DRAFT DECREE TO IMPLEMENT THE NEW LAW ON ENTERPRISES

LEGAL UPDATE

The Law on Enterprises 2020 will come into effect on 1 January 2021 (2020 LoE). However, the majority of its provisions would need further guidance through implementing regulations and guidelines. Please read our update on the 2020 LoE for general information.

On 30 September 2020, the Ministry of Planning and Investment released a draft decree (Draft Decree) guiding the implementation of the 2020 LoE and replacing Decree No. 78/2015/ND-CP as amended by Decree No. 108/2018/ND-CP, on enterprise registration (Decree 78). The Draft Decree is expected to also come into effect on 1 January 2021 (or maybe 1-2 months later subject to the actual situation) .

In general, the content of the Draft Decree is similar to that of Decree 78. In this legal update, we will set out the most remarkable changes which are either new or have changed in comparison with Decree 78.

1. Online Enterprise Registration Procedure

Similar to Decree 78, the Draft Decree defines online enterprise registration as a person (i.e. legal representative) registering a new establishment of an enterprise or the enterprise itself registering changes in its enterprise registration contents with the competent business registration authority, and the content of such registration shall be retained in the National Enterprise Registration Database .

Under Decree 78, after the person who conducts the procedures for enterprise registration (Applicant) has completed sending an online application dossier, the Applicant shall receive a receipt by email that the file has been sent. The Business Registration Office (BRO) will send an email requiring amendments or supplements of the dossier if the application dossier is invalid or insufficient. If such dossier satisfies all the conditions, the BRO will issue a notice via email to the enterprise regarding issuance of its enterprises registration certificate (ERC) and/or relevant written confirmation. After receipt of such notice, the Applicant will have to submit a hard copy of the application dossier enclosing the receipt for the online application at the BRO. The BRO will compare the hard copy dossier with that of the online application dossier. If the content matches, then the ERC will be issued. If the paper file and the electronic file are different, the BRO will send a notice requiring the enterprise to change or amend the files for consistency.

The important change is that the Draft Decree abolishes the requirement to submit a complete paper application dossier for enterprise registration in case of online submission. This effort to reduce administrative burden for enterprises will be welcomed by the business community.

2. Enterprise Registration by Securities Company and Fund Management Company

To make the 2020 LoE consistent with the 2019 Law on Securities.[1] the Draft Decree supplements provisions on the application dossiers and procedures for enterprise registration by a securities company or fund management company. These companies need to include a valid copy of securities business operation and establishment license or letter of approval from the State Securities Commission in the application dossier.

3. Suspension of Enterprise Registration Procedures

Pursuant to the Draft Decree, an enterprise may suspend or withdraw the business registration when the application dossier for enterprise registration has not been approved on the National Enterprise Registration Portal. For such purpose, the enterprise shall send a written request to suspend the business registration procedures to the BRO where the application dossier was submitted. The BRO will consider and issue a notice on suspension of the enterprise registration procedures and cancel the application dossier.

This provision meets market demand where enterprises sometimes would like to withdraw their application dossiers for registration enterprise, which however has not been specifically stipulated by the current provisions.

4. Business Commencement Date

Pursuant to Decree 78, an enterprise may commence its business operation as from the date of issuance of ERC, except the case where any of its registered business lines is conditional (in which such relevant conditions must be satisfied prior to the commencement of its business operation). The Draft Decree also provides the same, and in addition, it further provides that an enterprise may register its business commencement date as a date later than the date of issuance of ERC. This new provision seems merely to regulate the actual procedure which is currently applied (i.e. in the applicable form of the application for registration of enterprise under the current regulations).

5. Legal Status of Enterprises

The Draft Decree introduces some definitions in relation to the enterprise’s legal status such as

1. Temporary suspension of business,

2. Undergoing dissolution or bankruptcy procedures,

3. Dissolved or bankrupt,

4. No longer doing business at the registered address,

5. Notice of breach requiring revocation of its ERC, or

6. Active.

This enterprise’s legal status will be recorded on the National Enterprise Registration Database to support the competent authorities, individuals, and organisations in researching information on a certain enterprise.

Contact Information

Should you have any questions, please feel free to contact our lawyers at the below email addresses.

Mark Oakley / Managing Partner
mark.oakley@acsvlegal.com

Phuong Huynh / Senior Associate

phuong.huynh@acsvlegal.com

© 2020 ACS Legal Vietnam Company Limited – All rights reserved

This legal update is not an advice and should not be treated as such

Download pdf: Draft Decree to Implement New Law on Enterprises

[1]See our update 2019 Law on Securities expected to develop Vietnam's securities market.