Decree 163/2017 on logistic services in Vietnam

Decree 163 of the Government on logistics services was issued on 30 December 2017 (Decree 163/2017). It is going to take effect on 20 February 2018 and replace Decree 140 of the Government on logistics services dated 5 September 2007 (Decree 140/2007). Below are salient changes in Decree 163/2017.

Decree 163/2017 no longer requires the logistics services providers to meet the condition of adequate equipment and personnel. That condition was applied to some logistics services, but under Decree 163/2017, the logistics services providers have only to meet conditions specific to the logistics service that they provide.

Decree 163/2017 allows foreign investors to apply, at their discretion, investment conditions regarding logistics services under an international treaty where multiple treaties are applicable.

Decree 163/2017 classifies logistics services in accordance with Vietnam’s commitments to the WTO. By contrast, Decree 140/2007 has its own classification of logistics services which is not consistent with the description of logistics services under the WTO Commitments. And the investment conditions and foreign ownership limit provided in Decree 163/2017 are generally consistent with the WTO Commitments. Therefore, it is easier to compare the Decree 163/2017 with the WTO Commitments.

The table below sets out the applicable foreign ownership limit under Decree 163/2017, to the extent possible, in comparison with Decree 140/2007:

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Written by Nguyen Quang Vu On In ,

New requirements on strategic investors investing during the equitisation of a State-owned enterprise

Decree 126/2017 replacing Decree 59/2011 on equitisation of State-owned enterprises  introduces various new requirements for a strategic investor who invests during the equitisation of a State-owned enterprise (equitised SOE). These new requirements (especially the pricing requirement) are more difficult for a strategic investor to satisfy. In particular,

  • The equitized SOE must decide to select the strategic investor and the strategic investor must commit to invest before publication of the public offering document for the public auction. Under Decree 59/2011, the strategic investor may decide to invest either before or after the public auction;
  • Despite being required to commit to invest before the public auction, in most cases, the strategic investor must pay a price not lower than the average bidding price at the public auction. Under Decree 59/2011, there is no such requirement and the minimum price is the lowest successful bidding price. This requirement under Decree 126/201 seems to repeat the mistake under Decree 109/2007. There is unlikely any sensible investor who will commit to invest without knowing the price that it has to pay first;
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Written by Nguyen Quang Vu On In ,

Can a Board director in a Vietnamese joint stock company be removed by the courts?

A Vietnamese court does not have clear authority to remove a Board director from the Board of a Vietnamese joint stock company like other more developed jurisdictions. Under Article 156.1 of the Enterprise Law 2014,  a Board director may be dismissed (miễn nhiệm) if he/she:

  • fails to maintain the qualifications of a Board director including not having full capacity for civil acts or belonging to the types of persons who are not allowed to manage an enterprise in Vietnam;   
  • fails to participate in activities of the Board for six consecutive months, except in the case of an event of force majeure; and
  • tenders a written resignation.
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Written by Nguyen Quang Vu On In ,

Purchasing shares from an individual in Vietnam

A purchaser of listed shares in a public joint stock company (Public JSC) from an individual selling such shares through his/her securities trading account does not need to verify the selling individual’s authority to sell the listed shares under the Law on Family and Marriage 2014 assuming that:

  • the listed shares are not the main sources of income of the selling individual and his/her spouse (if he/she is married); and
  • the purchaser is an innocent purchaser who does not know that the selling individual is married or that the selling individual does not have the authority to sell the listed shares under the Law on Family and Marriage 2014.
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Written by Lawyers VNLaw On In ,