminar on “M&A regulation under Vietnamese Competition Law”. During the Q&A sections, the head of the merger filing division responded to various questions raised by lawyers from Venture North Law and other law firm. The official from the VCA has given some notable clarification as follows:

· Internal restructuring. Internal restructuring transactions within companies under the control of the same ultimate parent company is subject to the notification requirement. However, since the parties to the transactions in this case belong to the same group companies, the market share report of each party in this case will include market share information of the individual entity which is the party to the internal restructuring but not the whole company group. It is not clear on what legal basis, the official from VCA gave this explanation.

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Written by Nguyen Quang Vu On In ,

New Procedures to Coordinate Various Business Commencement Steps for Vietnamese Companies

In October 2020, the Government issued the new Decree 122/2020 on the coordination between various separate procedures relating to the business commencement steps of a company in Vietnam including enterprise incorporation procedures, employee usage declaration, social insurance registration code, and registration of tax invoice. In particular,

  • Decree 122/2020 provides for a company registration application which also includes information necessary for tax and invoice registration, social insurance registration, and employee usage declaration. Previously, the company registration application only include company registration information and tax registration information; and

  • The Enterprise Registration Authority will act as the single contact point to receive the application submitted by the relevant company’s founders and will electronically transfer necessary information to the tax authority, social insurance authority, and labour authority.

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Written by Nguyen Quang Vu On In ,

A U-Turn About Preemptive Rights Of Existing Shareholders In Joint Stock Companies In Vietnam

For many M&A lawyers in Vietnam, the changes in the pre-emptive rights of existing shareholder in (at least non-public) joint stock companies (JSCs) come as a surprise. For 20 years, the Enterprise Law always provides that a shareholder has priority rights to purchase new shares issued by the JSC in proportion to its shareholding. However, under earlier versions of the Enterprise Law, the provisions on private placement of shares or public offering of shares by a JSC, where the JSC may issue new share to third party investors, do not require a waiver of preemptive rights by existing shareholders. Therefore, it becomes a market practice that private place of shares or public offering of shares (or convertible equities) do not require waiver of (or compliance with) preemptive rights by existing shareholders (see further discussions here and here).

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Written by Nguyen Quang Vu On In ,