"The change would also help implement a principle mentioned in the Constitution, that people are allowed to conduct any business which the law does not ban," said Nguyen Dinh Cung.. — Photo Vu Sinh

HA NOI (Biz Hub) — The draft amendment to the Viet Nam Law on Enterprises 2005 allows enterprises to become involved in businesses not listed in their business register certification, except for those requiring specific conditions.

This change is seen by the business sector as an important point in the ongoing legal reform.

Under the proposed changes, enterprises could expand business lines with a notification sent to the business registration agency.

The amendment is also meant to separate the registration for receiving a business licence for consitional lines, which had caused confusion during the administrative and practical processes.

Under the current law, enterprises must register business activities and would be violating the Law on Enterprises if they carry out business activities not mentioned in their business register certificate.

Experts note that registering enterprises is a formality required when opening a business. But how an enterprise operates or invests is part of the process of developing a business idea.

Thus, the amendment would help reduce risks prone to re-registration of business certificates. These risks include modification costs, wasting time, litigation, conflicts and collapsing contracts, said Nguyen Dinh Cung, acting director of the Central Institute for Economic Management (CIEM).

"The change would also help implement a principle mentioned in the Constitution, that people are allowed to conduct any business which the law does not ban," said Cung.

However, lawyer Dinh Nhat Quang from Leadco legal counsel said the separation of business establishment registrations and business line registrations, and the abolition of the requirement for business conditions (such as a practicing certificate, certify legal capital) at the time of registration, would result in an inability to filter out investors who would normally not be approved to set up enterprises.

Additionally, the combination of business establishment registration and business line conditions would not waste the time and money of investors, but save a wide array of fees associated with opening and closing weak enterprises, Quang argued.

SOEs in focus

Another significant change is the draft amendment to the Viet Nam Law on Enterprises 2005, which focuses on the practices of State-owned enterprises (SOEs) along with the rights, obligations of ownership and managerial process.

The draft reflects the growing pressure to restructure this driver of the economy. According to the new chapter proposed by the Ministry of Planning and Investment (MPI), the amended law would identify the roles and missions of all SOEs and also each SOE, in particular.

The proposal legalises principles to secure and develop State capital in commercial operations.

In terms of ownership rights and implementing obligations, the draft proposes to separate the practice of ownership rights from other practices.

Every enterprise must have a representative body which takes responsibility before the Government and the National Assembly for State ownership practices in the enterprises. However, the body would not directly issue administrative orders or interrupt the enterprise's commercial operations.

The draft also regulates disclosure of periodic reports and requested information from SOEs.

The amended business law retains the fundamental structure of the current Law on Enterprise, which included 42 new articles, as 137 out of 172 articles were amended and supplemented, 39 articles were retained, and 5 articles were abolished. — VNS