LEGAL UPDATE: Did you know that the new Enterprise Law and Investment Law will come into effect soon on 1 July 2015. These are the two main pieces of legislation that will govern all aspects of your investment in Vietnam as a company. Here are some key changes to note. Decrees guiding these laws are being drafted. We will keep you posted.

  1. A foreign-invested company where a foreign investor(s) hold(s) less than 51% will be considered a Vietnamese company and therefore will enjoy the same benefits     accorded to a purely domestic company.
  2. In respect of M&A transactions, the target will no longer be required to apply for an investment certificate (“IC”) if a foreign investor buys more than 51% of its equity. Rather, the foreign investor must obtain an Investment Registration Certificate. It is unclear how these will be issued and whether this is a mere formality or whether the investor will have to submit paperwork as if it is applying for a IC. If the latter, this will delay closing of transactions.
  3. Super majority vote has been reduced to 65% from 75% on certain issues and simple majority from 65% to 51%.
  4. Procedures in respect of IC applications for services projects will be simpler and fast tracked and ICs granted within 5 days of submission.
  5. Procedures in respect of IC applications for other projects seem more complicated, however, requiring investors to obtain in-principle approvals first and then submit IC applications after. Mega projects may require the approval of the National Assembly. Projects in the “conditional” sectors will still be subject to strict scrutiny as before.
  6. Foreign investors will now have to apply for an IC for the project and an Enterprise Registration Certificate (“ERC”) to set up the project company. Previously, the IC served as both.
  7. Obtaining an ERC will take only 3 days.
  8. A company must notify online the National Information Gate of Enterprise Registration Data of its business activities that are not in the conditional sectors.
  9. Shareholders holding at least 1% of the total shares may initiate actions against board members, directors, controllers for breach of fiduciary duty.
  10. Companies may issue bonds if they are solvent rather than profitable.
  11. A company may appoint more than one legal representative.
  12. Charter capital is now defined as paid up capital and must be fully contributed within 90 days of establishment of a company.
  13. A company seal is no longer required.
  14. Joint stock companies with less than 11 shareholders do not have to establish a control board.