The Government recently issued Decree 1/2021 which takes effect from 4 January 2021 and replaces Decree 78/2015 in terms of enterprise registration procedures. There are certain new regulations and changes under Decree 1/2021 in relation to registration and notification of enterprise information as follows:

• Decree 1/2021 clarifies “person submitting the application” including the person having the authorization to sign the application (Authorized Signatory) and the person being authorized by the Authorized Signatory.

• ID number issued to a branch or representative office of an enterprise is specified as tax identification code of such branch or representative office.

• Language of the application - Enterprise registration application must be prepared in Vietnamese. The translation of documents in a foreign language must be notarized. In case the application is made in the bilingual language of English and Vietnamese, the Vietnamese version will be used for registration procedures. That means, although parties may agree that the English version will prevail as between the parties, parties must take care of the Vietnamese version/translation to avoid any inaccuracy as the authority only review the Vietnamese version of the application.

• Legalization of foreign documents - Legal document of foreign entities must be legalized (in Vietnamese: hợp pháp hóa lãnh sự). Although this requirement is newly added in Decree 1/2021, in practice enterprises have already conducted the legalization of documents issued by foreign authorities in relation to their dossier.

• M&A Approval in the enterprise registration dossier - Approval for a foreign investor to contribute capital or purchase share/capital contribution under the Investment Law 2020 is specifically required in an application for change of corporate form, and conversion from business household to an enterprise;

• Concurrently application - While applying for a change of corporate form, companies can register for a change of legal representative concurrently. Previously, a change of legal representative must be done after the new corporate form of the company is completely registered at Business Registration Agency.

• Enterprise registration of entities in banking and securities sector - Decree 1/2021 details the enterprise registration of securities companies, securities investment fund management company, securities investment company, branch of foreign securities company, and foreign fund management company which is regulated under the Securities Law 2019. Such entities must provide the license or approval issued by the State Securities Commission in their applications for enterprise registration.

• Cancelation of enterprise registration– Enterprises can request to cancel their enterprise registration application by submitting a written request to the Business Registration Agency if their application has not been approved in the National Portal. However, the Business Registration Agency has the right to accept or refuse such request.

• The commencement date of operation – Decree 1/2021 allows enterprises to start their business after the issuance date of the enterprise registration certificate (ERC) if enterprises register so. Decree 78/2015 only provides the enterprise's right to start a business from the issuance date of ERC.

• Refund of fee for publishing contents of enterprise registration – The fee for publishing contents of enterprise registration must be paid at the time of submitting the enterprise registration dossier. In case the enterprise is not issued the ERC, the fee for publishing contents of enterprise registration will be refunded to the enterprise. (Article 35.3 of Decree 01/2021)

• The legal status of enterprise – Article 41 of Decree 1/2021 explains several legal statuses of enterprise displayed in the National Portal. Depending on the status or procedures being conducts in relation to an enterprise, such enterprise may be tagged one of the following status: (i) temporary suspension of business, (ii) no longer active at the registered address, (iii) ERC being revoked due to tax management enforcement, (iv) on the progress of dissolution, being separated, merger or acquisition, (v) on the progress of bankruptcy, and (vi) being dissolved, bankrupted or terminated of existence, or (vii) active. This is a helpful explanation for the public to understand the legal status of a company in Vietnam.

• Decrease of charter capital of Multiple LLC – Multiple LLC must submit its latest financial statements in the dossier for registering the capital decrease.

• Procedures for change in tax calculation method – In case the enterprise changes its method to calculate tax, it must conduct procedures with tax authority instead of informing its change on tax calculation method to the Business Registration Agency. Previously, all changes in the tax registration (including tax calculation method) can only be informed to the Business Registration Agency, then the Business Registration Agency will transfer the changed information to the tax authority.

• Change of operation registration of the branch, representative office and business location – Decree 01/2021 make clear that after wholly state-owned companies are converted LLC or JSC, the branch, representative office, and business location of such company registers change in its operation information in accordance with general procedures applicable to branch, representative office and business location.

• Telephone number of enterprise is required – Enterprise is required to add its telephone number in the application during its registration or notification of changes in enterprise registration if this information has not been provided before. Otherwise, the registration or notification of changes will be treated as invalid.

• Change of enterprise registration according to a collection of opinion in writing – In comparison with Decree 78/2015, Decree 01/2021 clearly confirm that vote counting minutes of Board of Director or General Shareholders’ Meeting for a collection of opinion in writing can be replaced the meeting minutes if the collection of opinion in writing is made in compliance with Enterprise Law 2020.

• Restriction to register or notify changes in enterprise information – Decree 78/2015 has provided certain circumstances where the enterprises cannot change their enterprise registration contents. Decree 1/2021 adds two new circumstances, in particular, (i) at the request of the investigation agency, head, deputy head of investigation agency, or the investigator in accordance with Criminal Proceedings, or (ii) the enterprise is in the status of “not active at the registered address”. The enterprise in such case can continue changing its information once the investigation authority is approved in writing or the legal status of such enterprise is changed into “active”.

• Temporary suspension – Previously, the enterprise can temporarily suspend its operation for one year only. Currently, there is no limit on the total period of temporary suspension. That means the enterprise can notify the Business Registration Agency of its intended temporary suspension any time, however, the temporary suspension period in each notification should not exceed one year. Moreover, the enterprise is no longer required to submit a notification on the temporary suspension of its branch, representative office, and business location. The Business Registration Agency will based on the notification of the enterprise on its temporary suspension, update the legal status of the branch, representative office, and business location of such enterprise accordingly.

• In case the enterprise obtains the ERC/confirmation on enterprise registration, but later this ERC/confirmation is found to be issued not in compliance with statutory procedures or dossiers, such ERC/confirmation will be invalid upon the Business Registration Agency’s notice and the relevant enterprise must re-submit the application to obtain new ERC/confirmation. (Article 69 of Decree 01/2021)

• Dissolution – Decree 01/2021 provides details and separates procedures to dissolve an enterprise, one procedure for dissolution due to withdrawal of its ERC (involuntary dissolution) as prescribed under Article 70 of Decree 01/2021, and the other procedure for dissolution due to other reasons (voluntary dissolution) as prescribed under Article 71 of Decree 01/2021. Moreover, Decree 01/2021 also provides procedures in case the enterprise cancels its intended voluntary dissolution. (Article 70 and 71 of Decree 01/2021)

• Withdrawal of business registration certificate of branch and representative office – This is a new provision in comparison to Decree 78/20215. Business registration certificate of the branch and representative office will be withdrawn in three circumstances: (i) contents in the dossier registering business of branch and the representative office is counterfeit, (ii) branch or representative office stop operating for a year without notification to Business Registration Agency; or (iii) upon the court’s decision or proposal of the competent authority.

  This post is written by Le Minh Thuy and edited by Nguyen Quang Vu.