In April 2017, the People's Court of H. City decided to initiate the bankruptcy process of Hoang Minh Co., Ltd. due to the fact that Hoang Minh was in the bankruptcy status, failing to repay several debts overdue more than three (03) months. Among the debts Hoang Minh was obliged to pay, there was a loan of nearly VND 20 billion which Hoang Minh borrowed from XYZ Bank, secured by the land use right of Mr. Le Quang Tam under the mortgage agreement between Mr. Tam and the Bank.
After the 2014 Law on Enterprises came into effect, the regulations related to the establishment and operation of enterprises are increasingly more open, enabling enterprises to develop freely. Hundreds of thousands of enterprises have been established; however, the truly developed and successful enterprises are not many. Most enterprises were founded by two or more founders with good initial business ideas. However, in the process of putting such ideas into practice, internal conflicts have arisen partly because such founders have not obviously agreed on the rights and obligations of the founding members/shareholders prior to the establishment of the enterprises.
After over two years’ application, the new provisions of the Law on Investment and the related regulations have achieved remarkable positive results. However, besides such positive signals, some inadequacies in understanding and applying the law have caused many difficulties to foreign investors, one of which is how to identify a foreign-invested economic organization in order to apply for a Business License when conducting trading and its directly-related activities ("Commercial Activities").
The new regulations on the seal in the 2014 Law on Enterprises giving the enterprise more liberty at creating the seal has helped the enterprise be more active in making its own seal with specific characteristics and differences compared to other enterprises.
On 21 June 2017, at the 3rd session of Legislature XIV, the National Assembly officially passed Resolution No. 42/2017/QH14 on pilot settlement of bad debts of credit institutions ("Resolution 42"). This is apparently a positive signal for Vietnam’s banking sector, given that the amount of bad debts, amount of implicit debt risk and amount of debt sold to Vietnam Asset Management Company currently unhandled account for 10.08% of the total outstanding loans of the banking sector (equivalent to about VND 600,000 billion, according to statistics reported by the Governor of the State Bank to the National Assembly, as at 31 December 2016).
1980 Vienna Convention of the United Nations on Contracts for the International Sale of Goods (CISG) comes into force in Vietnam on 1 January 2017, opening quite a few opportunities and advantages for enterprises when they conduct international transactions.
With its “open” policies in the field of investment together with a large potential market, Vietnam has attracted many foreign investors in the world (“Foreign Investors”) to come and invest in business. In order to conduct their business, one of the options that the Foreign Investors choose to enter the Vietnamese market is the acquisition of a whole 100% shares, capital contributions (“Charter Capital”) in a target company which has been established in Vietnam (“the Company”).
According to a report of the Foreign Investment Department, in the first five (05) months of 2017, the total of new, increased registered capital and share contribution by the foreign investors was USD 12.13 billion, up 10.4% over the same period in 2016. This is a joyful sign demonstrating that Vietnam's economic market is flourishing, attracting a lot of attention from foreign investors (“Foreign Investors”). However, in addition to the achieved results, the process and procedures for investment into Vietnam still have certain disadvantages, especially the troubles the Foreign Investors encounter in relation to the investment capital account (“Capital Account”).
Thien Tai Joint Stock Company (“Thien Tai Company”) is set up by ten (10) individual founding shareholders. The organizational structure of Thien Tai Company includes: (i) General Meeting of Shareholders; (ii) Board of Directors; and (iii) General Director. On May 1st, 2017, Thien Tai Company submits a notification on change of members of the Board of Directors from three (03) members up to five (05) members attached with new updated Charter to the Department of Planning and Investment (“DPI”). After considering the dossier and the Charter of Thien Tai Company, DPI, based on Article 134.1 of the Law on Enterprises, issued a notification requesting Thien Tai Company to adjust its organizational structure to comply with the Law on Enterprises.
Commercial mediation (CM) is a common dispute resolution (DR) method in the world, especially in the developed countries. In addition to Negotiation and Arbitration, Mediation is deemed to be an Alternative Dispute Resolution (ADR) usually chosen by the enterprises thanks to its outstanding advantages. However, in Vietnam, this DR method is quite new. Decree No. 22/2017/ND-CP (“Decree”) dated April 15th, 2017 on Commercial Mediation, the official and sole document recently issued relating to this matter, defines: “CM is a commercial DR method agreed by the parties and assisted by commercial mediators in DR”.
In early 1970s, the rapid development of the oil producing countries in the Middle East made it possible for them to sign many large contracts with Western companies. For the sake to ensure safety and minimize risks in performing those contracts, a need arose for a guaranteed by a third party with good credibility and strong financial capacity. Therefore, bank guarantee was born as from this time.
Trading of goods can now be made in different ways, including through e-commerce. Online trading activities in Vietnam are mainly governed by the Commercial Law, the E-Transactions Law, and Decree 52/2013/ND-CP on e-commerce.
Pursuant to Article 8.3.(g) of Regulation No. 637 of the State Security Commission guiding securities margin trading issued with Decision No. 637/QD-UBCK dated August 30th, 2011 (“Regulation 637”), securities companies (“Securities Companies”) are responsible to inform investors of their rights arising from securities in the client's margin trading account.
Pursuant to Article 43.5 of the 2010 Commercial Arbitration Law (“CAL”), if the parties already had an arbitration agreement but do not clearly indicate a specific arbitration institution, then if a dispute arises, the parties must reach agreement on the arbitration institution to resolve the dispute.
From time immemorial, inside the “subconscious” of every Vietnamese enterprise, the corporate seal has been its inseparable asset. A document without a seal stamped on it is deemed to have not legal value. However, from Vietnam’s integration into international economy, the legislator’s mindset about the role of the corporate seal has changed
Under previous regulations, when conducting investment in Vietnam, foreign investors and foreign-invested enterprises are required to open an invested capital account in a commercial bank operating legally in Vietnam. Dependent on the form of investment, invested capital accounts are classified into direct investment capital account or indirect investment capital account.
In the operation of enterprises, signing contracts is a regular work to be done before starting any transaction. Contracts to perform commercial activities are diverse and various and are becoming more and more complex. This also means that legal risks may increase. Once such risks arise, the contracting parties will suffer not only property losses but also serious and unpredictable legal consequences. So how to control these risks before signing the contracts?
The issue of social insurance (“SI”) unpaid by Enterprises is not new, but recently this has occurred more often than not, especially when the enterprise must pay for its employees’ compulsory SI based on wages and other relevant allowances from January 1st 2016 to December 31st 2017. When SI amounts are not fully collected, in addition to the State budget being influenced, employees face a number of issues affecting their legitimate interests. This article is going to analyze such aspect and tries to propose a solution in principle for enterprises to limit and help handle this problem.
Thuan Thien Company Limited (“Thuan Thien”) is a foreign-invested enterprise operating in the chemical manufacturing field. In its financial year of 2015, due to impact of the general regional economic context, Thuan Thien suffered an accumulated loss of VND 20 billion. In order to overcome this loss, Thuan Thien’s management decides to supplement the business lines of importation and wholesale of chemical admixtures besides its chemical manufacture. However, in submitting documents to the licensing body, Thuan Thien received an official dispatch replying that “a loss-making enterprise may not add new business lines”.
The shareholders of Bao Thanh Joint Stock Company (“Bao Thanh”) are about to sign a Share Transfer Contract (“Contract”) to transfer their shares in Bao Thanh to another partner. Under the Contract, there is a prerequisite condition that for the buyer to become a member of the Board of Management, the new member structure of the Board of Management must be certified by the licensing body. Nonetheless, when Bao Thanh discusses the announcement of this new member structure of the Board of Management with the licensing body, it replies that this is the company’s internal affair and it neither administers such matter nor requests the company to make any announcement or registration.