This document discusses the key considerations for starting up and operating a business in Vietnam from a legal and policy perspective. It covers choosing partners and corporate form, business registration procedures, corporate governance structures, intellectual property protection, taxation, employment laws, and incentives available for alternative energy projects. The document provides an overview of these topics to help guide business owners through the legal requirements for establishing and running a business venture in Vietnam.

1. 1
www.duanemorris.com
©2010 Duane Morris LLP. All Rights Reserved. Duane Morris is a registered service mark of Duane Morris LLP.
Duane Morris – Firm and Affiliate Offices | New York | London | Singapore | Los Angeles | Chicago | Houston | Hanoi | Philadelphia | San Diego | San Francisco | Baltimore | Boston | Washington, D.C.
Las Vegas | Atlanta | Miami | Pittsburgh | Newark | Boca Raton | Wilmington | Cherry Hill | Princeton | Lake Tahoe | Ho Chi Minh City | Duane Morris LLP – A Delaware limited liability partnership
HOANG MINH DUC – LE THANH NHAN
DUANE MORRIS VIETNAM LLC
START-UP AND OPERATION: FROM THE
PERSPECTIVES OF LEGAL AND POLICIES
1
www.duanemorris.com
Agenda:
2
• START-UP
• OPERATION
• PROTECTION OF INTELLECTUAL RIGHTS; AND
• POLICIES VIS À VIS ALTERNATIVE ENERGY
SECTOR
www.duanemorris.com
START-UP AND OPERATIONS
Major issues:
• Seeking partners/shareholders
• Determination of corporate form
• Determination of funding
• Business registration procedures
• Setting up of management apparatus
• Coming into operations and relevant transactions
• Restructuring/dissolving
3

2. 2
www.duanemorris.com
CHOOSE PARTNERS AND DETERMINE
CORPORATE FORM
First step: Choose your friends wisely
• Who can establish/contribute capital? The “negative approach”
principle
• Subjects are restricted/limited to contribute capital under the law on
bankruptcy and law on cadres and civil servants, etc.
Next step: Choose form of corporate:
What is corporate form?
• Limited liability company;
• Joint stock company;
• Partnership;
• Private enterprise;
What form of corporate should be chosen?
4
www.duanemorris.com
SELECTION OF CORPORATE FORMS
Key criterion:
• Limited vs. unlimited liability;
• Capability to increase rights in ownership and capital transfer
• Easy to call any additional capital, i.e. listing
• Easy/complicated corporate management;
• Statutory requirements
5
www.duanemorris.com
CAPITALISATION/FUNDING – KEY NOTES
• Types of capital; Equity vs. loan
• Legal capital, charter capital and initial investment
• Sources of capital: Loans or capital contribution from local/foreign
investors.
• Restriction on foreign investment and registration of offshore loans.
• Form and evaluation of capital contribution: Cash, gold, assets,
property rights
• Actual capital contribution of enterprises in Vietnam
6

3. 3
www.duanemorris.com
BUSINESS REGISTRATION PROCEDURES
• What are business registration procedures?
• Agree on major aspects of the to-be enterprise (e.g. – capitalization,
corporate form, etc.)
• Draft and prepare business documents
• Execute business documents
• Submit the application to business registration division
• Receive Business Registration Certificate
• Satisfy other business conditions
• Official operations
7
www.duanemorris.com
BUSINESS REGISTRATION –
HIGHTLIGHTED ISSUES
• Business lines;
• Encouraged business sectors (Please see Slide 19 for further
information);
• Roles of important corporate documents such as charter,
shareholder/member agreements; and voting ratio, etc.
• Question: Should the charter follow the template?
• Business conditions? Why are they required?
8
www.duanemorris.com
CORPORATE GOVERNANCE – OVERVIEW
• What is corporate governance and how it varies by corporate forms?
• Basic management levels (2 -3):
 Ownership level: General Meeting of
Shareholders/Council’s Members
 Governance level: Board of Directors/Members’ Council
 Management level: Director/Managers of departments and
divisions
 Supervision level: Board of Supervision and Supervisors
• Appointment of directors/officers of enterprises
• Roles of the memorandum of association and internal rules.
• Decision-making process
9

4. 4
www.duanemorris.com
CORPORATE GOVERNANCE – SOME
ISSUES
• Code of Ethics
• Principles of prudence, fidelity and loyalty for managers vs. crimes
under the Penal Code of Vietnam
• Related party transactions
• The “principal - agency” problems and solutions (bonus, penalty,
supervision)
• Piercing the corporate veil
10
www.duanemorris.com
CORPORATE GOVERNANCE IN A MULTI-
MEMBER LLC
• Number of members range from 2 to 50 (max).
• Two governance levels are (i) Members’ Council including members
who contribute their capital and (ii) Director. There may be a
supervision board
• Governance is conducted by the owners (themselves or through
proxies)
• Principles of decision making: 65% and 75%
• External capitalization is permitted however without issuance of
shares or being listed on stock exchange.
• Right of first refusal
• Conclusion: Suitable for family business with close relationship
between members. Limited in capital mobilization.
11
www.duanemorris.com
CORPORATE GOVERNANCE IN A SINGLE
MEMBER LLC
• Number of member: 01, an individual or organization/entity
• Two management levels are (i) members’ council/president and (ii)
managers. There may be a supervision board.
• Owner exercises his/her rights through his/her representatives (i.e.. –
members’ council vs. president).
• Decision-making process
• No reduction of charter capital.
• Conclusion: Convenient and flexible with high level of concentration
in management. Capital reduction is not however permitted.
12

5. 5
www.duanemorris.com
CORPORATE GOVERNANCE IN A JSC
• Number of shareholders (3 to n)
• 3-tier management: (i) general meeting of shareholders; (ii) board of
directors and (ii) officers (have or do not have supervision board)
• Issuance of shares to increase its capital. Diversified shares.
• Voting ratios: 65% and 75% in GMS level. Headcounts at the BOD
level.
• Shares are easily transferred => high liquidation
• Increase of capital: Convenient and easy
• High control mechanism => close governance is required
• Conclusion: Suitable for ventures that demand large capital and a
high level of management.
13
www.duanemorris.com
RESTRUCTURE, DISSOLUTION AND
BANKCRUPTCY
• Capital transfer: Freedom vs. restrictions
• Merger, consolidation, division, split of enterprise
• Sale of assets/ business operation
• Dissolution
• Bankruptcy
14
www.duanemorris.com
EMPLOYMENT
•
• Labor contracts are mandatory:
• Invalid labor contracts
• Internal labor rules and labor disciplines.
• Bonus and salary
• Working time and rest; overtime
15

6. 6
www.duanemorris.com
TAX
•
• Tax code
• Corporate income tax, value added tax, excise tax
• Tax rates
• Tax exemptions and reductions
• Administrative penalties with respect to tax/tax avoidance
16
www.duanemorris.com
INTELLECTUAL PROPERTY
• What is intellectual property right? What is industrial property right?
• IP rights:
 Copyrights and related rights
 Plant variety rights
 Industrial property rights
• Industrial property right
 Trademarks (in comparison with “Trade names”)
 Inventions and utility solutions
 Industrial designs; Geographic indications
 Designs of semi-conducting closed circuits
• Why must these rights be protected?
• Consequences if not protected (legal, business, etc.)
17
www.duanemorris.com
PROTECTION OF INTELLECTUAL
PROPERTY RIGHTS
• Registartion procedure
• “First to file” and “priority” principles
• Registration timing: Theory and practice
• Term of protection and extention.
• Trade and speculation of domain names (not covered by Intellectual
Property laws)
18

7. 7
www.duanemorris.com
TECHNOLOGY TYPES TO BE SUPPORTED
• Renewable energy technology: wind power, biomass power, power
using solid waste
• Sustainable agriculture: pollution treatment and environmental
protection
• Energy efficiency: selection of technologies with high energy
efficiency
• Transportation technology: applying new technologies and material
for increase of contsruction quality and saving investment cost
• Water management and purification: Water supply in rural areas
• Adaptation technology: Reduction of greenhouse gases (“GHG”)
emission
• Other climate techonology businesses
19
www.duanemorris.com
INCENTIVES
Basic incentives as follows:
• Taxation: Corporate income tax, export and import tax;
• Land approach: Land use fees or land rent shall be exempted or
reduced;
• Supports: Preferred loans from policy banks, Development
assistance funds, personnel training, market development, product
price support scheme, etc.
20
www.duanemorris.com
PREFERENCE LEGAL INSTRUMENTS
• Prime Minister’s decision No. 37/2011/QD-TTg on supporting
mechanism for development of power generation projects using wind
in Vietnam;
• Prime Minister’s decision No. 24/2014/QD-TTg on supporting
mechanism for development of power generation projects using
biomass in Vietnam;
• Prime Minister’s decision No. 31/2014/QD-TTg on supporting
mechanism for development of power generation projects using solid
waste in Vietnam;
21

8. 8
www.duanemorris.com
PREFERENCE LEGAL INSTRUMENTS
• Government’s decree No. 210/2013/ND-CP on incentive policies for
enterprises investing in agriculture and rural areas;
• National Assembly’s Law No. 50/2010/QH12 on economical and
efficient use of energy;
• Prime Minister’s Decision No. 1210/2014/QD-TTg on approval of
restructure plan for transport sector in the cause of industrialization,
modernization and sustainable development until the year of 2020;
• Prime Minister’s Decision No. 131/2009/QD-TTg on a number of
investment preference and promotion policies and the management
and exploitation of rural clean water supply works.
• Prime Minister's Decision No. 2139/2011/QD-TTg on approving the
national strategy for climate change.
22
www.duanemorris.com
DUANE MORRIS VIETNAM LLC
Thank you very much!
Duane Morris Vietnam LLC Duane Morris Vietnam LLC
Pacific Place, Unit V1307/08, 13th Floor, Suite 1503/04, Saigon Tower
83B Ly Thuong Kiet, Hoan Kiem District 29 Le Duan Street, District 1
Hanoi, Vietnam Ho Chi Minh City, Vietnam
Tel.: +84 4 39462200 Tel.: +84 8 3824 0240
Fax: +84 4 3946 1311 Fax: +84 8 3824 0241
Contact email: omassmann@duanemorris.com
23