This edition summarises changes to Vietnam's corporate law to take effect on 1 January 2021.

1. ASIA COUNSEL INSIGHTS
August 2020
NEW LAW ON ENTERPRISES
On 17th June 2020, the National
Assembly of the Socialist Republic of
Vietnam adopted the Law on Enterprise
No. 59/2020/QH14 (“New LOE”), which
will come into effect from 1 January
2021. The New LOE will replace the
current Law on Enterprise No.
68/2014/QH13 dated 26 November 2014
(“Current LOE”). This insight provides a
brief summary of the key changes to be
brought in by the New LOE.
will be the legal representative of the
company.
Capital contribution
If a capital contribution member fails to
contribute its charter capital within 90
days after the issuance of an enterprise
registration certificate, the MLLC must
register a charter capital reduction
within 30 days, instead of 60 days under
the Current LOE, after the expiry of the
90-day period.
Meeting minutes
If the meeting minutes are not signed by
the chairman or the secretary of an MC,
the meeting minutes may still be valid if
it is signed by all the other attending
members and includes all the required
contents under the law.
Capital handling in special cases
In case a member of an MLLC is
declared to be missing, the New LOE
clarifies his/her rights and obligations will
be performed by his/her asset manager
(instead of his/her asset manager
automatically becoming a member in
his/her place under the Current LOE).
Single-member LLC (SLLC)
Organisational structure
The New LOE removes the
requirement for a SLLC to have an
inspector if the SLLC is owned by an
organisation, unless the SLLC is a
state-owned enterprise.
The New LOE also requires that at
least one legal representative of a
SLLC owned by an organisation must
be the chairman of the members’
council, the company chairman or
the director/general director; and if
the charter of the SLLC does not have
any other relevant provision, the
chairman of the members’ council or
the company chairman will be the
legal representative of the company.
Voting in the members’ council (MC)
It should be noted that under the
Current LOE, passing a MC’s
resolution in a SLLC is determined
based on the number of attending
members. However, taking into the
consideration that the owner of the
SLLC may want to assign more
voting power to certain MC
members, the New LOE will allow a
resolution to be passed depending on
the number of votes that the MC
members are assigned by the owner.
In this regard, the resolution of the MC
in a SLLC is passed if:
• it is approved by more than 50% of
the attending members OR
approved by those attending
members who hold more than 50%
of the votes;
• in terms of resolution on charter
amendment, re-organisation of
the company, partial OR whole
assignment of the charter capital,
it is approved by at least 75% of the
attending members OR approved
by those attending members who
hold 75% of the votes or more.
Multi-member LLC (MLLC)
Organisational structure
At least one of the legal representatives
must be the chairman of members’
council or director/general director of
that MLLC; and if its charter does not
contain any other relevant provision,
the chairman of the members’ council
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E minh@asia-counsel.com
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2. ASIA COUNSEL INSIGHTS
August 2020
and after the offer of bond to the
stock exchange.
State-owned Enterprises
Pursuant to the Current LOE, “State-
owned enterprise” means an
enterprise in which the State holds
100% of the charter capital. This
definition has been changed under
the New LOE, where an enterprise is
considered as a State-owned
enterprise if it has more than 50% of its
charter capital or shares with voting
rights owned by the State. As such, a
state-owned enterprise can either be
a single-member LLC, a multi-
member LLC, or a joint-stock
company under the New LOE.
Administrative Procedures
Seal specimen registration
Under the New LOE, an enterprise is
no longer required to notify its seal
specimen to the business registration
authority before use. The New LOE
also officially recognizes the digital
signatures provided under the Law on
Electronic Transactions as a type of
corporate seal and have the same
legal validity as the traditional seal.
Notification of managers
An enterprise is no longer required to
make notification to the business
registration authority of any change
on the name, address, nationality
and identification information of a
board member, the inspector or the
inspection committee member.
Business temporary suspension
An enterprise must notify the
business registration authority in
writing no later than three business
days before the date of business
temporary suspension, instead of 15
days as per the Current LOE.
If a member becomes incapacitated,
his/her rights and obligations will be
performed by his representative
(instead of his guardian under the
Current LOE).
Joint Stock Company (JSC)
Organisational structure
The chairman of the Board of
Management (“BOM”) of a state-
owned JSC is not allowed to
concurrently hold the title of
director/general director of that JSC.
Independent member of the BOM
Under the New LOE, an individual is
elected as an independent member
of the BOM for no more than two
consecutive office term, while the
Current LOE does not provide any
limitation.
Minority shareholders
A shareholder or a group of
shareholders holding 5% or more of
the common shares, or a lower
percentage provided by the charter
of the company is entitled to a
number of rights including request the
convening of a general meeting of
shareholders or to request the
inspection committee to investigate
the management of the company.
Under the Current LOE this threshold is
10% and requires the shareholder to
own shares in the company for more
than 6 months.
Shareholder resolutions
An ordinary resolution is passed if
more than 50% of eligible
shareholders attending the meeting,
approves the resolution. Under the
Current LOE this threshold is 51%.
Holders of preference shares
Preference shareholders are now
permitted to vote in any resolution
that causes adverse changes to their
rights and obligations. Such
resolution will only be passed if it is
approved by the shareholders
holding at least 75% of the respective
preference shares. Under the
Current LOE, the preference
shareholders (except for voting-
preferred shareholders) have no
voting rights.
Non-Voting Depositary Receipt
The New LOE introduces the concept
of ordinary shares with no voting rights,
which are called non-voting
depositary receipt (NVDR). Although
there is no definition of NVDR under
the New LOE, it is stipulated that
ordinary shares which are used as an
underlying asset to issue a NVDR are
called underlying ordinary shares.
NVDR gives its holder the economic
interests and obligations
corresponding to the underlying
ordinary share, except for voting right.
Given it is unclear how the NVDR will
be implemented, it is expected there
will be further guiding legislations on
this scheme.
Private bond placement
The New LOE provides regulations on
conditions and procedures for offer
and transfer of private corporate
bonds. A JSC wishing to offer bonds
through a private placement must
satisfy a number of conditions
including: (i) an audited financial
statement for the preceding year; (ii)
no outstanding due debt within 3
years prior to the offer of bond; (iii)
maintaining the safety ratio as
provided under relevant law. The
GMS and BOM must approve the
proposal for offer of the bond and
must publicize the information prior