Legal Capacity of a Branch of a Company in Vietnam under the Civil Code 2015

Under the Civil Code 2015, the legal capacity of a branch is limited. To be specific, a branch cannot enter into contracts under its own name since it is not a legal person or a natural person. Also, while it is not entirely clear (see below), it is arguable that a branch can no longer be a representative of its parent company. Therefore, it is unsure whether a contract signed by a branch on behalf of the parent company is valid under the new regulations of the Civil Code 2015. This is because under the Civil Code 2015,

  • only natural persons and legal persons can enter into contracts under their names;
  • only a natural person or a legal person can become a representative for another person (either natural or legal); and
  • the Civil Code 2005 used to provide that a branch’s function includes representative function (chức năng đại diện theo ủy quyền). However, such a provision is now removed under the Civil Code 2015.
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Written by Nguyen Quang Vu On In ,

Order of payment priority between unenforceable secured transactions

Under Article 308 of the Civil Code 2015, where all secured transactions relating to the same assets are not enforceable against a third person (unenforceable secured transactions), the order of payment will be determined according to the order in which the unenforceable secured transactions were established. Article 47a of Decree 163/2006 contains a similar provision governing the order of payment priority between the beneficiary of a guarantee and other unenforceable secured transactions. In particular,  the order of payment priority among the beneficiary of a guarantee and other unenforceable secured transactions will also be determined according to the order in which these transactions are established.

These provisions give rise to the following issues:

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Written by Lawyers VNLaw On In

List of State monopoly goods and services in Vietnam

Decree 94/2017 of the Government provides a list of goods and services, which are subject to State monopoly. In other words, enterprises from private sectors including foreign-invested enterprises are not allowed to provide these goods and services in Vietnam unless they are appointed by the State authority to do so.

Under Decree 94/2017, the State will contemplate a goods or service to be State monopoly services only when there are no other investors who are interested in and capable to provide such goods and services. The list of State monopoly goods and services includes, among other things:

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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 ,