How Does The Enterprise Law 2020 Affect Foreign Businesses? – Shareholders – Vietnam

The Enterprise Law 2020 has a lot of new regulations,
supplements, and amendments. Although there are no provisions that
directly affect foreign enterprises, there are many new points that
affect the operation and management of foreign enterprises in Vietnam.

Enterprises are not required to notify seal samples

According to Article 44 of the Enterprise Law 2014, the
enterprise is obliged to notify the seal sample to the business
registration authority for public posting on the National Business
Registration Portal.

However, this regulation has been officially abolished in the
Enterprise Law 2020. Accordingly, Article 43 of the Enterprise Law
2020 has re-stipulated as follows:

• A seal includes a seal made at a seal-engraving establishment
  or a seal in the form of a digital signature in accordance with the
  law on electronic transactions (new regulations added in the Law
  2020);
• The enterprise decides on the type, quantity, form, and content
  of the enterprise, its branches, representative offices, and other units
  (additional);
• The management and keeping of the seal shall comply with the
  provisions of the company’s charter or the regulations issued
  by the enterprise, branch, representative office, or another unit of the
  enterprise with the seal (additional);

After being granted an enterprise registration certificate,
foreign enterprises do not need to send a notice of seal sample to
the Business Registration Office and decide on the form and number
of seals themselves.

A limited company is allowed to issue bonds

Clause 4, Article 46, Clause 1, Article 74 of the Law on
Enterprises 2020 has stipulated that limited liability companies
with 2 or more members and one-member limited liability companies
can issue bonds. Compared to the old regulations, the Enterprise
Law 2020 allows limited companies to raise capital by issuing
bonds.

Thus, a foreign company operating in the form of a limited
liability company will be able to raise capital in the following
forms:

• Increase the capital contribution of members;
• Receiving new members;
• Transformed into a joint-stock company;
• Release Stock.

Change of conditions to conduct the General Meeting of
Shareholders

The General Meeting of Shareholders is conducted when the number
of attending shareholders represents more than 50% of the total
votes (Article 145 of the Enterprise Law 2020) instead of 51%
previously.

This regulation is very beneficial for large-scale foreign
companies, especially corporations or parent companies. Because,
the difference between the new regulation and the old one is only
1% of the total number of votes, but for foreign companies with
many shareholders, this is a relatively huge percentage of
votes.

The manager is jointly responsible for the damage of the
company

All managers of the enterprise and the legal representative of
the enterprise shall be jointly liable for the damage caused to the
enterprise.

This is a very new regulation of the Enterprise Law 2020, which
has a direct impact on managerial positions in enterprises. Foreign
enterprises in general and foreigners holding managerial positions
or legal representatives of the company need to update this
regulation.

Temporarily suspending business only need to notify 3 working
days in advance

According to Article 200 of the Enterprise Law 2014, the time to
notify business suspension is at least 15 days before the date of
business suspension.

However, Clause 1, Article 206 of the Enterprise Law 2020
stipulates: Enterprises must notify in writing the business
registration agency at least 03 working days before the date of
suspension or resumption of business before the deadline.

In case a foreign enterprise wants to temporarily stop doing
business in Vietnam, it only needs to notify 03 working days in
advance.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.