Vietnam Business Law is a website managed by lawyers of Venture North Law Limited (VNLaw). Venture North Law Limited (VNLaw) is a Vietnamese commercial law firm. We won the Rising Law Firm of the Year Award at the Southeast Asia Law Awards for the years 2020 and 2021 held by The Legal 500. Very few Vietnamese law firms have achieved a similar regional recognition.
The new Construction Law (Construction Law 2014) is probably one of the more important legislation passed by the National Assembly during the first section of this year. The Construction Law 2014 will take effect from 1 January 2015 and contain the following important points, among others:
This week, the Prime Minister approved the equitisation plan for Vietnam Airlines, the national carrier. It is planned that:
The Ministry of Finance has just issued Circular 118/2014 to allow State Capital Investment Corporation (SCIC) to take over State capital currently held by numerous provincial People’s Committees (PCs) and Ministries in a large number of enterprises. In particular, the SCIC will replace the provincial PCs and Ministries as representatives of State’s capital in:
To show commitment to the SOEs restructuring process, Circular 118/2014 expressly imposes liabilities to provincial PCs or Ministries which delay the transfer process. Circular 118/2014 is another effort in making SCIC to be a “Temasek” of Vietnam.
However, Circular 118/2014 would likely make it more difficult for existing and future strategic investors in SCIC-to-be-transferred enterprises to structure their investments. This is because existing and potential strategic investors in these enterprises usually want to have a shareholder agreement with representative of State capitals being provincial PCs or Ministries. If SCIC is to replace these provincial PCs or Ministries, it is not clear whether SCIC will accede to such shareholder agreement or if the strategic investor will need to re-negotiate and enter into a new shareholder agreement.
Under Decree 68/2014, a Vietnamese non-life insurance company may now issue a “guarantee insurance” (bảo hiểm bảo lãnh) to guarantee contractual obligations of its customers in favour of a third party. The customer will need to pay insurance premium to the insurance company for the guarantee insurance. Thereafter, if the customer fails to perform the guaranteed obligations then the insurance company must perform the guaranteed obligations and will have a right to require reimbursement from the customer. In essence, a guarantee insurance is not a traditional insurance product but is similar to a surety bond or a bank guarantee. So for the first time, insurance companies will be competing with banks in performance bonds and guarantee market. This must be an important product for some non-life insurance companies in Vietnam as the whole Decree 68/2014 is all about definition of guarantee insurance.