The Enterprise Law 2020 has a lot of new regulations, supplements, and amendments. Although there are no provisions that directly affect foreign enterprises, there are many new points that affect the operation and management of foreign enterprises in Vietnam.
Enterprises are not required to notify seal samples
According to Article 44 of the Enterprise Law 2014, the enterprise is obliged to notify the seal sample to the business registration authority for public posting on the National Business Registration Portal.
However, this regulation has been officially abolished in the Enterprise Law 2020. Accordingly, Article 43 of the Enterprise Law 2020 has re-stipulated as follows:
- A seal includes a seal made at a seal-engraving establishment or a seal in the form of a digital signature in accordance with the law on electronic transactions (new regulations added in the Law 2020);
- The enterprise decides on the type, quantity, form, and content of the enterprise, its branches, representative offices, and other units (additional);
- The management and keeping of the seal shall comply with the provisions of the company's charter or the regulations issued by the enterprise, branch, representative office, or another unit of the enterprise with the seal (additional);
After being granted an enterprise registration certificate, foreign enterprises do not need to send a notice of seal sample to the Business Registration Office and decide on the form and number of seals themselves.
A limited company is allowed to issue bonds
Clause 4, Article 46, Clause 1, Article 74 of the Law on Enterprises 2020 has stipulated that limited liability companies with 2 or more members and one-member limited liability companies can issue bonds. Compared to the old regulations, the Enterprise Law 2020 allows limited companies to raise capital by issuing bonds.
Thus, a foreign company operating in the form of a limited liability company will be able to raise capital in the following forms:
- Increase the capital contribution of members;
- Receiving new members;
- Transformed into a joint-stock company;
- Release Stock.
Change of conditions to conduct the General Meeting of Shareholders
The General Meeting of Shareholders is conducted when the number of attending shareholders represents more than 50% of the total votes (Article 145 of the Enterprise Law 2020) instead of 51% previously.
This regulation is very beneficial for large-scale foreign companies, especially corporations or parent companies. Because, the difference between the new regulation and the old one is only 1% of the total number of votes, but for foreign companies with many shareholders, this is a relatively huge percentage of votes.
The manager is jointly responsible for the damage of the company
All managers of the enterprise and the legal representative of the enterprise shall be jointly liable for the damage caused to the enterprise.
This is a very new regulation of the Enterprise Law 2020, which has a direct impact on managerial positions in enterprises. Foreign enterprises in general and foreigners holding managerial positions or legal representatives of the company need to update this regulation.
Temporarily suspending business only need to notify 3 working days in advance
According to Article 200 of the Enterprise Law 2014, the time to notify business suspension is at least 15 days before the date of business suspension.
However, Clause 1, Article 206 of the Enterprise Law 2020 stipulates: Enterprises must notify in writing the business registration agency at least 03 working days before the date of suspension or resumption of business before the deadline.
In case a foreign enterprise wants to temporarily stop doing business in Vietnam, it only needs to notify 03 working days in advance.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.