New measures to control greenhouse gas emissions in Vietnam

In this January 2022, three new legal documents have been issued regarding the reduction of greenhouse gas emissions and protection of the ozone layer, including:

· Decree 6 of the Government dated and effective from 7 January 2022 (Decree 6/2022);

· Circular 1 of the Ministry of Natural Resources and Environment (MONRE) dated and effective from 7 January 2022 regarding response to climate change (Circular 1/2022); and

· Decision 1 of Prime Minister regarding issuance of list of greenhouse gas emitting sectors and establishments subject to greenhouse gas inventory dated and effective from 18 January 2022 (Decision 1/2022).

The legislation seems to a step to implement Vietnam’s commitment to achieve net-zero carbon emissions by 2050 in the COP26.

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Written by Nguyen Quang Vu On In

Guarantee for obligations of a non-resident by a Vietnamese individual

It is not entirely clear under the foreign exchange (FX) regulations of Vietnam if a Vietnamese individual can provide guarantee for a non-resident (i.e. guarantee for the performance of obligation of such non-resident) (Non-Resident Guarantee). While the FX Ordinance 2005 provides that “economic institutions [established in Vietnam] are permitted to provide offshore loans, except for the export of goods and services on deferred payment, and to provide guarantees for non-residents when the Prime Minister so permits”, there is no similar clause applicable to Vietnamese individuals. Due to this ambiguity, one can take different views on this issue.

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Written by Nguyen Quang Vu On In ,

“Seat of arbitration” and “venue of arbitration” – What do they mean under Vietnamese law?

In international arbitration, determining the “seat of arbitration” is important since the law of the country where the seat of arbitration is located will usually govern the arbitration proceedings. In addition, international arbitration rules distinguish the seat of arbitration from the venue of arbitration which is the physical place where hearings take place. In Vietnam, the Law on Commercial Arbitration 2010 does not have a clear definition of “seat of arbitration” and “venue of arbitration”.

Article 3.8 of the Law on Commercial Arbitration 2010 provides that:

“Dispute resolution place means the place where the arbitration tribunal conducts the dispute resolution as agreed by the parties, or as decided by the arbitration tribunal if the parties do not have such an agreement. If the dispute resolution place is within the territory of Vietnam then the award is deemed to be made in Vietnam regardless of the location where the arbitral tribunal conducts the hearing to issue the award”

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Written by Nguyen Quang Vu On In

Will the number of preference shareholders be taken into account in determining public company status in Vietnam?

The Securities Law 2019 is not clear whether the number of preference shareholders will be taken into account when determining whether a company is a public company. Under the Securities Law 2019 a joint stock company (Company) would be considered a public company if:

  • Its paid-up charter capital is at least VND 30 billion; and

  • At least 10% voting shares (cổ phiếu có quyền biểu quyết) if the Company is held by at least 100 investors who are not major shareholders.

The first requirement is clear and intelligible. However, the second requirement is not clear whether:

(1) each and every of the 100 investors who are not major shareholders must hold ordinary shares; or

(2) only some (but not all) of the 100 investors who are not major shareholders could hold ordinary shares and the rest of these 100 investors could hold preference shares.

A literal reading of the law tends to support the first interpretation (i.e., all investors must hold ordinary shares). However, a closer look suggests that the second interpretation is more reasonable. This is because:

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Written by Nguyen Quang Vu On In