28 August 2020

Pursuant to the Criminal Code 2015 (as amended in 2017), there have been 33 economic offenses that a commercial legal entity may be subject to criminal liability. The Criminal Code 2015 has also provided two main types of penalties and additional penalties applicable to a commercial legal entity committing crimes. To ensure the feasibility and applicability of regulations in respect of the criminal liability of the commercial legal entities, the Government of Vietnam also promulgated Decree No. 44/2020/ND-CP (“Decree 44”) regulating coercive judgment enforcement measures against commercial legal entities which took effect on 1 June 2020.

According to Decree 44, if commercial legal entities fail to (i) comply with or (ii) duly comply with the Court’s judgments and decisions already in force, they will be subject to the coercive judgment enforcement measures as follows:

Account freeze

  • This measure may be applied to commercial entities that have accounts opened at credit institutions, state treasury, securities companies, or Vietnam Securities Depository.
  • Account freezing could be implemented in the following cases: (i) carry out coercive enforcement of serving of the decision to suspend operation (in case of suspension of all business line); (ii) carry out coercive enforcement of serving of the decision on prohibition from operating in certain business line (in case of prohibition from operating in all business line); prohibition from raising capital; (iii) carry out coercive enforcement of serving of the judicial measure.

Property distrain

  • The property that is to be distrained includes property that is put up as collateral and held by a third party, pledged or mortgaged property, contributed capital, vehicles, intellectual property rights, property subject to registration of ownership or security interests, land use right and assets attached to the land.
  • Decree 44 also identifies properties that is not allowed to be distrained as set out at Article 20 of Decree 44.

Impoundment of records, documents, and devices containing electronic data and impoundment or withdrawal of seals of corporations

In addition, there are some notable points:

  • Decree 44 shall not govern on (i) the coercive judgment for the fine specified in Article 77 of the Criminal Code 2015 (as amended in 2017) and (ii) judicial measures against commercial legal entities specified in Article 82.1(a) of the Criminal Code 2015 (as amended in 2017).
  • The coercive judgment enforcement is only carried out after receipt of the written decisions on coercive enforcement from the competent authority.
  • A commercial legal entity may be subject to one or more enforcement measures at the same time if a single coercive enforcement measure does not guarantee their execution.

If you have any questions or require any additional information, please contact Loan Danh of ZICO Law Vietnam (a member of ZICO Law).

This alert is for general information only and is not a substitute for legal advice.


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