New Amendments To Investment Law, Enterprise Law, Electricity Law, Residential Housing Law and Other Laws

On 11 January 2022, the National Assembly passed a new law amending 09 laws, including Public Investment Law, Public-Private Partnership Law, Investment Law, Residential Housing Law, Tendering Law, Electricity Law, Enterprise Law, Law On Special Consumption Tax, and Law On Civil Judgment Enforcement (Law 03/2022). Law 03/2022 will come into effect on 1 March 2022. In this post, we will discuss some new key points of Law 03/2022.

1) Enterprise Law 2020

Change of the term “members of the Members’ Council” into “members of the company”

As discussed before, the Enterprise Law 2020 (Articles 49 and 50) only provides for the rights of members of the Members’ Council, but not the rights of the members of the LLC. And many rights of the members of the Members’ Council should be the rights of the members of the LLC such as rights to subscribe for new capital increase or to receive dividends paid by the LLC. The change of the term “members of the Members’ Council” into “members of the company” in Articles 49 and 50 has successfully resolved this problem, although in other provisions, the Enterprise Law 2020 still does not distinguish between the positions of members of the LLC and members of the Members’ Council of the LLC.

Removal of requirement on signatures of dissenting members on meeting minutes; personal liability of the chairperson and the person writing the minutes

The requirement that meeting minutes of the Members’ Council must include signatures of members who disagree to pass such meeting minutes is now removed.

In addition, in the event that the chairperson of the meeting of the Members’ Council/Board Of Directors or the person writing the minutes refuses to sign the meeting minutes, for such minutes to be effective, the Enterprise Law 2020 no longer requires all attending members of the meetings to sign, and only the signatures of the attending members who agree to pass the minutes are necessary. Also, in such event, the chairperson or the person writing the minutes who refuses to sign such minutes must bear personal liability for any loss arising to the company due to their refusal.

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Written by Nguyen Quang Vu On In , , , ,

The Problems Of Joint Venture Under Vietnam Competition Law

The Competition Law 2018 defines a joint venture between enterprises (JV) as a transaction where “two or more enterprises together contributes a portion of their lawful assets, rights, obligations, and interests to form a new enterprise” (JV Definition). The Competition Law 2018 requires a JV satisfying certain notification thresholds to be notified to the competition authority for review. However, the application of the JV concept under the Competition Law 2018 is problematic because:

  • First, the JV Definition does not take into account the element of “joint control”; and

  • Second, the JV Definition does not accurately reflect the sequence of actions in the formation of a JV company under the Enterprise Law 2020.

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Written by Nguyen Quang Vu On In ,

The Institutional Representative of the State in a Vietnamese State-owned Enterprise (SOE)

Decree 47/2021 implementing the Enterprise Law 2020 and Decree 10/2019 implementing the Law on Management State Capital 2014 provide helpful clarification on (1) the entities who can act as the owner representative agency (cơ quan đại diện chủ sở hữu) of the State in a SOE, and (2) calculation of State shareholding in an enterprise. In particular,

  • Under Decree 10/2019, the Institutional Representative only include (i) the Commission for the Management of State Capital at Enterprises (CMSC); (ii) Ministries, Ministry-equivalent agencies, Governmental agencies, provincial People’s Committee; and (iii) the State Capital Investment Corporation (SCIC). Accordingly, other SOEs such as EVN or PVN are not regarded as an Institutional Representative. In the past, it is not clear an SOE can be regarded as the Institutional Representative in another SOE.

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Written by Nguyen Quang Vu On In ,

New structure to overcome tender offer requirements under Vietnam securities law

Under the Securities Law 2019, a proposed buyer (the Buyer) who wish to acquire 25% or more of total shares (the Sale Shares) of a public company (the Target) must comply with tender offer requirements (see here). However, based on the new potential exemption of tender offers available at law, there may be a potential way of not having to follow the tender offer procedures by merging the buyer and the seller’s relevant entities of as follows:

  • Step 1: The selling shareholder (the Seller) sets up a special purpose company for this sale transaction (the SPV1) by way of contributing all the Sale Shares into the SPV1. This step does not trigger a tender offer requirement since it is an intra-group transfer of the Sale Shares.

  • Step 2: The Buyer sets up another special purpose company for this transaction (the SPV2) by way of contributing to the SPV2 an amount of cash equivalent to purchase price of Sale Shares; and

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Written by Nguyen Quang Vu On In ,