On 11 January 2022, the National Assembly passed a new law amending 09 laws, including Public Investment Law, Public-Private Partnership Law, Investment Law, Residential Housing Law, Tendering Law, Electricity Law, Enterprise Law, Law On Special Consumption Tax, and Law On Civil Judgment Enforcement (Law 03/2022). Law 03/2022 will come into effect on 1 March 2022. In this post, we will discuss some new key points of Law 03/2022.

1) Enterprise Law 2020

Change of the term “members of the Members’ Council” into “members of the company”

As discussed before, the Enterprise Law 2020 (Articles 49 and 50) only provides for the rights of members of the Members’ Council, but not the rights of the members of the LLC. And many rights of the members of the Members’ Council should be the rights of the members of the LLC such as rights to subscribe for new capital increase or to receive dividends paid by the LLC. The change of the term “members of the Members’ Council” into “members of the company” in Articles 49 and 50 has successfully resolved this problem, although in other provisions, the Enterprise Law 2020 still does not distinguish between the positions of members of the LLC and members of the Members’ Council of the LLC.

Removal of requirement on signatures of dissenting members on meeting minutes; personal liability of the chairperson and the person writing the minutes

The requirement that meeting minutes of the Members’ Council must include signatures of members who disagree to pass such meeting minutes is now removed.

In addition, in the event that the chairperson of the meeting of the Members’ Council/Board Of Directors or the person writing the minutes refuses to sign the meeting minutes, for such minutes to be effective, the Enterprise Law 2020 no longer requires all attending members of the meetings to sign, and only the signatures of the attending members who agree to pass the minutes are necessary. Also, in such event, the chairperson or the person writing the minutes who refuses to sign such minutes must bear personal liability for any loss arising to the company due to their refusal.

Voting threshold of GMS based on the number of votes of attending shareholders who cast their votes

According to the amendment to Article 148 of the Enterprise Law 2020, the voting threshold of GMS is determined based on the number of votes of attending shareholders who cast their vote. Before this, such threshold is determined based on the number of votes of all attending shareholders, regardless of whether such shareholders cast their votes or not.

2) Investment Law 2020

Decentralization in granting in-principle approval for residential housing projects and projects within the scope of protection of relics

According to the amendment under Law 03/2022, the Prime Minister now only gives in-principle approval for residential housing projects with land use scale of 300 ha or more, or having population scale of 50.000 people or more, while provincial People’s Committees are in charge of granting in-principle approval for those with land use scale of less than 300 ha and population scale of less than 50.000 people. Before this, criteria for determining the authority in granting in-principle approval for a residential housing project are more complex. In particular, the old criteria include not only land use scale and population scale, but also the combination of these with the area where such project is located (urban or non-urban area).

The authority to grant in-principle approval for projects within the scope of protection of relics is now allocated between the Prime Minister and the provincial People’s Committee according to (i) the level of the scope of protection and (ii) the category of the relics. Notably, the amended provisions clarify that projects within the scope of protection of relics must be those that are suitable to regulations on cultural heritage.

New conditional business line

The business of cyber security products and services (excluding the business of cyber security information products and services, and the business of civil cryptographic products and services) is provided as a new conditional business line under the Investment Law 2020.

3) Residential Housing Law 2014 – Clarification on types of land owned by developers that are permitted to be used for commercial housing projects

Previously, Article 23.1 of the Residential Housing Law 2014 provides that developers having lawful land use rights with respect to residential land and other types of land for which the competent state authority permits conversion of land use purpose to residential land may use such land to implement commercial housing projects.

This provision has created ambiguities and posed an obstacle to real estate developers. The previous wordings are not clear on whether the land area owned developers (a) must include both residential land and other types of land for which the competent state agency permits conversion of land use purpose to residential land, or (b) just need to be either of those types of land in order to be eligible for use as land of commercial housing projects.

The amendment to Article 23.1 of the Residential Housing Law 2014 under Law 03/2022 has solved this problem by expressly providing that developers must have lawful land use rights with respect to (a) residential land, or (b) residential land and other non-residential land which satisfies the conditions for conversion of land use purpose. In addition, the use of such land to implement commercial housing projects must be suitable to land use master plan and plan approved by competent state authorities, except in the events of land withdrawal by the State. This amended provision also sets forth that developers must perform the land conversion procedures and fulfill relevant financial obligations after obtaining the in-principle approval-cum-investor approval for their commercial housing projects.

4) Electricity Law 2004 – Participation of private sector in constructing and operating transmission grid

Previously, the State had the monopoly on transmission activities. According to the amended electricity development policy under Article 4 of the Electricity Law, the private sector may now invest in, construct, and operate transmission grid.

5) Public-Private Partnership (PPP) Law 2020 - Decentralization in granting in-principle approval for PPP projects

Similar to the amendment to the Public Investment Law 2019, the Prime Minister now only grants in-principle approval PPP projects that are classified as Group A projects under public investment regulations funded by (i) central budget managed by Ministries and central bodies; (ii) ODA loans; and (iii) concessional loans of foreign sponsors.

6) Tendering Law 2013 – Facilitation of implementation of projects funded by ODA and concessional loans

The new Article 33a of the Tendering Law 2013 sets forth the activities that must be carried out with respect to projects funded by ODA and concessional loans before entering into international treaties and agreements on ODA and concessional loans. This is expected to speed up the implementation progress of projects funded by ODA and concessional loans.

7) Law On Civil Judgment Enforcement 2008 – New mechanism for delegation of realization of assets in civil judgment enforcement process

Previously, there is no mechanism for delegation of realization of assets in civil judgment enforcement process under the Law On Civil Judgment Enforcement 2008. A civil judgment enforcement authority must realize the relevant assets being temporarily held, seized or distrained within their locality by themselves before delegating the enforcement task to other civil judgment enforcement authorities in other localities. This means that the enforcement of civil judgment must be completed with respect to one locality before the civil judgment enforcement authority of such locality can delegate such task to other civil judgment enforcement authorities in other localities, resulting in the prolongation of the enforcement process in general, and in particular, of the process of withdrawing assets in corruption cases where the relevant assets are located in many different localities.

Law 03/2022 has supplemented the mechanism for delegation of realization of assets in civil judgment enforcement process to fix this problem: in the case a judgment or decision requires the distraint, blockade or disposition of assets to ensure judgment enforcement, where the assets are located in different localities, the civil judgment enforcement authority shall realize the assets in the locality, and at the same time can delegate this task to other civil judgment enforcement authorities where the other assets are located.

8) Public Investment Law 2019 - Decentralization in granting in-principle approval for public investment projects

According to the amendment under Law 03/2022, the Prime Minister now only grants in-principle approval for public projects funded by ODA loans and concessional loans of foreign sponsors that are classified as Group A projects. The authority to grant in-principle approvals for (i) those that are classified as Group B or Group C projects and (ii) technical assistance projects funded by ODA loans and concessional loans of foreign sponsors in the stage of investment project preparation is delegated to the head of the relevant Ministries, central bodies and the provincial People’s Council in charge of such projects.

9) Law On Special Consumption Tax 2008 – Preferential special consumption tax rates applicable to electric cars

In order to encourage investment in production and development of electric cars, and especially, battery electric cars, the special consumption tax rates applicable to such vehicles have been decreased considerably. In particular, special consumption tax rates imposed on battery electric cars for the first 05 years since the effective date of Law 03/2022 are very low, only ranging from 1 to 3 percent.

This post is written by Nguyen Thuc Anh and edited by Nguyen Quang Vu

Vietnam Business Law