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Vietnam Law on Enterprises

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NATIONAL ASSEMBLY

No. 60-2005-QH11

 

SOCIALIST REPUBLIC OF VIỆT NAM

Independence - Freedom – Happiness

Hà Nội, November 29, 2005

LAW ON ENTERPRISESS

Pursuant to the 1992 Constitution of the Socialist Republic of Việt Nam as amended and supplemented by Resolution 51-2001-QH10 dated 25 December 2001 of Legislature X of the National Assembly at its 10th session.

This Law provides for enterprises.

CHAPTER I

GENERAL PROVISIONS

Article 1 Governing scope

This Law provides for the establishment, management organization and operation of limited liability companies, shareholding companies, partnerships and private enterprises in all economic sectors (hereinafter referred to as enterprises); provides for corporate groups.

Article 2 Applicability

1. Enterprises of all economic sectors.

2. Organizations and individuals involved in the establishment, management organization and operation of the enterprises.

Article 3 Application of the Law on Enterprises, international treaties and relevant legislation

1. The establishment, management organization and operation of enterprises in all economic sectors shall comply with this Law and other relevant provisions of the law.

2. In special cases where the establishment, management organization and operation of an enterprise are regulated by another law, the provisions of such law shall apply.

3. If an international treaty of which the Socialist Republic of Việt Nam is a member contains provisions which are different from the provisions in this Law, the provisions of such international treaty shall apply.

Article 4 Interpretation of terms

In this Law, the following terms shall be construed as follows:

1. Enterprise means an economic organization having its own name, having assets and a stable transaction office, and having business registration in accordance with law for the purpose of conducting business operations.

2. Business means the continuous conduct of one, several or all of the stages of the investment process, from production to sale of products or provision of services in the market for profits.

3. Valid documents mean documents comprising all papers as required by this Law, providing all information as required by law.

4. Capital contribution means the transfer of assets into a company so as to become the owner or a joint owner of the company. Capital contribution may be in the form of Vietnamese currency, freely convertible foreign currency, gold, value of land use rights, value of intellectual property rights, technology, technical know-how, or other assets recorded in the charter of the company as being contributed by the members to form the capital of the company.

5. Share of capital contribution means the ratio of capital contributed by the owner or the joint owners of the company to the charter capital.

7. Legal capital means the minimum amount of capital required by law for the establishment of an enterprise.

8. Voting capital means the amount of capital contribution or shares entitling the owner to vote on matters which fall under the powers to decide of the Members’ Council or the General Meeting of Shareholders.

9. Dividend means the amount of net profits distributed to each share in cash or in the form of other assets from the remaining profits of the company after discharge of financial obligations.

10. Founding member means a person contributing capital and involved in formulating, approving and signing the first charter of a limited liability company or partnership.

11. Shareholder means a person holding at least one share already issued by the shareholding company.

Founding shareholder means a shareholder involved in formulating, approving and signing the first charter of a shareholding company.

12. Unlimited liability partner1 means a partner who is liable for the obligations of the partnership to the extent of all his or her assets.

13. Manager of an enterprise means the owner or director of a private enterprise, unlimited liability partner of a partnership, chairman of the Members’ Council, chairman of a company, a member of the Board of Management, director or general director and other managerial positions as stipulated in the charter of a company.

14. Authorized representative means an individual who is authorized in writing by a member or shareholder being an organization of a limited liability company or shareholding company to exercise its rights in the company in accordance with this Law.

15. A company shall be deemed to be a parent company of another company in one of the

following cases:

(a) Holding over fifty (50) per cent of the charter capital of or of total ordinary shares already issued by such company;

(b) Having the right to directly or indirectly appoint a majority or all of members of the board of management, director or general director of such company;

(c) Having the right to decide on amendment or addition to the charter of such company.

16. Re-organization of an enterprise means the division, separation, merger, consolidation or conversion of an enterprise.

17. Related person means organization or individuals related directly or indirectly to an enterprise in the following cases:

(a) A parent company, the managers of the parent company and the person who has the power to appoint such managers, and a subsidiary company;

(b) A subsidiary company and a parent company;

(c) A person or a group of persons being able to control the decision-making process and operations of such enterprise through the management bodies of the enterprise;

(d) A manager of the enterprise;

(dd) Husband, wife, father, adoptive father, mother, adoptive mother, children, adopted children, siblings of any manager of an enterprise, any member, or any shareholder holding a share of capital contribution or controlling share;

(e) An individual who is authorized to act as the representative of the persons stipulated in paragraphs (a), (b), (c), (d) and (dd) of this Clause;

(g) An enterprise in which the persons as stipulated in paragraphs (a), (b), (c), (d), (dd), (e) and (h) of this Clause holding shares to the level that they can control the decision-making process of the management bodies of such enterprise;

(h) Any group of persons who agree to co-ordinate to take over shares of capital contribution, shares or interests in the company or control the decision-making process of the company.

18. Portion of State owned capital contribution means the portion of capital contribution invested from the State Budget and other capital sources of the State of which a State body or economic organization acts as the representative of the owner; State owned shares mean shares for which payment is made with capital from the State Budget or other State capital sources of which a State body or economic organization acts as the representative of the owner.

19. Market price of the share of capital contribution or shares means the transaction price on the securities market or price determined by a professional valuation organization.

20. Nationality of an enterprise means the nationality of the country or territory in which the enterprise is established and registers its business.

21. Residence address means the registered address of the head offices in the case of

organizations; registered address of permanent residence or address of the work place or

other address of an individual who has registered such address with the enterprise as the

contact address.

22. State owned enterprise means an enterprise in which the State owns over fifty (50) per cent of the charter capital.

Article 5 State guarantees2 for enterprises and owners of enterprises

1. The State shall recognise the long term existence and development of types of enterprise provided for in this Law, ensure the equality of enterprises before the law, regardless of their form of ownership and economic sector; recognise the lawful profit-making nature of business activities.

2. The State shall recognise and protect the ownership of assets, investment capital, income and other lawful rights and interests of an enterprise and its owner.

3. The lawful assets and investment capital of an enterprise and its owner shall not be nationalized or expropriated by administrative action.

Where the State acquires or requisitions the assets of an enterprise for essential reasons of

national defence or security and in the national interest, the enterprise shall be paid or compensated at the market price determined at the time of declaration of the acquisition or requisition. The payment or compensation must ensure the interest of the enterprise without discrimination between forms of enterprise.

Article 6 Political organizations and socio-political organizations in enterprises

1. Political organizations and socio-political organizations in enterprises shall operate within the framework of the Constitution, the laws and the regulations of respective organizations which are consistent with law.

2. An enterprise shall be obliged to respect and facilitate its employees to establish and participate in activities of organizations stipulated in clause 1 of this article.

Article 7 Lines of business and business conditions

1. Enterprises in all economic sectors shall have the right to conduct lines of business which are not prohibited by law.

2. With respect to lines of business which are subject to conditions stipulated by the law on investment or relevant legislation, an enterprise shall be only allowed to conduct such lines of business if it satisfies all of the stipulated conditions.

Business condition means a requirement which an enterprise must satisfy or perform when it conducts a specific line of business and which shall be demonstrated by way of a

business licence, certificate of satisfaction of conditions for business, practicing certificate, certificate of professional indemnity insurance, requirement for charter capital or other requirements.

3. Business activities adversely affecting national defence, security, social order and safety, historical, cultural and ethical traditions, fine customs and traditions of Việt Nam and the people’s health or deteriorating natural resources or destroying the environment shall be prohibited.

The Government shall specify the list of prohibited lines of business.

4. The Government shall periodically review and reassess all or part of business conditions; shall abolish or propose the abolishment of conditions which no longer are suitable; shall amend or propose the amendment of unreasonable conditions; shall issue or propose the issuance of new business conditions in accordance with the requirements of State administration.

5. Ministries, ministerial-level bodies, people’s councils and people’s committees at all levels shall not be permitted to stipulate conditional lines of business and business conditions.

Article 8 Rights of enterprises

1. To conduct business autonomously; to take initiative in selecting the line of business and area for investment and the form of investment, to take initiative in expanding the scope and lines of business; to be encouraged and facilitated by and to enjoy favorable treatment of the State to participate in production and supply of public services and products.

2. To select the form and manner of raising, allocating and using capital.

3. To take initiative in seeking markets and customers and signing contracts.

4. To conduct import and export business.

5. To recruit, employ and use labour in accordance with business requirements.

6. To take initiative in applying modern technology and science in order to improve business efficiency and competitiveness.

7. To decide autonomously on business affairs and internal relations.

8. To possess, use and dispose of assets of the enterprise.

9. To refuse any demand for supply of any resources not sanctioned by law.

10. To lodge complaints and denunciations in accordance with the law on complaints and denunciations.

11. To participate directly or via the authorized representative in legal proceedings in accordance with law.

12. Other rights as provided for by the law.

Article 9 Obligations of enterprises

1. To conduct business strictly in accordance with the lines of business recorded in the business registration certificate; to satisfy business conditions in accordance with law if it

conducts a conditional line of business.

2. To organize accounting works, to prepare and submit truthful and accurate financial statements on time in accordance with the law on accounting.

3. To register tax code, declare and pay taxes and to perform other financial obligations as provided for by law.
4. To ensure rights and interests of employees in accordance with labour legislation; to implement the regimes of social insurance, medical insurance and other insurance for employees in accordance with the law on insurance.

5. To ensure and be responsible for the quality of goods or services in accordance with registered or published standards.

6. To perform the regime of statistics in accordance with the law on statistics; to periodically report fully information relating to the enterprise and its financial position in the stipulated forms with the authorized State body; to amend and add in a timely manner the information upon discovery of any inaccurate or incomplete declaration or report of information.

7. To comply with the law on national defence, security, social order and safety, protection of natural resources and the environment, protection of historical and cultural sites and places of interests.

8. [To perform] Other obligations as provided for by law.

Article 10 Rights and obligations of enterprises involved in production or provision of public services or products

1. The rights and obligations specified in articles 8 and 9 and in other relevant provisions of this Law.

2. To conduct cost accounting and be entitled to cost recovery at the price for tender implementation, or collect charges for provision of services in accordance with the regulations of the authorized State body.

3. To be guaranteed an appropriate period for production and supply of products or provision of services in order to recover its investment capital and gain reasonable profits.

4. To produce and supply products or provide services in correct quantity and quality and on time as agreed at the price or charge rate stipulated by the authorized State body.

5. To ensure that the same equitable and favorable conditions are applicable to all types of customers.

6. To be responsible before the law and customers for quantity, quality, terms of supply and prices, charges for supply of products or provision of services.

7. Other rights and obligations as stipulated by the law.

Article 11 Prohibited practices

1. To issue business registration certificates to persons not satisfying the conditions or refusing to issue business registration certificates to persons satisfying the conditions stipulated in this Law; to cause any delay, trouble, obstruction, or hassle to persons requesting business registration or business activities of enterprises.

2. To conduct business in the form of an enterprise in accordance with this Law without

carrying out business registration, or to continue to conduct business after the business

registration certificate has been revoked.

3. To declare dishonestly or inaccurately the contents of the business registration documents; to declare dishonestly, inaccurately or in an untimely manner the alterations to the business registration documents.

4. To declare wrongly the registered capital or failing to contribute capital in full and on time as registered; to deliberately value assets contributed as capital not at their actual value.

5. To operate illegally or to deceive; to conduct prohibited lines of business.

6. To conduct conditional lines of business without satisfying all the business conditions stipulated by law.

7. To prevent owners, members or shareholders from exercising their rights in accordance

with this Law and the charter of the company.

8. Other prohibited practices as stipulated by law.

Article 12 Document retention regime of enterprises

1. Subject to the form of enterprise, an enterprise must retain the following documents:

(a) Charter of the company; amendments of and additions to the charter of the company; internal management rules of the company; and register of members or register of shareholders;

(b) Business registration certificate; certificate of protection of industrial property rights; certificate of registration of product quality; other licences and certificates;

(c) Documents and papers certifying ownerships of assets of the company;

(d) Minutes of meetings of Members’ Council, General Meetings of Shareholders and the Board of Management; decisions of the enterprise;

(dd) Prospectus for issue of securities;

(e) Reports of the Inspection Committee, conclusions of inspection bodies, conclusions of independent auditing organizations;

(g) Books of accounts, accounting records, annual financial statements;

(h) Other documents as stipulated by law.

2. An enterprise must retain the documents referred to in Clause 1 of this article at its head office; the documents shall be retained for the duration prescribed by law.

CHAPTER II

Establishment and Business Registration

Article 13 Right to establish, contribute capital, purchase shares and manage enterprises

1. Vietnamese organizations or individuals and foreign organizations or individuals shall have the right to establish and manage enterprises in Việt Nam in accordance with this Law, except for the cases set out in clause 2 of this article.

2. The following organizations and individuals shall not have the right to establish and manage enterprises in Việt Nam:

(a) State bodies, units of people’s armed forces of Việt Nam using State assets to establish business enterprises to make profits for their own bodies or units;

(b) State officials and employees in accordance with the law on State officials and employees;

(c) Officers, non-commissioned officers, career servicemen, national defence workers in

bodies and units of the People’s Army of Việt Nam; officers, career noncommissioned officers in bodies and units of the People’s Police;

(d) Management personnel, professional management personnel in enterprises with one hundred (100) per cent State owned capital, except for those appointed to be authorized representatives to manage the State’s share of capital contribution in other enterprises;