Legal Advice: A synthesis of new regulations of Law on Enterprises 2014
VietNamNet Bridge - Decision rights on the number of legal representatives, quantity and content of corporate seals, changes in business registration procedures, etc., are several highlights prescribed in the Law on Enterprises 2014.
Law on Enterprises 2014 was approved by the National Assembly on November 26, 2014 and will take effect on July 1, 2015 with significantly notable changes as follows:
Enterprises may have many legal representatives
Limited Liability Companies (LTD.) and Joint Stock Companies (JSC) may have one or more legal representatives (LRs). Depending on the needs of administration of each entity, enterprises are entitled to decide on the number, management titles, specific rights and obligations of their LRs in the company’s charter.
It is mandatory for enterprises to make certain there is always at least one LR residing in Vietnam. In the event of enterprises having only one LR, he/she must reside in Vietnam and authorize another person in writing to perform the rights and obligations of an LR when he/she leaves Vietnam. If the LR does not return to Vietnam when the duration of authorization expires and there is no other authorization, the authorized person will continue exercising the rights and obligations of the LR to the authorized extent until such LR returns to work; or until the enterprise’s owner, Board member, or Managing Board decides to appoint another to become the enterprise’s LR. This is a new and progressive point of Law on Enterprises 2014 when a mechanism of resolution for the frequent absence of LR from Vietnam is provided.
Business Registration Certificate is granted in 3 working days and its contents exclude those of business sectors.
When registering for company establishment, in some cases, business registration authority may require the applicant to submit a Judicial Record.
In Law on Enterprises 2014, the duration of examining and granting Business Registration Certificate is reduced to 3 working days commencing from the date of receipt of dossier, while according to existing provisions, it takes 10 days for such procedure (Law on Enterprises 2005).
Business Registration Certificate shall be presented in written or electronic form and shall not include the contents of business sectors. As a consequence, when changing business sectors, enterprises will only need to inform business registration authority to update such contents into the dossier of enterprise registration without having to change business registration contents in order to receive a new Business Registration Certificate as was done previously.
After being granted a Business Registration Certificate or adjusting business registration content, enterprises are required to publicly announce on the National Portal their business registration. Whereas, according to current regulations, enterprises may select the publishing method such as posting on the business information website of the business registration authority or in 3 consecutive issues of a newspaper or electronic newspaper.
Enterprises have the right to decide on the form, quantity, and content of corporate seal
Based on current provisions, each enterprise may only be allowed to use one seal, unless otherwise approved to use a second seal whose sample is registered at the police office. Beginning on July 1, 2015, enterprises are entitled to decide on the form, quantity, and content of their corporate seal but the name and code of the enterprise must be guaranteed to be shown. In addition, enterprises must inform the business registration authority of the seal’s sample to publicly publish it on the National Portal of business registration.
Duration of capital contribution is shortened to 90 days
The owner and members of LTD must contribute sufficient and correct type of capital as committed when registering for company establishment within a period of 90 days commencing from the date of issuance of Business Registration Certificate, whereas the duration of capital contribution regulated by current provisions is up to 36 months. However, for an LTD set up before July 1 2015, duration of capital contribution is still carried out under the provisions of the company’s Charter.
While in the Law on Enterprises 2005, the Government only encourages, facilitates, and gives incentives to enterprises participating in the production and provision of public products and services, the criteria, rights and obligations with which social enterprises are set up are now regulated more specifically with better details under the new provisions.