New Decree On Industrial Zone In Vietnam

On 28 May 2022, the Government issued Decree 35 on management of industrial zones (IZ) and economic zones (Decree 35/2022) to replace Decree 82/2018 on the same matters (Decree 82/2018). Decree 35/2022 will be in effect from 15 July 2022.

Decree 35 introduces several significant changes as compared with Decree 82/2018 which are expected to create a more simplified legal framework for investors making investment in IZ projects.

1. New models of IZ

Decree 35/2022 introduces two new models of IZ, including:

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Notice on mortgage over receivables in Vietnam

Mortgage over receivables (thế chấp khoản phải thu) is a very common type of mortgage in Vietnam. Article 33 of Decree 21/2021 provides that a mortgage over receivables does not require a consent by the obligor but such person must be notified by the secured party to know before implementing the obligations in accordance with agreement or law. Under the Civil Code 2015, only a transfer of rights (not mortgage of rights) need to be notified to the obligor. It is not clear if the notice requirement is a perfection requirement and what the consequence is if the notice about the mortgage over receivable is not made to the relevant obligor.

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Is the list of related persons of a Vietnamese joint stock company expanded?

When determining who is a related person of a non-public joint stock company (JSC), as a routine, one would turn to Article 4.23 of the Enterprise Law 2020. Article 4.23 lists out the related persons of a company. However, Article 167.1 of the Enterprise Law 2020 on related party transactions (RPTs) applicable to JSCs suggests that the list of related persons under Article 4.23 might not be exhaustive.

Article 167.1 reads that: the General Meeting of Shareholders or the Board of Directors approve contract and transactions between the JSC and “the following related persons”:

(a) shareholders, authorized representatives of shareholders holding more than 10% ordinary shares and their related persons;

(b) members of the Board of directors, (general) director and their related persons; and

(c) enterprises that the members of the Board of directors, supervisory committee, (general) directors, and other managers of the company have an interests and must report to the JSC in accordance with Article 164.2 of the Enterprise Law 2020.

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Is M&A Approval Required For A Foreign Investor Buying Secondary Shares In A Vietnamese Securities Company?

The Securities Law 2019 removes the requirement for an approval by the State Securities Commission (SSC) for transactions involving 10% or more of the Charter Capital of a securities company. Instead, only a private placement of shares by a securities company is subject to SSC’s approval. Accordingly, it is not clear if an M&A Approval is required if a foreign investor acquires secondary shares from existing shareholders in a Vietnamese securities company.

A foreign investor purchasing shares in a company doing businesses sectors which are subject to market access conditions applicable to foreign investors will have to obtain an M&A Approval under the Investment Law 2020 from the relevant Department of Planning and Investment (DPI). Businesses carried on by a securities company are conditional businesses. However, Article 4.3(e) of the Investment Law 2020 provides that if the provisions of the Investment Law 2020 and other laws promulgated before the 1 January 2021 differ on (i) investment processes or procedures, or (ii) investment guarantee, except that the authority, processes, procedures, investment conditions, securities and securities market activities will follow the Securities Law 2019.

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Vietnam Business Law