Highlights of the Draft Amendment Law on Enterprises
On 28 October 2019, the Government of Vietnam submitted a report (“Draft Law”) to the National Assembly with the aim of proposing its amendments and supplements to several articles of the current Law on Enterprise for the National Assembly to consider. Accordingly, the main purpose of the Draft Law is to improve the quality of the business environment in Vietnam and, if passed, the Draft Law will be effective from 1 January 2021.
The salient differences between two laws are as follows:
|Law on Enterprise 2014||Draft Law|
|Report of change of information about enterprise managers||An enterprise must report to the business registration office if there is any change in information of:||This requirement is abolished and will reduce fees relating to information report for enterprises.|
|Company seal||The enterprise is obligated to notify the business registration office of the sample seal before use.||This requirement is abolished. The Government is giving enterprises more freedom to use company seal as they see fit. This might reduce unnecessary procedure in the course of business.|
|Procedures for online business registration||Not regulated.||The Draft Law would enable online business registration with electronic documents without the need for filing additional documents for registration.|
|Legal representatives||Limited liability companies and shareholding companies may have more than one legal representative, however, the law is silent on who shall be the legal representative having full powers of the enterprise in the event the neither company charter nor official decision on the distinction of rights and obligations of each legal representative specifies that.||Either of the legal representatives shall be the legal representative having full powers of the enterprise as may be requested by courts, arbitrators or third parties in the event the neither company charter nor official decision on the distinction of rights and obligations of each legal representative specifies that.|
Under the current law, in the event a case is filed against a company, none of the legal representatives of such company might be willing to be representative having full powers of the enterprise, and thus, prolong the already time-consuming process. The Draft Law could mitigate this by providing a solution for the above-mentioned cases.
Overall, the Draft Law will be promulgated to increase the efficiency of business environment in Vietnam. This could be done by decreasing the number of unnecessary steps provided in the Law on Enterprise 2014 such as the report of change of information about enterprise managers and registration of company seal. The Draft Law would also offer a clearer guideline and solution for confusing provisions in the current law on enterprise.
This alert is for general information only and is not a substitute