Modifications to Law on Enterprises

Wednesday, Jan 07, 2015 08:00

The right to decide the number of legal representatives and corporate seals, and changes in business registration procedures are some of the highlights of the Law on Enterprises 2014.

The law was approved by the National Assembly on November 26, 2014, and will take effect from July 1, 2015, with significant changes as follows:

Enterprises may have several legal representatives:

A limited liability company (LTD.) and joint stock company (JSC) may have one or more legal representatives (LRs). Depending on the administrative needs of each entity, the enterprises are entitled to decide the number, management titles, specific rights and obligations of their LRs in the company's charter.

It is mandatory for enterprises to make certain that there is always at least one LR residing in Viet Nam. In the event of the enterprises having only one LR, he/she must reside in Viet Nam and authorise another person in writing to perform the rights and obligations of an LR when he/she leaves Viet Nam. If the LR does not return to Viet Nam when the duration of authorisation expires and there is no other authorisation, the authorised person will continue to exercise the rights and obligations of the LR to the authorised extent, till such LR returns to work; or till the enterprise's owner, board member or managing board decides to appoint another as the enterprise's LR. This is a new and progressive point of the Law on Enterprises 2014, when a mechanism of resolution for the frequent absence of LRs from Viet Nam is provided.

A business registration certificate will be granted in three working days and will not include contents of the business sectors:

While registering a company establishment, in some cases the business registration authority may require the applicant to submit a judicial record.

In the Law on Enterprises 2014, the duration for examining and granting a business registration certificate is reduced to three working days, commencing from the date of receipt of the dossier, while according to the existing provisions, it takes 10 days for such a procedure (Law on Enterprises 2005).

A business registration certificate shall be presented in writing or electronic form and shall not include the contents of the business sectors. As a consequence, when changing business sectors, the enterprises will only need to inform the business registration authority to update such contents in the dossier of enterprise registration, without having to change the business registration contents in order to receive a new business registration certificate as done currently.

After being granted a business registration certificate or after adjusting the business registration content, the enterprises are required to publicly announce the same on the national portal of business registration. According to current regulations, the enterprises may select the publishing method such as posting on the business information website of the business registration authority or in three consecutive issues of a newspaper or electronic newspaper.

Enterprises have the right to decide on the form, quantity and content of corporate seals:

According to current provisions, each enterprise may only be allowed to use one seal, unless otherwise approved to use a second seal whose sample is registered at the police office. From July 1, 2015, enterprises will be entitled to decide on the form, quantity and content of their corporate seals, but the name and code of the enterprise must be guaranteed to be shown. In addition, enterprises must inform the business registration authority of the seal's sample that will be publicly published on the national portal of business registration.

Duration of capital contribution will be shortened to 90 days:

The owner and members of the LTD must contribute sufficient and correct type of capital as committed, when registering a company establishment within a period of 90 days commencing from the date of issuance of the business registration certificate; whereas the duration of capital contribution as per current provisions is up to 36 months. However, for a LTD set up before July 1, 2015, the duration of capital contribution is still governed by the provisions of the company's charter.

Social enterprises

While in the Law on Enterprises 2005, the government only encourages, facilitates and gives incentives to enterprises participating in the production and provision of public products and services, the criteria, rights and obligations with which social enterprises are set up are now regulated more specifically with better details by the new provisions.—  PLF – LAW FIRM

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