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Official Gazette

Friday, October 7, 2022

Draft decree to further detail Law on Enterprises

Updated: 16:21’ - 22/06/2007

The second draft of a decree guiding the establishment, organization, management, operation, reorganization and dissolution of enterprises has been recently unveiled by the Ministry of Planning and Investment for comment.

The 27-article decree targets enterprises set up under the 2005 Enterprise Law and the 2005 Investment Law, enterprises set up under the 1999 Enterprise Law, joint-stock companies and limited liability companies transformed from state enterprises under the 2003 Law on State Enterprises, from foreign-invested enterprises which were set up under the 1996 Law on Foreign Investment in Vietnam, or from enterprises of the Party and socio-political organizations.

Apart from some trades and services banned from business under current regulations, the draft decree also places a ban on the provision of secret investigation services which infringe upon the State interests and lawful rights and interests of organizations and citizens, the provision of marriage and adoption brokerage services involving foreign elements and the trading in imported scraps which cause environmental pollution.

Regarding the right to found enterprises, the draft paper makes it clear that, except some specific cases defined in the Enterprise Law, all legal entities, including foreign-invested enterprises, regardless of the places of registration of their head offices, and all individuals, regardless of their places of residence and nationalities, may found or participate in the founding of enterprises in Vietnam.

Although each individual may found only one private enterprise, an individual who is the owner of a private enterprise may still found or participate in the founding of enterprises of other types.

The draft decree requires foreign organizations and individuals that found enterprises in Vietnam for the first time to formulate an investment project if foreign capital accounts for more than 49% of the charter capital of the to-be-founded enterprise. In this case, the investor is obliged to make investment registration together with business registration and will be granted an investment certificate, which is also the business registration certificate, if all specified conditions are met. In other cases, the founding of enterprises complies with relevant provisions of the Enterprise Law and Decree No. 88/2006/ND-CP of August 29, 2006, on business registration and business registration agencies.

The draft decree sets no limitation on the contribution of capital to and purchase of shares of enterprises by foreign investors. However, the proportion of foreign capital in listed companies, equitized state enterprises, state enterprises undergoing transformation and in some special cases must comply with specialized laws.-
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