Nguyen Chi Cong, LL.D., Hoang Thi Song Mai, LL.B.
Department of Legal Affairs and Research Administration, Supreme People’s Court
The 2015 Penal Code (revised in 2017) (the Code) is Vietnam’s first and only code that holds commercial legal persons criminally liable for committing criminal acts. This is a breakthrough in the country’s criminal justice policy and leads to a substantial change in the general perception about crime and punishment. It also applies various penalties to commercial legal persons found liable for crimes[1], including three principal penalties (fine, suspension from operation, and termination of operation), three additional penalties (prohibition from doing business or operating in certain areas, prohibition from raising capital, and fine, when not imposed as a principal penalty), and five judicial measures (confiscation of objects and money directly related to the crime; return of property, redress of or compensation for damage; coerced public apology; coerced restoration to the original state; and coerced application of measures to redress and prevent further consequences).
This article focuses on penal liability of commercial legal persons for offenses against the economic management order in Vietnam and applicable penalties.
Penal liability of commercial legal persons
In addition to prescribing offenses for which a commercial legal person may be held liable in 22 articles, the Code amends the previous Code’s provisions regarding the basis of penal liability, handling principles, definition of crime, penalties and judicial measures applicable to corporate offenders. It devotes a whole chapter[2] to providing for the penal liability, penalties, judicial measures, extenuating and aggravating circumstances, penalty exoneration, and expungement of criminal records of corporate offenders.
Offenses against the economic management order for which corporate offenders may be held liable
Smuggling[3]
A commercial legal person may be criminally charged for illegally trading across the border or from non-tariff areas into the inland or vice versa in goods, Vietnamese currency, foreign currencies, precious metals or gemstones valued at VND 200 million to under 300 million or in relics or antiques valued at under VND 200 million. For this crime, it may be fined VND 300 million to 15 billion, suspended from operation for six months to three years, forced to terminate its operation, or prohibited from conducting business or operating in certain areas or raising capital for one year to three years.
Illegally transporting goods and currencies across the border[4]
A commercial legal person may bear penal liability for illegally transporting across the border or from non-tariff areas into the inland or vice versa goods, Vietnamese currency, foreign currencies, precious metals or gemstones valued at VND 200 million to under 300 million or in relics or antiques valued at under VND 200 million. For this crime, it may be imposed a fine of VND 200 million to five billion or be prohibited from conducting business or operating in certain areas or raising capital for one year to three years.
Producing or trading in prohibited goods[5]
A commercial legal person may be held liable for producing or trading in 50 kilos to under 100 kilos or 50 liters to under 100 liters of banned pesticides; trading in 1,500 packs to under 3,000 packs of illegally imported cigarettes; producing or trading in 6 kilos to under 40 kilos of firecrackers; producing or trading in other banned goods valued at VND 100 million to under 300 million or gaining an illicit profit of VND 50 million to under 200 million; producing or trading in unpermitted goods valued at VND 200 million to under 500 million, or gaining an illicit profit of VND 100 million to under 300 million.
Its liability may be aggravated if a commercial legal person commits this crime in an organized or professional manner or involving prohibited goods in a large quantity exceeding the prescribed one or it earns an illicit profit exceeding the prescribed level. For this crime, it may pay a fine of VND 1 billion to 9 billion, be suspended from operation for six months to three years, forced to terminate its operation, or prohibited from conducting business or operating in certain areas or raising capital for one year to three years.
Stockpiling or transporting prohibited goods[6]
A commercial legal person may be criminally charged for stockpiling or transporting 50 kilos to under 100 kilos or 50 liters to under 100 liters of banned pesticides; 1,500 packs to under 3,000 packs of illegally imported cigarettes; 6 kilos to under 40 kilos of firecrackers; other banned goods valued at VND 100 million to under 300 million or gaining an illicit profit of VND 50 million to under 200 million; unpermitted goods valued at VND 200 million to under 500 million, or gaining an illicit profit of VND 100 million to under 300 million.
Its liability may be aggravated if a commercial legal person commits this crime in an organized or professional manner or involving prohibited goods in a large quantity exceeding the prescribed one or it earns an illicit profit exceeding the prescribed level. For this crime, it may pay a fine of VND 300 million to 5 billion, be suspended from operation for six months to three years, forced to terminate its operation, or prohibited from conducting business or operating in certain areas or raising capital for one year to three years.
Producing or trading in counterfeit goods[7]
A commercial legal person may face a criminal charge for producing or trading in counterfeit goods of a quantity equivalent to that of genuine goods or goods with the same technical specifications and uses valued at between VND 30 million and under 150 million. Regardless of the value of counterfeit goods it produces or trades in, a commercial legal person may also be charged if inflicting injury to, or causing harm to the health of, a natural person with an injury rate of 31 to under 60 percent, gaining an illicit profit of VND 50 million to under 100 million or causing a property damage of VND 100 million to under 500 million.
The aggravating circumstances include committing this crime in an organized or professional manner, involving counterfeit goods of large value or earning an illicit profit exceeding the prescribed level, causing a human death or inflicting a human injury of a rate higher than the aforesaid rate, or causing a property damage heavier than the aforesaid level. For this crime, a commercial legal entity may be imposed a fine of between VND 1 billion and 9 billion, suspended from operation for six months to three years, forced to terminate its operation, or prohibited from conducting business or operating in certain areas or raising capital for one year to three years.
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| Defendant Nguyen Ngoc Su (second from left), former Chairman of the Members’ Council of Vietnam Shipbuilding Industry Corporation (Vinashin), and his accomplices at the first-instance trial for their charge of abusing positions and powers to appropriate property at Vinashin__Photo: Van Diep/VNA |
Producing or trading in counterfeit food, foodstuff or food additives[8]
A commercial legal person may face a criminal charge for producing or trading in counterfeit food, foodstuff or food additives, regardless of the value or quantity of, or harm caused by, such counterfeit goods.
Its liability may be aggravated if a commercial legal person commits this crime in an organized or professional manner or in dangerous recidivism, or trades in counterfeit goods across the border or of a quantity equivalent to that of genuine goods or goods with the same technical specifications and uses valued at least VND 150 million or to gain an illicit profit of at least VND 100 million, cause a human death or inflict a human injury of a rate of at least 31 percent or cause a property damage of at least VND 100 million. For this crime, it may be fined VND 1 billion to 18 billion, be suspended from operation for six months to three years, forced to terminate its operation, or prohibited from conducting business or operating in certain areas or raising capital for one year to three years.
Producing or trading in counterfeit medicines[9]
A commercial legal person may face a criminal charge for producing or trading in counterfeit curative medicines or preventive medicines, regardless of the value or quantity of, or harm caused by, such counterfeit goods.
Its liability may be increased if a commercial legal person commits this crime in an organized or professional manner or in dangerous recidivism, or trades in counterfeit goods across the borders or of a quantity equivalent to that of genuine goods or goods with the same technical specifications and uses valued at least VND 150 million or to gain an illicit profit of at least VND 100 million, cause a human death or inflict a human injury of a rate of at least 31 percent or cause a property damage of at least VND 100 million. For this crime, it may be fined VND 1 billion to 20 billion, suspended from operation for one year to three years, forced to terminate its operation, or prohibited from conducting business or operating in certain areas or raising capital for one year to three years.
Producing or trading in counterfeit animal feeds, fertilizers, veterinary drugs, pesticides, plant varieties or animal breeds[10]
A commercial legal person may be examined for penal liability for producing or trading in counterfeit animal feeds, fertilizers, veterinary drugs, pesticides, plant varieties or animal breeds of a quantity equivalent to that of genuine goods or goods with the same technical specifications or uses valued at VND 30 million to under 150 million. Regardless of the value of counterfeit goods it produces or trades in, a commercial legal person may also be criminally charged if causing property damage of VND 100 million to under 500 million, or gaining an illicit profit of VND 50 million to under 100 million.
Its liability may be aggravated if a commercial legal person commits this crime in an organized or professional manner or in dangerous recidivism, or trades in counterfeit goods across the border or of a quantity equivalent to that of genuine goods or goods with the same technical specifications and uses valued at least VND 150 million or to cause a property damage of at least VND 500 million or to gain an illicit profit of at least VND 100 million. For this crime, it may pay a fine of between VND 1 billion and 15 billion, be suspended from operation for six months to three years or forced to terminate its operation or prohibited from conducting business or operating in certain areas or raising capital for one year to three years.
Speculation[11]
A commercial legal person may be examined for penal liability for taking advantage of the scarcity of goods or creating a sham scarcity of goods valued at VND 500 million to under 1.5 billion during a natural disaster, an epidemic, a war or a situation of economic hardship to buy up goods on the list of valorized-price goods or the list of state-priced goods in order to resell them for gaining an illicit profit of VND 100 million to under 500 million.
Its liability may be aggravated if a commercial legal person commits this crime in an organized manner or in dangerous recidivism or involving a goods value of at least VND 1.5 billion, or to gain an illicit profit of at least VND 500 million, or to exert a bad impact on social security, order and safety. For this crime, it may be fined VND 300 million to 9 billion, or be prohibited from conducting business or operating in certain areas or raising capital for one year to three years.
Tax evasion[12]
A commercial legal person may be criminally charged for evading a tax amount of VND 200 million to under 300 million through failing to lodge tax registration dossiers or lodging tax declaration dossiers 90 days later than the required deadline, failing to record in account books revenues related to the determination of payable tax amounts, failing to issue invoices when selling goods or providing services or writing in sales invoices a value lower than the value actually paid for the goods sold or services provided, using unlawful invoices to reduce payable tax amounts or increase refundable tax amounts, making incorrect declarations as compared to the actually imported or exported goods, failing to make tax declarations or making incorrect tax declarations for imported or exported goods, colluding with goods consignors to import goods, or using tax-free goods for improper purposes without informing tax agencies of the change of goods use purposes.
Its liability may be aggravated if a commercial legal person commits this crime in an organized manner or in dangerous recidivism or involving a tax amount of at least VND 300 million. For this crime, it may face a fine of between VND 300 million and 10 billion, or be suspended from operation for six months to three years or prohibited from conducting business or operating in certain areas or raising capital for one year to three years.
Illegally printing, issuing, or purchasing and selling invoices and documents of payment to the state budget[13]
A commercial legal person may be held liable for illegally printing, issuing, purchasing or selling invoices and documents of payment to the state budget, involving 50 to under 100 blank invoices or documents or 10 to under 30 filled invoices and documents or to earn an illicit profit of VND 30 million to under 100 million.
Its liability may be aggravated if a commercial legal person commits this crime in an organized or professional manner or in dangerous recidivism or involving at least 100 blank invoices or documents or at least 30 filled invoices and documents or to earn an illicit profit of at least VND 100 million or cause a damage of at least VND 100 million to the state budget. For this crime, it may be fined VND 100 million to 1 billion, forced to terminate operation, or prohibited from conducting business or operating in certain areas or raising capital for one year to three years.
Intentionally disclosing false information or concealing information in securities activities[14]
A commercial legal person may be criminally charged for intentionally disclosing false information or concealing information in securities offering, listing and trading, organization of the securities market, or securities registration, deposit, clearing or payment, thus causing a damage of VND 1 billion to 3 billion to investors or gaining an illicit profit of VND 500 million to 1 billion.
Its liability may be increased if a commercial legal person commits this crime in an organized manner or in dangerous recidivism or to gain an illicit profit of at least VND 1 billion or cause a loss of at least VND 3 billion to investors. For this crime, it may pay a fine of VND 500 million to 5 billion, or be prohibited from conducting business or operating in certain areas or raising capital for one year to three years.
Using internal information for securities trading[15]
A commercial legal person may be criminally charged for using information relating to a public company or public fund which has not yet been disclosed and, if being disclosed, is likely to greatly affect the price of securities of such public company or public fund for securities trading, or revealing or providing such information or advising another person to trade in securities on the basis of such information, thereby gaining an illicit profit of VND 300 million to 1 billion or causing a damage of VND 500 million to under 1.5 billion to investors.
Its liability may be aggravated if a commercial legal person commits this crime in an organized manner or in dangerous recidivism or to gain an illicit profit of at least VND 1 billion or cause a damage of at least VND 1.5 billion to investors. For this crime, it may face a fine of between VND 1 billion and 10 billion, or be prohibited from conducting business or operating in certain areas or raising capital for one year to three years.
Manipulating the securities market[16]
A commercial legal person may be examined for penal liability for committing one of the following acts to gain an illicit profit of VND 500 million to under 1.5 billion or cause a loss of VND 1 billion to under 3 billion to investors: (i) using trading accounts or colluding with another to trade in securities on a continuous basis in order to create sham supply and demand; (ii) colluding with another to place orders to buy and sell securities of the same type on the same trading day or without actual transfer of ownership or with ownership transferred only among group members to create sham securities prices or supply and demand; (iii) continuously buying or selling securities with a controlling quantity at the opening or closing time of the market in order to set a new closing or opening price for such type of securities on the market; (iv) conducting securities transactions through colluding with or inciting another person to continuously place orders to buy and sell securities to greatly affect securities supply and demand or securities prices or manipulate securities prices; (v) giving opinions directly or via the mass media about a type of securities or securities issuer in order to influence the price of such securities after conducting transactions and holding a certain position for such securities; and (vi) using other methods or committing other acts of conducting transactions to create sham supply and demand or manipulate securities prices.
Its liability may be aggravated if a commercial legal person commits this crime in an organized manner or in dangerous recidivism or to gain an illicit profit of at least VND 1.5 billion or cause a loss of at least VND 3 billion to investors. For this crime, it may pay a fine of between VND 2 billion and 10 billion, or be forced to terminate its operation or prohibited from conducting business or operating in certain areas or raising capital for one year to three years.
Committing frauds in insurance business[17]
A commercial legal person may be examined for penal liability for committing one of the following acts to appropriate an insurance sum of VND 20 million to under 100 million or cause a damage of VND 50 million to under 200 million: (i) colluding with the insured to settle insurance claims or pay insurance sum in contravention of law; (ii) forging documents or intentionally falsifying information to refuse to pay compensation or insurance sum although the insured event has occurred; (iii) forging documents or intentionally falsifying information in compensation or benefit claim dossiers; and (iv) causing damage to its own property in order to enjoy insurance benefits.
Its liability may be aggravated if a commercial legal person commits this crime in an organized manner or in dangerous recidivism, with a sophisticated or treacherous trick, or to appropriate an insurance sum of at least VND 500 million or cause a damage of at least VND 1 billion. For this crime, it may be fined between VND 200 million and 7 billion, or be prohibited from conducting business or operating in certain areas or raising capital for one year to three years.
Evading payment of social insurance, health insurance, unemployment insurance premiums for employees[18]
A commercial legal person that is obliged to pay social insurance, health insurance or unemployment insurance premiums for its employees may be examined for penal liability for committing a deceitful act or employing another trick to evade paying or insufficiently pay for at least six months an insurance premium of VND 50 million to under 300 million or for 10 to under 50 employees.
Its liability may be aggravated if a commercial legal person commits this crime at least twice or to evade paying insurance premiums totaling at least VND 300 million or for at least 50 employees. For this crime, it may be fined between VND 200 million and 3 billion.
Violating regulations on competition[19]
A commercial legal person may be criminally charged for committing one of the following acts to cause a damage of VND 1 billion to under 5 billion to other persons or gain an illicit profit of VND 500 million to under VND 3 billion: (i) entering into an agreement to prevent or inhibit another enterprise from participating in the market or developing business; (ii) entering into an agreement to exclude from the market another enterprise other than a party to the agreement; and (iii) entering into an agreement to restrict competition when the parties to the agreement hold an aggregate share of 30 percent or more of the relevant market, fix prices of goods or services, divide the consumer market or supply sources of goods or services, limit or control the volume of goods or services, restrict technical and technological development or investment, impose conditions on another enterprise for signing a goods or service purchase and sale contract or force another enterprise to accept an obligation not directly related to the object of the contract.
Its liability may be aggravated if a commercial legal person commits this crime at least twice, with a sophisticated or treacherous trick, through abusing its dominant market position or monopolistic position, or to gain an illicit profit of at least VND 3 billion or cause a damage of at least VND 5 billion to other persons. For this crime, it may be imposed a fine of between VND 1 billion and 5 billion, suspended from operation for six months to two years, or prohibited from conducting business or operating in certain areas or raising capital for one year to three years.
Infringing upon copyright and related rights[20]
A commercial legal person may be criminally charged for intentionally committing either of the following acts, thus infringing upon copyright and related rights currently under protection in Vietnam on a commercial scale or gaining an illicit profit of VND 50 million to under 300 million, causing a damage worth VND 100 million to under 500 million to copyright and related rights holders, or involving infringing goods valued at VND 100 million to under 500 million: (i) reproducing works, phonograms or video recordings; and (ii) distributing to the public copies of works, phonograms or video recordings. For this crime, it may pay a fine of between VND 300 million and 3 billion, be suspended from operation for six months to two years, or prohibited from conducting business or operating in certain areas or raising capital for one year to three years.
Infringing upon industrial property rights[21]
A commercial legal person may be criminally charged for intentionally infringing upon industrial property rights over a trademark or geographical indication currently under protection in Vietnam with violating goods bearing counterfeit trademarks or geographical indications on a commercial scale, gaining an illicit profit of VND 100 million to under VND 300 million or causing a damage worth VND 200 million to under 500 million to the trademark or geographical indication owner, or involving an infringing goods value of VND 200 million to under 500 million.
Its liability may be aggravated if a commercial legal person commits this crime in an organized manner or at least twice, or to gain an illicit profit of at least VND 300 million or cause a damage worth at least VND 500 million to the trademark or geographical indication owner, or involving an infringing goods value of at least 500 million. For this crime, it may face a fine of between VND 500 million and 5 billion, or be suspended from operation for six months to two years or prohibited from conducting business or operating in certain areas or raising capital for one year to three years.
Breaching regulations on research, exploration and exploitation of natural resources[22]
A commercial legal person may be criminally charged for violating the regulations on research, exploration and exploitation of natural resources on the mainland or islands, in the internal waters, territorial sea, exclusive economic zone, continental shelf or air space of Vietnam while having no permit or acting in violation of its permit in the following cases: (i) gaining illicit profits of VND 300 million to under VND 500 million from research, exploration and exploitation of water resources, oil and gas or other minerals or involving minerals valued at 700 million to under VND 1 billion; (ii) inflicting injury to, or causing harm to the health of, another person with an injury rate of 61% or higher; (iii) inflicting injury to, or causing harm to the health of, two or more persons with an aggregate injury rate of between 61% and 121%; and (iv) gaining illicit profits of VND 100 million to under VND 300 million from research, exploration and exploitation of water resources, oil and gas or other minerals or involving minerals valued at 500 million to under VND 700 million but having been administratively sanctioned for one of the acts prescribed in this Article or convicted of this offense and not had such conviction expunged.
The aggravating circumstances include gaining illicit profits of VND 500 million or higher from the research, exploration and exploitation of water resources, oil and gas, or other minerals; involving minerals valued at VND 1 billion or higher; committing the crime in an organized manner; causing environmental incidents; causing human death; inflicting injury to, or causing harm to the health of, two or more persons with an aggregate injury rate of 122% or higher.
For this crime, the offender may be subject to a fine of VND 1.5 billion to 7 billion or suspended from operation from six months to three years.
Additional penalties may include a fine of VND 100 million to 500 million (if not yet imposed as a principal penalty); prohibition from doing business in certain areas or operating in certain areas or raising capital for between one year and three years.-
