Breakthroughs in Vietnam’s securities market

November 19, 2020

Since the first promulgation of the law on securities in 2006, Vietnam’s securities market has experienced dramatical growth (roughly twentyfold in market capitalisation). After three rounds of amendments to and supplementation of the law, on November 26, 2019, the National Assembly approved the new law on securities No. 54/2019/QH14 coming into effect on January 1, 2021 (“Law 2019”). Significant changes brought in by the new law promise to create a relevant legal framework and strong impetus to enhance market development. This article reviews some prominent issues.

Securities offering

Currently, conditions on public offerings are specifically provided for stocks, bonds and fund certificates regardless the nature, size and influence of the offering. The Law 2019 improves such provisions by distinguishing conditions applicable for initial public offerings and secondary public offerings of stocks, conditions for offering of non-convertible bonds and convertible bonds and conditions for offerings of fund certificates. Furthermore, new regulations seem to limit public offerings to well-performing, large companies and pay more attention to minority investors’ protection. Of particular note: for eligible IPO issuers, the threshold for paid-up charter increases from 10 billion VND to 30 billion VND; profitable performance history extends from one years to two years; issuers subject to criminal prosecution or having been convicted of any one of the crimes of violation of economic management order are prohibited; and it is required that at least 15 percent of the voting shares to be subscribed to more than 100 minority shareholders.

For private placements, the new law differentiates conditions applicable for the private placement of bonds and those applicable for other securities (stocks, convertible bonds and bonds with warrants). Only professional investors or strategic investors are allowed to apply in private placement. Professional investors are defined more broadly to comprise corporates with paid-in capital of more than 100 billion VND, listed companies, companies registered in the securities trading system, securities practicing certified individuals, individuals possessing a portfolio of at least 2 billion VND or having paid personal income tax in the most recent year of at least 1 billion VND besides other traditional financial institutions. The new law also regulates a private placement lock-up period to be three years for strategical investors and one year for professional investors.

Public companies

Law 2019 alters the criteria for public company classification. Paid-in charter capital of public companies increases to 30 billion VND (the current criteria is 10 billion VND) and at least 10 percent of voting shares are to be held by at least 100 minority shareholders. Companies successfully completing an IPO by registration with the State Securities Committee (“SSC”) are also classified as a public company.

Public companies shall comply with various remarkable regulations. After a successful public offering, they are obliged to register for trading on the unlisted securities trading system for unlisted securities. Share repurchase by a public company shall satisfy a number of conditions including having sufficient funds from specific sources and assigning a securities company to undertake the transaction. Numerous aspects relating to the administration of public companies are also addressed in the new law, namely shareholders’ rights and obligations, shareholder congress convention, the board of management’s structure and its rights and obligations, the nomination of members of board of management, principles for the prevention of conflict of interest, and information transparency.

Securities trading market

Under the new law, the securities market is organised and operated solely by the Vietnam Stock Exchange (“VSE”), a corporate 50 percent and more hold by the State and its subsidiaries. Another important new player in the market is Vietnam Securities Depository and Clearing Corporation (“VSD”), replacing the Securities Depository Center, which will be in charge of registration, depository, clearing and supporting services for securities transactions. Like VSE, VSD is also owned by the State for more than 50 percent of their voting shares and under the supervision of the SSC.

Other significant changes

Depository receipts: this term is defined as securities issued on the basis of securities of an organisation legally established in Vietnam. There is also a term of non-voting depository receipts under the new law on enterprise 2020. This new derivative product is designed with the aim to open up foreign room without loosening restrictions on foreign control over local companies.

Clearing bank: there currently exist three clearing banks in the market, SBV for treasury bonds, BIDV for common securities and Vietinbank for derivatives. The new law sets conditions for new players wishing to enter this niche market. Most notable conditions include having charter capital of more than 10 trillion VND, two years of profitable operation, capital adequacy ratios satisfaction and other requirements on technical infrastructure.

Harmonisation with the law on enterprise: Securities companies and fund management companies after obtaining an operation license from the SSC shall apply for an enterprise registration certificate in accordance with the law on enterprise.

Foreign room applicable for securities companies, fund management companies is opened to 100 percent for foreign institutions operating in banking, securities, insurance industries and originated from countries signing bilateral agreement with SSC. For other foreign organisations and individuals, the room is set to 49 percent.

https://www.inhousecommunity.com/article/breakthroughs-vietnams-securities-market/

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LEGAL UPDATE – OCTOBER 2020 – Highlights on mechanism of coordination and streamline for establishment of companies under new Enterprise Law in Vietnam

Vol 1 Issue October 2020

 

Ha Thi Hai
Partner

Phan Van Huy
Assisting Lawyer

Decree No. 122/2020/ND-CP on the coordinating and streamlining of procedures for establishment registration of enterprises, branches and representative offices, initial declaration of labour usage, issuance of codes for units participating in social insurance, registration of invoices usage of enterprises is passed by the Government on October 15, 2020 (the “Decree 122”) with the following notable contents:

1.The mechanism for coordinating and streamlining provided in Decree 122

Decree 122 provides the mechanism for coordinating and streamlining of four procedures applicable to enterprises, branches, and representative offices upon their establishments, including (i) Establishment registration of enterprises, branches and representative offices; (ii) Initial declaration of labour usage; (iii) Issuance of codes for units participating in social insurance, and (iv) Registration of invoices usage with the Business Registration Office, which is the focal agency for dossier-receiving and result-delivering.

Thus, when implementing the mechanism for coordinating and streamlining, enterprises, branches, and representative offices shall no longer have to carry out the procedures of initial declaration of labour usage and registration of self-printed invoices usage, invoices printed on order usage. Also, Decree 122 regulates that enterprise codes, branch and representative office codes shall be used as codes for units participating in social insurance.

Although the mechanisms of Decree 122 are only applied when establishing enterprises, branches, and representative offices, it still helps to streamline some administrative procedures, improve the business environment, facilitate and promote start-up businesses.

2. The coordinated and streamlined dossiers specified in Decree 122

The coordinated and streamlined dossiers specified in Decree 122 comply with the Law on Enterprise and the Decree on enterprise registration, in which (i) The form of Application for enterprise registration specified in Appendix I-1, I-2, I-3, I-4 and I-5 and (ii) The form of Notice of branch/representative office operation registration specified in Appendix II-11 issued together with Decree 122 shall replace the corresponding forms in Appendix I-1 to I-5 and Appendix II-11 issued together with Circular No. 02/2019/TT-BKHDT.

Compared to the replaced forms, the new forms issued together with Decree 122 are basically supplemented with two more items: (i) Invoice usage registration (including options: Self-printed invoices, Invoices printed on order, E-invoices and Invoices purchased from tax authorities) and (ii) Information on social insurance premium payment (select one of payment methods: monthly, every 3 months, every 6 months).

Decree 122 came into effect on 15th October 2020.

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Vietnam: Remarkable changes in the new Law on Enterprises

October 27, 2020

By Trang Nguyen  – Associate | Attorney at Law

 

On June 17, 2020, the National Assembly officially passed a new Law on Enterprises (“New Law”) to replace the current Law on Enterprises. The New Law (effective from  January 1, 2021) is expected to make a breakthrough in improving the corporate governance, enhance the enterprise’s initiative and create favourable conditions for foreign-invested enterprises to operate in Vietnam.

Reduce business registration procedures

The New Law reducing a number of administrative procedures, including, among others, eliminating the procedure for reporting changes in the information of the enterprise’s manager and the procedure for notification of seal samples with the business registration office to post it publicly on National Business Registration Portal before using.

In addition, regarding the method of enterprise registration, apart from the direct registration method at the business registration authority, Article 26 of the New Law added two other registration methods, which are registration via postal service and registration through the electronic information network, with legal validity equivalent to a hard copy.

Supplemental provisions on the obligations of the legal representatives

The New Law requires the company’s charter to specify the quantity, managerial title and rights and obligations of each legal representative. In case the division of rights and obligations of each legal representative is not clearly specified in the charter, each legal representative of the enterprise will be considered a duly authorised representative of the enterprise before a third party and all the legal representatives are jointly liable for any damage caused to the enterprise in accordance with the laws.

Changing regulation on term of capital contribution with assets

The New Law introduces new regulation on the term for capital contribution with assets of members/ shareholders. In particular, the term for capital contribution of the members/ shareholders remain 90 days from the date of issuance of the Enterprise Registration Certificate, but for members/ shareholders contributing capital with assets, the time for transferring, importing assets contributed as capital, implementing administrative procedures to transfer the ownership of such assets will not be counted to ensure the feasibility of contributing capital with assets of such members/ shareholders.

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Issuance of bonds

Under the New Law, limited liability companies and joint stock companies is allowed to issue bonds. Limited liability companies and joint stock companies that are not public companies shall carry out the procedures for a private offering of bonds according to the provisions of the New Law, while the private offering of bonds by public joint-stock companies, other organizations or the public offering of bonds will follow the law on securities. It is noted that only strategic investors and professional securities investors are entitled to buy, be transferred bonds via private placement.

Expanding rights and scope of shareholders

Rather than holding 10 percent or more of the total amount of ordinary shares for at least 06 consecutive months or a smaller percentage as stipulated in the charter, the New Law prescribed that a shareholder or group of shareholders will only need to own five percent or more of the total amount of ordinary shares or a smaller percentage as stipulated in the company’s charter without a minimum holding period to exercise their right of accessing information regarding the operation of the enterprise, except for documents related to trade secrets, business secrets.

However, the right to nominate members to the board of directors, board of supervisors still reserves for shareholders or groups of shareholders owning 10 percent or more of the total amount of ordinary shares, unless otherwise stipulated in the charter with a smaller ratio.

Non-voting depositary receipt

For the first time, the Non-Voting Depositary Receipt (NVDR) is recorded in the content of the enterprise law. It is considered one of the remarkable points of the New Law.

Essentially, NVDR enjoys same economic benefits and obligations as ordinary shares, with the exception of voting rights. It is expected that a subsidiary of the Ho Chi Minh City Stock Exchange (HOSE) will be established and purchase these ordinary shares from  companies, then issue NVDR’s to sell to investors in need. Detailed regulations shall be specified in the guiding decrees.

NVDR’s are expected to attract more indirect investment from foreign investors into companies with limited foreign ownership, but still ensures the target of state management as the investors owning NVDR’s do not have voting rights, and shall therefore  not interfere in the operations of companies.

The New Law also reforms certain provisions on converting private enterprises into limited liability companies, joint stock companies, partnerships and converting household-businesses into enterprises, etc.

https://www.inhousecommunity.com/article/vietnam-remarkable-changes-new-law-enterprises/?idU=1

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The Law on Investment 2020

August 10, 2020

The current economic situation in Vietnam has revealed various disadvantages and loopholes in the legal framework, especially under the backbone law on investment. Though, the Law on Investment 2014 (LOI 2014) has been in effect for six years, new regulations are needed to create a more transparent, favourable and sustainable investment environment. On June 17, 2020, the National Assembly of Vietnam adopted the Law on Investment (LOI 2020), which will take effect from January 1, 2021 with the following salient changes:

List of prohibited and conditional business lines

Debt collection services has been added to the list of prohibited business lines as numerous service providers have abused this business activity to extort properties or to manipulate in the black lending market, causing public and security disorder.

For the list of conditional business lines, the LOI 2020 removes 22 business lines that are deemed to have no direct impact on national defence and security, social morality and public health, or which are already controlled by technical regulations and standards. Most popular businesses no longer belonging to the conditional list include franchising, logistics services, commercial arbitration, debt trading services, shipping agency service, medical equipment inspection service and aesthetic plastic surgery services. In contrast, it supplements a number of business activities to the list including insurance auxiliary activities, fishing vessel registry, architectural services, piping water supply service, data centre services, electronic identification and authentication services, provision of payment service without using customers’ payment accounts, among others.

Concretise market access commitment to foreign investors

Market access commitments are now specifically addressed under the LOI 2020. In particular, the government must officially issue a list of business lines not open to foreign investors or which imposed conditions. Accordingly, foreign investors who wish to engage in business lines limited to foreign investors shall meet the conditions of: (i) foreign ownership room, (ii) statutory investment forms, (iii) scope of investment activities; (iv) capacity of foreign investors and business partners participating in investment activities and other regulatory conditions. For all other business activities, foreign investors are equal with domestic investors in all respects. New regulations on detailed list limited to foreign investors under LOI 2020 may improve the transparency and feasibility in applying Vietnam’s market opening commitment under the next-generation FTAs.

Favourable mechanism for innovative start-ups

The definition of innovative start-up investment project is given as a project implementing ideas based on the exploitation of intellectual property, technology, new business models and rapid growth potential. Such projects are entitled to investment incentives. Foreign investors who set up medium- and small-sized innovative start-ups are not required to submit investment project nor obtain an Investment Registration Certificate for the purpose of setting up enterprises.

Deemed foreign investors

Previously, the threshold to consider a foreign-invested economic organisation (EO) as a foreign investor was 51 percent or more of charter capital of target company held by (a) foreign investors; or (b) EO which 51percent or more of its charter capital is owned by foreign investors; or (c) foreign investors and EO stated in (b) jointly. Consequently, such EO must satisfy the investment conditions and comply with investment procedures applicable to foreign investors when participating in incorporation of another EO or acquiring interest in an existing EO or investing in the form of BCC. The LOI 2020 deceases this threshold to 50 percent to comply with controlling ratio under newly adopted revised Law on Enterprise.

Cases where M&A approval is required

The LOI 2020 specifies instances where foreign investors must obtain M&A approval before acquiring an ownership interest in the target company as follows:

  1. an increase of foreign ownership in the target company engaging in business lines included in the lists set limited to foreign investors;
  2. an increase of foreign ownership in the target company from under 50 percent to exceeding 50 percent of the charter capital;
  3. an increase of foreign ownership in the target company which already exceeds 50 percent of the charter capital; or
  4. the target company is using land located at sea-islands, borderlands and coastal areas and other areas having an effect on national security and defence.

The change is expected to overcome ambiguity of the provisions on cases requiring M&A Approval under the LOI 2014.

Mechanism for selecting investors for implementing investment project

To ensure the uniformity and consistency of the legal system, the LOI 2020 clarifies principles, respective conditions applied for each method of selection of investors for implementing land-use project, including: (i) auction for land use rights; (ii) bid for investor selection; (iii) approval of investor.

https://www.inhousecommunity.com/article/law-investment-2020/

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Vietnam: Release of long-awaited guidance on Competition Law

July 10, 2020

The long-waited guidance on the Competition Law — the Decree 35/2020/ND-CP (Decree 35) — was issued on March 24, 2020 with effect from May 15, 2020, and casts light on certain prominent provisions of the Competition Law, such as economic concentration.

Under the Competition Law, economic concentration includes, among other things, acquisition of a company to the extent of controlling or dominating the acquired company or its business line. Decree 35 now further defines “controlling or dominating” as:

  • holding up to 50 percent voting right shares, or 50 percent total assets related to any or all business line, of acquired company; or
  • having right to, directly or indirectly, appoint or remove majority of member(s) or chairman of the board, or chief executive officer, or amend the charter, or decide critical issues, of acquired company.

Under Decree 35, the thresholds that trigger mandatory pre-merger notification include:

  • involved party’s total assets in the Vietnam market exceeding VND3,000 billion in the preceding fiscal year;
  • involved party’s total turnover exceeding VND3,000 billion in the preceding fiscal year;
  • the value of the transaction exceeding VND1,000 billion (not applicable in case of transaction outside the territory of Vietnam); or
  • combined market share exceeding 20 percent in preceding fiscal year.

These thresholds are more stringent for transactions involving credit institutions, securities or insurance companies, in particular:

  • involved parties’ total assets in the Vietnam market exceeding VND15,000 billion;
  • involved credit institutions’ total assets exceeding 20 percent of the whole credit institution system;
  • turnover of involved insurance companies exceeding VND10,000 billion, or of involved securities companies exceeding VND3,000 billion;
  • involved credit institutions’ turnover exceeding 20 percent of the whole credit institution system;
  • value of transaction involving credit institution exceeding VND3,000 billion or 20 percent of credit institution system’s total charter capital in the preceding fiscal year; or
  • the combined market share exceeding 20 percent in preceding fiscal year.

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After the 30 days upon the pre-merger notification filling, an economic concentration transaction may be implemented if it falls under either of below cases, among others:

  • the combined market share is below 20 percent;
  • the combined market share exceeds 20 percent but post-merger aggregate of square number of each involved parties’ market shares is less than 1,800;
  • the combined market share exceeds 20 percent, and post-merger aggregate of square number of each involved parties’ market shares exceeds 1,800, but the amplitude increase of the aggregate of square number of each involved parties’ market shares between pre-merger and post-merger is below 100; or
  • involved parties in relevant supply/manufacturing chain have 20 percent combined market share.

Otherwise, an economic concentration shall undergo an official review to determine whether it may cause significant competition-restraining impact and subsequently should be banned. The official review shall base on, among others, market share combination, threat to cause or reinforce market power, ability to increase ability for correlation or collusion, relationship between involved parties in the manufacturing and supply chain, competition advantage, ability to increase price or profit margin ratio.

In addition, Decree 35 also introduces various criteria in determining the significant competition-restraining impact on market of a cartel conduct, including, among others, development of market share of involved parties, barriers to market access or expansion, restriction on research, development and technological innovations, increase of costs and time for customers to purchase goods or services.

In respect of competition dispute settlement, Decree 35 gives further detail on requirements on evidence collection, usage and examination. Decree 35 further provides for procedure on implementing certain interim injunctions during competition investigation.

https://www.inhousecommunity.com/article/vietnam-release-long-awaited-guidance-competition-law/

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LEGAL UPDATE – JUNE 2020 – SUMMARY OF THE DRAFT DECREE ON CONTROLLED TESTING MECHANISM FOR FINANCIAL TECHNOLOGY ACTIVITIES (FINTECH) IN THE BANKING SECTOR

June 23, 2020

Recently, the State Bank of Vietnam (SBV) issued a Decree on Controlled Testing Mechanism for Financial Technology Activities (Fintech) in the banking sector for public opinion. In the context of fast-growing financial technology entailing many potential risks, the draft decree can be considered as one of the first bricks, laying the foundations for building a regulatory framework for Fintech in Vietnam.

1. Definition of Controlled Testing Mechanism for Financial Technology Activities (Fintech)

According to the draft decree, the Fintech Testing Mechanism (hereinafter referred to as the Testing Mechanism) is a legal mechanism established by the Government that allows credit institutions, Fintech solution companies and innovative organization to directly conduct Fintech product and services testing in an environment that is strictly controlled and monitored by the relevant regulatory agencies.

2. Subjects and fields allowed to participate in the Testing Mechanism

Three group of subjects involved in Fintech activities in the banking sector are expected to be allowed to participate in the test include: credit institutions (credit institutions) as prescribed in the Law on Credit Institutions 2010; Fintech company/Fintech solution provider cooperating with banks; Fintech company/independent Fintech solution provider. Fintech fields participating in Fintech testing mechanism includes: payment; credit; peer-to-peer lending (P2P Lending); customer identification support; open application programming interface (Open API); innovative application technology solutions such as Blockchain; other services supporting banking activities (such as credit scoring, savings, capital mobilization, etc.).

To be approved to participate in the Fintech Testing Mechanism, the subjects must meet all the following criteria:

  • Being a solution that does not yet exist or is partially unregulated;
  • Being an innovative Fintech solution applied for the first time in Vietnam or a Fintech solution applied for a new, highly innovative service that contributes to the benefit of service users in Vietnam, especially solutions to support and promote the goal of expanding financial universalization;
  • Being a well-designed risk management solution that does not have or is likely to have a negative impact on financial institutions in particular and the financial system in general; have a plan to handle and overcome risks occurring during the testing process;
  • Being a solution that is implemented by Fintech companies/Fintech solution providers or credit institutions with appropriate and accurate assessment of functions, utilities and usefulness;
  • Being a feasible and commercial solution, with a plan to provide specific markets after the completion of the testing process;
  • Being a solution that contains no potential risk of destabilizing financial markets – banks in particular and the economy in general.

3. Scope of testing

The testing time for Fintech solutions is 1-2 years depending on the specific solutions and fields, counting from the time the Prime Minister approves the trial. Depending on the specific Fintech solutions, the SBV shall discuss with the testing organizations to decide the scope for the operation of the solutions, including at the same time or one of three factors: geography, transaction limit and number of customers participating in the service.

4. Registration for participation in the Testing Mechanism 

Credit institutions, Fintech companies/Fintech solution providers must carry out the registration when participating in the Testing Mechanism, the registration dossier includes: (1) Application for participation in Fintech Testing Mechanism; (2) Establishment license or incorporation registration certificate and not in the process of division, separation, consolidation, merger, conversion, dissolution or bankruptcy under an issued decision; (3) Written description of the organizational structure and executive management of the Fintech Solution registered for testing; (4) Scheme describing Fintech Solution.

The SBV is the focal point to receive, appraise dossiers, advise and submit to the Prime Minister for granting or withdrawal of certificates of participation in the Testing Mechanism.

5. Provisions on risk monitoring, reviewing and certifying test completion for organizations

At the end of the testing period, organizations participating in the test must develop a summary report, including information: test output, test evaluation of success or failure of the solution and test results; incident reports and customer complaints, handling and lessons learned from testing. The SBV shall base on the summary report and monitoring process to submit to the Prime Minister the next solution, including: ceasing the test, certifying the test completion or extending the test period. The issuance of the certificate of testing completion is the basis for organizations to officially deploy the solution to the market. At the same time, the results of service testing are also set the ground for state agencies to develop and complete suitable legal framework to each type of Fintech service and application.

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Highlights of successful deals recently consulted by bizconsult’s team

June 15, 2020

Bizconsult proudly highlights three of many successful deals that we have consulted recently:

  • “Advising a hotel owner to successfully negotiated and signed Hotel Management Agreement (HMA) and Technical Services Agreement (TSA) with Rosewood”
  • “Advising a 99% foreign invested company (Japan) to obtain M&A Approval and Trading License for engaging in office equipment leasing”
  • “Advising a local group Lotus Group to successfully negotiated and concluded a JV agreement with NIPPON SUISAN KAISHA, LTD (Japan)”

Bizconsult’s deal and contract team led by Partner Phong Le and mainly supported by Senior Associate Sang Huynh and Associate Tin Nguyen. We are delighted to have worked closely with our clients – providers in many key service sectors to successfully deliver these transactions despite the current challenging post-epidemic economic environment.

LEGAL UPDATE – JUNE 2020 – TEMPORARY POLICY ON INDUSTRIAL PROPERTY: Reduce 50% of official fees in the field of Industrial Property

Post on June 02, 2020

In response to the economic impacts arising from the COVID-19 pandemic, the Ministry of Finance of Vietnam has recently promulgated Circular No. 45/2020/TT-BTC dated 26 May 2020 on the reduction of fees for registration of foreign QR codes and some certain official industrial property fees (“Circular 45”) pursuant to Circular No. 263/2016/TT-BTC dated 14 November 2016 regulating on fees and charges for industrial property and the collection, transfer, management and use thereof (“Circular 263”).

Highlights

According to Circular 45, the following fees as previously prescribed in Section A of the schedule enclosed with Circular 263 will be temporarily discounted by half (50%) during the period from 26 May 2020 to 31 December 2020:

  • Fees for filing applications for registration of protection of IPRs (including applications for separation or transfer of ownership);
  • Fees for requesting an extension of time to respond to the notifications of National Office of Intellectual Property of Vietnam (the “NOIP”);
  • Fees for issuance of protection certificates;
  • Fees for issuance of certificates of recordal of IP license agreements;
  • Fees for maintenance, extension, invalidation or annulment of Certificates of IP protection (regarding patents for inventions, utility solutions, trademarks and industrial designs);
  • Fees for issuance of industrial property representation service practice certificates and declaration and registration of industrial property representative.

The captioned fees for which the   incentive policy applied are generally insignificant, which is in the range of VND 50,000 to 200,000 VND (about $2 – $9 as converted into USD), compared to overall costs with regard to the corresponding procedures. Therefore, the amount of money saved for many IP cases is generally not remarkable. However, applicants, in some circumstances, may receive significant discounts for total costs paid to the NOIP in light of these fees are individually charged for each unit such as class, claim or application.

Due to the global spread of the COVID-19 outbreak continues to be at more serious and complex situation, the promulgation of the Circular 45 has expressed the efforts of the government of Vietnam to support and share the difficulties with individuals and enterprises who wish to protect IPRs which is realistic and noteworthy.

Contact

For further information regarding registration and protection of intellectual property rights in Vietnam, kindly contact us at the following contact information:

Mr. Tuan Anh Nguyen
Partner
Mobile +84 90 340 4242
E-mail: tuanna@bizconsult.vn

BIZCONSULT LAW FIRM
Hanoi – Ho Chi Minh City
Vietnam
www.bizconsult.vn

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LEGAL UPDATE – APRIL 2020 – NEW REGULATIONS ON REGISTRATION OF THE MORTGAGE OF LAND USE RIGHT AND ASSET ATTACHED WITH LAND

Post on April 29, 2020

By Nguyen Thi Thu Ha – Assisting Lawyer

On 25 November 2019, Ministry of Justice issued Circular No. 07/2019/TT-BTP guiding some of regulations on registration of the mortgage of land use right and asset attached with land (“Circular 07”). Circular 07 specifically guide a number of provisions of Decree No. 102/2017/ND-CP, and replace Joint Circular No. 09/2016/TTLT-BTP-BTNMT dated June 23, 2016.

Circular 07 supplements one additional circumstance required for registration of mortgage of land use right (“LUR”) and assets thereon that is mortgage of the investment project for construction of residential housing or the investment project for construction of work constructed without residential housing, other investment project for construction as prescribed by law. Procedure of such mortgage registration shall be akin to registration of mortgage of LUR and in-future residential housing and construction work thereon.

In addition, Circular 07 introduces several new regulations on mortgage registration of LUR which are common property with the Land registration authority. The Article 12 of Circular 07 set out several special circumstances in mortgage registration of LUR by the Land Registration Authority as below:

(i) for mortgage of LUR being common property of husband and wife, but ownership certificate thereof names either husband or wife, both information of husband and wife shall be included in mortgage agreement as the mortgagor;

(ii) for mortgage of LUR being common property of the family household but ownership certificate thereof only names head of the family household, both name of the head of and other members commonly holding LUR shall be named in mortgage agreement as the mortgagor. In case a number of members of a family household or group of land users require a mortgage registration for their LUR, such person must carry out the procedures for division of LUR and the procedures for separation of the parcel of land for purpose of issue the LURC before registering the mortgage; and

(iii) for mortgage the LUR having the ownership certificate just names proprietorship, the full name of the owner of the proprietorship or the name of owner of the proprietorship and the his/her spouse shall be included in mortgage agreement as the mortgagor.

Circular 07 also stipulates on two cases of transition of the mortgage registration of property rights connected with residential housing purchase and sale contract as below.

Firstly, the mortgage registration of property rights arising from residential housing purchase and sale contract shall transit into mortgage registration of in-future residential housing. Secondly, the mortgage registration of property rights, which arising from residential housing purchase and sale contract, shall transit into the mortgage registration of formed residential housing (house accepted and put into use). In the latter case, there would be two circumstances (i) deregistration of mortgage of property rights arising from residential housing purchase and sale contract at the registration agency for secured transactions, and then registering the mortgage of land use right and residential house at the Land Registration Authority; or (ii) transiting the registration for mortgage of property rights arising from residential housing purchase and sale contract into the registration for mortgage of formed residential housing.

Circular 07 takes effect from January 10, 2020.

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LEGAL UPDATE – APRIL 2020 – NEW REGULATIONS ON E-WALLET SERVICE

Post on April 28, 2020

By Le Anh Kien – Legal Assistant

E-wallet is considered as an important tool for the development of e-commerce and financial technology industries, especially in the industry revolution 4.0. This is a type of payment intermediary firstly regulated in Decree No. 101/2012/ND-CP promulgated by the Government on November 22, 2012 and Circular No. 39/2014/TT-NHNN promulgated by the State Bank of Vietnam on December 11, 2014 (“Circular 39”), however, these legal documents have not been fully and specifically regulated all aspects related to E-wallet provision activity. Therefore, on November 22, 2019, the State Bank of Vietnam promulgated Circular No. 23/2019/TT-NHNN amending and supplementing a number of articles of Circular 39 (“Circular 23”) in order to complete legal framework of E-wallet provision activity. Circular 23 officially taking effect from January 07, 2020, which supplements a number of noteworthy provisions as follows:

1. Regulating specifically on dossiers and information of subjects opening E-wallets

Circular 23 supplements regulations on dossiers and information of subjects opening E-wallets for individuals and organizations, in which, for E-wallets of individuals, the dossier must contain the personal information and identity documents of this individual. For E-wallets of organizations, the dossier also requires the organization’s information, legal documents and lawful representative.

In case an individual who registers to open an E-wallet has a payment account opened through a guardian or legal representative, in addition to the above-mentioned documents, legal documents of this guardian/legal representative and documents proving the guardian/legal representative status of such person/organization to the E-wallet holder must be provided.

2. Customers must completely link the E-wallets with the bank account before using the E-wallets

According to Circular 23, E-wallet service providers must require their customers to completely link the E-wallets with Vietnamese-dong payment accounts or debit cards (linked to Vietnamese-dong payment accounts) that customers open at affiliate banks before using the E-wallets. Customers are not limited in the number of bank accounts linked with their E-wallets.

3. Top-up methods and top-up limit into E-wallets

Top-up into an E-wallet shall be conducted via payment accounts or debit cards of the E-wallet holders opened at banks or received from other E-wallets opened by the same E-wallet service providers. Customers may use the E-wallets for paying legitimate goods and services; transferring money to other E-wallets opened by the same E-wallet service providers and withdrawing money from the E-wallets to the payment accounts or debit cards of Customers.

Total maximum limit on transactions performed via a personal E-wallet of a customer at an E-wallet service provider shall be VND 100 (one hundred) million per month. This limit shall not be applied to personal E-wallet of persons signing contracts/agreements to become entities accepting payments with E-wallet service providers.

4. E-wallet service providers must ensure its solvency

To ensure the rights and interests of E-wallet holders and related organizations and individuals, Circular 23 stipulates that E-wallet service providers must open payment guarantee accounts in order to ensure the provision of this service and are obligated to maintain the total balance on all payment guarantee accounts for E-wallet services opened at cooperative banks not lower than the total balance of all E-wallets of customers at the same time.

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