LEGAL UPDATE: Did you know that two other significant laws in investment and enterprises have been passed and will become valid on 1 July 2015. These laws will affect all investments and corporate transactions in Vietnam.
Key changes are:
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. This will facilitate the completion of M&A deals as the process of getting and IC was unnecessary and artificial.
3. Super majority vote has been reduced to 65% from 75% on certain issues and simple majority from 65% to 51%.
4. IC applications for services projects will be simpler and fast tracked and ICs granted within 5 days of submission.
5. IC applications for other projects seem more complicated, however, requiring obtaining in-principle approvals first and then IC applications. 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 may 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.