Originally published 8 April 2011
Keywords: Vietnam, real estate business enterprise, Ministry of Construction, legal capital, Law on Enterprises,
On 2 March 2011, the Ministry of Construction (MOC) sent Official Letter No. 287/BXD-QLN in reply to Official Letter No. 436/BKHDT/DKKD dated 21 January 2011 of the Ministry of Planning and Investment (MPI) regarding application files to register the real estate business line.
The MOC provided the following opinion:
In order to conduct real estate business, an enterprise must have legal capital of VND 6 billion (about USD 285,000). Under legislation on enterprises and on business registration, a written certification of such legal capital must be issued by the competent body.
The application file for a legal capital certificate from a currently operating enterprise wishing to add real estate business to its business lines, has to contain a certificate from an independent auditor regarding the current amount of capital belonging to such enterprise as recorded in its most recent financial statements (namely statements of the year of registration or the year immediately preceding the year of registration).
However, Article 10.4 of Decree 102/2010/ND-CP of the Government dated 1 October 2010 implementing the Law on Enterprises (Decree 102) provides that "In the case of an enterprise registering an additional line of business requiring legal capital, it shall not be necessary to have certification from a competent body or organisation about such legal capital if the equity recorded in the total list of assets of the enterprise on a date within three months prior to the date of lodging the file is equal to or more than the stipulated level of legal capital".
For the sake of uniformity in application files from enterprises wishing to register the real estate business line, the MOC suggests uniform application of the above provision.
In the near future, in order to implement the instructions of the Government in Resolution 55/NQ-CP dated 14 December 2010 on simplification of administrative procedures in the real estate business sector, the MOC is to research and amend the provision on the level of legal capital required when establishing a real estate business enterprise, and will amend some of the matters regarding certification of capital for real estate business to ensure consistency with Decree 102.
The MOC has requested the MPI to consider the above issues and provide guidelines to localities in terms of implementation.
Visit us at www.mayerbrown.com
Copyright 2011. JSM, Mayer Brown International LLP and/or Mayer Brown LLP. All rights reserved. Mayer Brown is a global legal services organization comprising legal practices that are separate entities ("Mayer Brown Practices"). The Mayer Brown Practices are: JSM, a Hong Kong partnership, and its associated entities in Asia; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales; and Mayer Brown LLP, a limited liability partnership established in the United States. The Mayer Brown Practices are known as Mayer Brown JSM in Asia.
This article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein. Please also read the JSM legal publications Disclaimer.