How Agreements On ROFO, ROFR, Tag Along And Drag Along Could Work In A Multiple Member Limited Liability Company In Vietnam?

In a shareholder agreement (or joint venture agreement) between members of a multiple member limited liability companies (Multiple LLC), the members often agree on various transfer restrictions such as right of first offer (ROFO), right of first refusal (ROFR), tag along or drag along rights. These transfers are intended for the parties to control the ownership structure of the Multiple LLC and their exit from the Multiple LLC. However, implementing such agreements on transfer restriction may be inconsistent with the statutory transfer restrictions provided in Article 52 of the Enterprise Law 2020. Therefore, a shareholder agreement relating to a Multiple LLC should have specific provision to resolve such inconsistencies.

The table below sets out the potential inconsistencies between agreements on ROFO, ROFR, Tag Along and Drag Along and the transfer procedures under Article 52 of the Enterprise Law 2020.

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Written by Nguyen Quang Vu On In ,

Comments on New Law on Real Estate Business 2023 – Part 2

Please download the pdf version here.

In this post, we continue discussing the new changes introduced by the Real Estate Business Law 2023. Part 1 of our discussion can be found Here.

This post is written by Nguyen Hoang Duong and Nguyen Bich Ngọc, and edited by Nguyen Quang Vu.

1)         New restriction when collecting deposit for purchase of off-plan real estate

Under the Real Estate Business Law 2023, real estate developers can only collect a deposit of up to 5% of sale price of the relevant real estate from purchasers when the residential houses, construction works are qualified to be put into trading. The law further requires a deposit agreement to expressly set out the sale price and area of the off-plan real estate. The off-plan real estate under the deposit agreement must satisfy conditions for sale under law. This indicates that collecting a deposit is considered putting relevant off-plan real estate into business.

The new requirements may pose significant difficulty for real estate developers with weak financial capacity when it comes to funding for pre-construction phase of their projects.

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Written by Nguyen Quang Vu On In ,

New Law on Credit Institutions 2024 (Part 1)

Introduction

On 18 January 2024, new Law on Credit Institutions (LCI 2024) has been passed by the National Assembly. LCI 2024 will replace the Law on Credit Institutions 2010 (as amended) (LCI 2010) from 1 July 2024. In a series of posts, we will introduce the new changes of LCI 2024.

It seems that the ongoing criminal case against the controlling shareholders of Saigon Commercial Bank (SCB) has motivated the draftsman of LCI 2024 to introduce stricter management toward credit institutions (CIs).

Stricter conditions of independent board members

LCI 2024 tightens the standards and conditions of independent members of the Board of Directors of CIs. Specifically, an independent member of the Board of Directors of a CI must not represent ownership of any share of such CI and not, together with his/her related persons, directly or indirectly own 1% or more of the charter capital of such CI.

A broader range of related persons

LCI 2024 expands the definition of related persons to also cover the relationship between (i) the “grandparent” company/CIs and the “grandchildren” company, (ii) the manager/controller of a parent company/CIs and the subsidiary, and (iii) an individual with his/her wider range of family members.

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Written by Nguyen Quang Vu On In

E-signatures of individuals under the Law on E-Transaction 2023

On 22 June 2023, the National Assembly passed a new Law on E-transactions, set to be effect from 1 July 2024 (LET 2023). The LET 2023 introduces significant changes regarding the use of e-signatures by individuals as outlined below:

1)         Restriction on individuals’ right to create and use of their own e-signature

The LET 2023 categorizes e-signatures into three types as below, none of which encompass e-signatures self-generated by individuals:

  • specialized e-signatures (chữ ký điện tử chuyên dùng), which are created and used by organizations for their “own private operations” in accordance with their function and tasks;

  • public digital signature (chữ ký số công cộng), which are used for “public activities” and are secured by an e-certificate confirming the public digital signature issued by a qualified service provider; and

  • specialized digital signature for official use (chữ ký số chuyên dùng công vụ), which are digital signatures used for official activities and are secured by an e-certificate confirming the specialized digital signature for official use issued by a qualified service provider

Unlike the broader definition of e-signatures under the LET 2005, which may cover signatures self-created by individuals, this classification significantly limits individuals' ability to create and use their own e-signatures. Under the LET 2023, individuals may be required to use a public digital signature issued by a third-party service provider in normal e-transactions.

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Written by Nguyen Quang Vu On In ,