Author: Vu Mai Trang

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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VIETNAM: COVID-19 có phải là sự kiện bất khả kháng không? Pháp luật Việt Nam quy định như thế nào về bất khả kháng, về quyền, nghĩa vụ và trách nhiệm các bên hợp đồng khi xảy ra sự kiện bất khả kháng đó?

Ngày 13 tháng 4 năm 2020

Bất khả kháng là một vấn đề tương đối phức tạp theo quy định của pháp luật Việt Nam. Toà án và trọng tài đã giải quyết nhiều vụ tranh chấp liên quan đến sự kiện bất khả kháng, và không phải cứ xảy ra các sự kiện như được quy định, định nghĩa tại điều khoản về bất khả kháng trong hợp đồng giao kết giữa các bên sẽ đương nhiên được tòa án, trọng tài chấp nhận là sự kiện bất khả kháng, và bên chịu sự tác động của sự án kiện đó sẽ đương nhiên được miễn trừ nghĩa vụ, trách nhiệm của họ quy định trong hợp đồng.

Gần đây có nhiều ý kiến, kể cả ý kiến chuyên môn, về bệnh dịch coronavirus/COVID-19 được đưa ra, thảo luận trên các phương tiện báo chí truyền thông và diễn đàn mạng xã hội, cho rằng bệnh dịch coronavirus/COVID-19 là sự kiện bất khả kháng, và bên chịu sự tác động của sự kiện đó được miễn thực hiện các nghĩa vụ, trách nhiệm của bên đó quy định tại hợp đồng đã giao kết với đối tác, như hợp đồng thuê địa điểm kinh doanh, hợp đồng mua bán hàng hoá, cung ứng dịch vụ, hợp đồng thuê khoán – bao tiêu sản phẩm, hợp đồng tín dụng/vay vốn và nhiều loại hợp đồng khác. Với những thông tin đăng tải trên các phương tiện thông tin truyền thông rộng rãi, nhiều bên đang xem xét thực hiện đơn phương chấm dứt hợp đồng với đối tác, với niềm tin rằng họ sẽ được miễn thực hiện các nghĩa vụ quy định trong hợp đồng đã giao kết. Chúng tôi khuyên bạn hãy thận trọng và nên tham vấn ý kiến của những luật sư có trình độ cao và dày dạn kinh nghiệm trong vấn đề này trước khi thực hiện.

Nhóm luật sư cấp cao của CÔNG TY LUẬT TNHH BIZCONSULT vào chiều thứ Sáu tuần trước (ngày 10/4/2020) đã thảo luận sâu và toàn diện về các nghiên cứu và ý kiến đánh giá của mình về sự kiện bất khả kháng, về sự bùng phát của bệnh dịch coronavirus/COVID-19 và các biện pháp của Chính phủ đang áp dụng ngăn chặn sự lây lan của bệnh dịch, khi nào và trong tình huống nào có thể được xem là sự kiện bất khả kháng, và khi đó quyền, lợi ích, nghĩa vụ và trách nhiệm của mỗi bên trong hợp đồng sẽ được xác định như thế nào theo quy định của pháp luật Việt Nam.

Nếu bạn đang gặp phải những vấn đề nêu trên, hãy liên hệ với chúng tôi để được tư vấn đầy đủ về vụ việc cụ thể của bạn:

Luật sư Nguyễn Anh Tuấn ([email protected])

Luật sư Nguyễn Trọng Nghĩa ([email protected])

CÔNG TY LUẬT TNHH BIZCONSULT (www.bizconsult.vn).

 

 

VIETNAM: Is covid-19 outbreak an event of force majeure? How the laws of Vietnam regulate about force majeure, rights, obligations and responsibilities of parties to a contract in case of occurring an event force majeure?

April 13, 2020

Force majeure is a rather complicated issue under the laws of Vietnam. Courts and arbitrators heard and judged many disputes related to force majeure circumstances, and it should be noted that any occurrence of the events of force majeure defined and regulated in the contracts will be certainly accepted by courts, arbitrators, resulting in a situation that party suffering from such event will certainly be exempted from implementing its obligations, responsibilities stipulated in such contracts.

It has been recently published and discussed in the public communication means, newspapers, and social network forums different views, including legal views, on the coronavirus/COVID-10 pandemic, subjectively judging that coronavirus/COVID-19 epidemic outbreak in Vietnam is an event of force majeure, and party suffering from such event will be exempted from implementing its obligations, responsibilities stipulated in the contracts of various types, such as premise leases for business, sale and purchase contracts, service supply contracts, contracts for “lump system” of products/property, credit/loan agreements and contracts of other types. In consideration of such judgments flood in local mass media, many parties are considering various ways to unilaterally terminate contracts signed with their partners, with a hope that they would be exempted from implementing their contractual obligations, responsibilities. We suggest that you should be careful and should seek advice from counsels of high seniority and long-standing experience on force majeure under the laws of Vietnam before taking action of unilateral termination.

Last Friday, April 10, 2020, a group of high-seniority counsels of BIZCONSULT LAW FIRM have comprehensively discussed on their study and legal assessments on force majeure events, as to when and in what circumstances coronavirus/COVID-19 epidemic disease outbreak and certain preventive measures and lockdowns imposed by the Government of Vietnam for preventing and fighting against the fast and wide spreading of the epidemic disease would be considered a force majeure event, and that in such situation what and how rights, interests, obligations and responsibilities of each party to contract will be determined and judged in accordance with the laws of Vietnam.

If you are facing to any of the above issues, contact us for advice on your specific issue:

Counsel Nguyen Anh Tuan: [email protected]

Counsel Nguyen Trong Nghia: [email protected]

BIZCONSULT LAW FIRM: www.bizconsult.vn

Vietnam: New regulations on automobile transport business

Ngày 06 tháng 4 năm 2020

Lưu ý: “bài viết này chỉ phát hành tiếng Anh cho tạp chí nước ngoài Asian- Mena Counsel”

     

After a long time in the drafting stage, the Government issued Decree No. 10/2020/ND-CP (Decree 10) on January 17, 2020, regulating automobile transport business and conditions for conducting automobile transport business, replacing the Decree No. 86/2014/ND-CP dated September 10, 2014 (“Decree 86”). Decree 10 shall officially take effect from April 1, 2020 and put an end to the pilot application of ride-hailing software for passenger transport business with e-contract which has been applied for more than four years. Some notable new features of Decree 10 are as follows:

Discrimination between automobile transport business providers and providers of application software supporting the transport connection

The most important new point of Decree 10 is the definition that “automobile transport business” means conducting one or more main transport activity (to directly coordinate the vehicles, drivers or to decide the transport fee) to transport passengers or goods on the road for profit. This definition helps discriminating automobile transport business providers from providers of application software supporting the transport connection by the factor of directly coordinating the vehicles, drivers or deciding the transport fee or not.

Furthermore, the Decree also defines “Coordinating vehicles, drivers refers to the process where an organisation or individual assigns a passenger or freight transport task to a driver via the application software supporting the transport connection, a transport order or a transport contract”. This shall help to determine whether technology companies providing ride-hailing transport services be considered as transport business providers or not. If yes, such companies shall be required to obtain Automobile Transport Business Licence and are subject to legal regulations binding automobile transport business companies, including the requirement to sign labour contracts, pay kinds of insurances, periodical health check and other benefits for their employees, including drivers and supporters on automobile.

Relaxing taxis from requirement of light boxes fixed on the car roofs

According to previous regulations, taxies were required to have light boxes with the word “TAXI” fixed on the roof. Now, Decree 10 allows passenger transport by taxi businesses the option of either fixing light boxes with the word “TAXI” on car roofs with a minimum size of 12×30 cm or posting (affixed) the phrase “XE TAXI” (“TAXI CAR”) made of reflective material on the front and rear windshields with the minimum size of the phrase “XE TAXI” (“TAXI CAR”) being 6 x 20 cm.

Rented automobiles, tourist automobiles must have signages and all required information affixed on the vehicle’s bodies

To prevent the problem of illegal transport vehicles, illegal temporary station, Decree 10 requires the rented automobiles to have the signage of “XE HỢP ĐỒNG (“RENTED AUTOMOBILE”), the tourist automobiles to have the signage of “XE DU LỊCH” (“TOURIST AUTOMOBILE”) affixed beneath the front windscreen on the right-hand side of the vehicle.

At the same time, rented automobiles and tourist automobiles must be posted (affixed) with the words “XE HỢP ĐỒNG” (“RENTED AUTOMOBILE”), “XE DU LỊCH” (“TOURIST AUTOMOBILE”) made of reflective materials on the front and back windshields of the vehicle.

Mandatory installation of cameras for passenger transport business automobiles of nine seats (including drivers) or more, trucks and tractors

Decree 10 requires passenger transport business automobiles of nine seats (including drivers) or more, trucks and tractors to be equipped with cameras to ensure the recording and archive of images inside the vehicles (including driver and vehicle doors) during the course of traffic before July 1, 2021. Duration of retention of these images is at least 24 hours or 72 hours depending on the operating distance of the vehicle. The image data must be provided to the competent authority upon request.

Requirements for taxis equipped with the ride-hailing software

Taxis using ride-hailing software capable of booking, cancelling and charging rides must be equipped with a device directly connecting with passengers for booking and cancelling rides; the ride is charged based on the distance showed on the digital map and the ride charging software must comply with regulations of laws on electronic transactions.

In particular, when finishing a ride, companies using ride-hailing software must send e-invoices to passenger via the software and send the invoice’s information to its supervisory tax authority pursuant to regulations promulgated by the Ministry of Finance.

Beside above notable points, Decree 10 also provides for several other new regulations to meet with the needs for management of technology companies providing ride-hailing transport services which are expected to create a fair competitive environment for traditional taxi and technology taxi in Vietnam.

https://www.inhousecommunity.com/article/vietnam-new-regulations-automobile-transport-business/ 

Ha Hai
M: (84) 96 371 8558
E: [email protected]

Phan Minh
M: (84) 90 462 1350
E: [email protected]

Vietnam: New regulations on automobile transport business

April 6, 2020

     

After a long time in the drafting stage, the Government issued Decree No. 10/2020/ND-CP (Decree 10) on January 17, 2020, regulating automobile transport business and conditions for conducting automobile transport business, replacing the Decree No. 86/2014/ND-CP dated September 10, 2014 (“Decree 86”). Decree 10 shall officially take effect from April 1, 2020 and put an end to the pilot application of ride-hailing software for passenger transport business with e-contract which has been applied for more than four years. Some notable new features of Decree 10 are as follows:

Discrimination between automobile transport business providers and providers of application software supporting the transport connection

The most important new point of Decree 10 is the definition that “automobile transport business” means conducting one or more main transport activity (to directly coordinate the vehicles, drivers or to decide the transport fee) to transport passengers or goods on the road for profit. This definition helps discriminating automobile transport business providers from providers of application software supporting the transport connection by the factor of directly coordinating the vehicles, drivers or deciding the transport fee or not.

Furthermore, the Decree also defines “Coordinating vehicles, drivers refers to the process where an organisation or individual assigns a passenger or freight transport task to a driver via the application software supporting the transport connection, a transport order or a transport contract”. This shall help to determine whether technology companies providing ride-hailing transport services be considered as transport business providers or not. If yes, such companies shall be required to obtain Automobile Transport Business Licence and are subject to legal regulations binding automobile transport business companies, including the requirement to sign labour contracts, pay kinds of insurances, periodical health check and other benefits for their employees, including drivers and supporters on automobile.

Relaxing taxis from requirement of light boxes fixed on the car roofs

According to previous regulations, taxies were required to have light boxes with the word “TAXI” fixed on the roof. Now, Decree 10 allows passenger transport by taxi businesses the option of either fixing light boxes with the word “TAXI” on car roofs with a minimum size of 12×30 cm or posting (affixed) the phrase “XE TAXI” (“TAXI CAR”) made of reflective material on the front and rear windshields with the minimum size of the phrase “XE TAXI” (“TAXI CAR”) being 6 x 20 cm.

Rented automobiles, tourist automobiles must have signages and all required information affixed on the vehicle’s bodies

To prevent the problem of illegal transport vehicles, illegal temporary station, Decree 10 requires the rented automobiles to have the signage of “XE HỢP ĐỒNG (“RENTED AUTOMOBILE”), the tourist automobiles to have the signage of “XE DU LỊCH” (“TOURIST AUTOMOBILE”) affixed beneath the front windscreen on the right-hand side of the vehicle.

At the same time, rented automobiles and tourist automobiles must be posted (affixed) with the words “XE HỢP ĐỒNG” (“RENTED AUTOMOBILE”), “XE DU LỊCH” (“TOURIST AUTOMOBILE”) made of reflective materials on the front and back windshields of the vehicle.

Mandatory installation of cameras for passenger transport business automobiles of nine seats (including drivers) or more, trucks and tractors

Decree 10 requires passenger transport business automobiles of nine seats (including drivers) or more, trucks and tractors to be equipped with cameras to ensure the recording and archive of images inside the vehicles (including driver and vehicle doors) during the course of traffic before July 1, 2021. Duration of retention of these images is at least 24 hours or 72 hours depending on the operating distance of the vehicle. The image data must be provided to the competent authority upon request.

Requirements for taxis equipped with the ride-hailing software

Taxis using ride-hailing software capable of booking, cancelling and charging rides must be equipped with a device directly connecting with passengers for booking and cancelling rides; the ride is charged based on the distance showed on the digital map and the ride charging software must comply with regulations of laws on electronic transactions.

In particular, when finishing a ride, companies using ride-hailing software must send e-invoices to passenger via the software and send the invoice’s information to its supervisory tax authority pursuant to regulations promulgated by the Ministry of Finance.

Beside above notable points, Decree 10 also provides for several other new regulations to meet with the needs for management of technology companies providing ride-hailing transport services which are expected to create a fair competitive environment for traditional taxi and technology taxi in Vietnam.

https://www.inhousecommunity.com/article/vietnam-new-regulations-automobile-transport-business/ 

Ha Hai
M: (84) 96 371 8558
E: [email protected]

Phan Minh
M: (84) 90 462 1350
E: [email protected]

Công ty Luật bizconsult hân hạnh được đóng góp bài viết đăng trên ấn phẩm Asian-mena Counsel In-house Handbook 2020

Công ty Luật Bizconsult hân hạnh được đóng góp bài viết “Vietnam market update” đăng trên ấn phẩm Asian-mena Counsel In-house Handbook 2020 thực hiện bởi Luật sư Nguyễn Anh Tuấn – Chủ tịch HĐTV và các Luật sư Thành viên Nguyễn Thu Huyền, Hà Thị Hải và Trần Công Quốc. Bài viết tiếp cận và đánh giá quy định pháp luật hiện hành của Việt Nam trong những lĩnh vực luật quan trọng và cốt lõi nhất mà các nhà đầu tư nước ngoài cần phải lưu ý khi tham gia vào thị trường Việt Nam như luật đầu tư, luật lao động, luật cạnh tranh và các quy định pháp luật liên quan đến giao dịch ngoại hối. Các tác giả hi vọng bài viết sẽ đem đến một cái nhìn toàn cảnh về môi trường pháp lý đầu tư, kinh doanh tại thị trường Việt Nam, một thị trường hứa hẹn tiềm năng phát triển mạnh mẽ nhưng cũng ẩn chứa nhiều thách thức, rủi ro.

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https://www.inhousecommunity.com/about-us/publications/asian-mena-counsel-in-house-handbook/

 

Bizconsult Law Firm is pleased to be the contributors of Asian-mena Counsel In-house Handbook Edition 2020

Bizconsult’s Chairman – Lawyer Nguyen Anh Tuan and bizconsult’s partners namely Lawyer Nguyen Thu Huyen, Lawyer Ha Thi Hai, Lawyer Tran Cong Quoc are pleased to be the contributors of Asian-mena Counsel In-house Handbook Edition 2020’s article “Vietnam market update”. The article offers a holistic approach to Vietnam’s current legal provisions in the most essential law areas that foreign investors need to be aware of when participating in Vietnam market such as investment law, labor law, competition law, provisions on foreign exchange controls.

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https://www.inhousecommunity.com/about-us/publications/asian-mena-counsel-in-house-handbook/

 

VIETNAM: SWEEPING REFORM TO SECURITIES MARKET

Lưu ý: “bài viết này chỉ phát hành tiếng Anh cho tạp chí nước ngoài Asian- Mena Counsel”

By Trang Nguyen  – Associate | Attorney at Law

In November 2019, the National Assembly passed the new Law on Securities No. 54/2019/QH14 (“New Law”), effective from 01 January 2021. The New Law will completely replace the current Law on Securities No. 70/2006/QH11 as amended by the Law No. 62/2010/QH12 (“Current Law”). The New Law is said to be a radical improvement to regulations on securities market in Vietnam, and is expected to overcome those shortcomings observed for the past 10 years.

One of the remarkable points of the New Law is the imposition of stricter qualifications to become a public company. In particular, in order to become a public company, the required minimum paid-up charter capital of a company will be VND30 billion, in which at least 10% voting shares must be held by at least 100 shareholders other than major shareholders. The Current Law requires the minimum paid-up charter capital of a public company to be VND10billion and held by 100 shareholders only. The current public company which fails to reach such conditions after the effective date of the New Law shall be reverted to be non-public.  Alternatively, a non-public company may also become a public company after its successful initial public offering (“IPO”).

With respect to public offering, the New Law set out separately conditions for IPO and follow-on public offer, rather than the same conditions for both under the Current Law. For IPO, the conditions on charter capital, profit and accumulated loss before IPO and minimum voting shares to be offered in an IPO are more stringent than those provided in the Current Law. In particular,

  • The company must have paid-up charter capital of at least VND30billion (VND10billion is required under Current Law);
  • There must be profit in two preceding years (one year is required under Current Law), and no accumulated losses till the year of IPO.
  • At least 15% of the company’s voting shares must be sold (or at least 10% with the company having charter capital of VND 1,000 billion or more) to at least 100 investors other than major shareholders; and
  • Major shareholders must commit to hold at least 20% of the company’s charter capital within at least one year from the completion date of the IPO.

The subscription price shall be deposited on an escrow account during IPO process and be released only upon the completion of IPO. Furthermore, the company’s shares are also demanded to be listed on the Stock Exchange after the IPO. For follow-on public offer, it is required below conditions:

  • The company must have paid-up charter capital of at least VND30billion;
  • There must be profit in preceding year, and no accumulated losses till the year of follow-on public offer;
  • The total par value of offered shares shall not exceed the total par value of outstanding shares, excepting the case that the unsold shares are guaranteed to be subscribed by an underwriter.

If a public offering is to raise capital for project, at least 70% of the total offered shares must be issued. The company must prepare a plan to make up the short fall of the capital intended to be raised from such public offering for the project’s implementation.

Regarding private placement, only strategic investors and professional securities investors are allowed to participate in private placement of a public company under the New Law. The lock-up period will be three years for strategic investors, or one year in case of professional securities investors, except for transfers among professional investors or so ruled by the court/arbitration or in case of inheritance. As compared with the Current Law, the scope of professional investors under the New Law covers further, among others, the company with charter capital over VNDN100 billion, the listed company, individual having securities practice certificate, individual having portfolio of listed shares valued at VND2billion, or individual having yearly taxable income of VND1billion or more.

The New Law also introduce certain new regulations on listing and registration for trading, securities depository, registration of securities, securities settlement and clearance, information disclosure, protection of client’s assets, securities investment funds, and sanctions.

https://www.inhousecommunity.com/article/vietnam-sweeping-reform-securities-market/

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Vietnam: Sweeping reform to securities market

By Trang Nguyen  – Associate | Attorney at Law

In November 2019, the National Assembly passed the new Law on Securities No. 54/2019/QH14 (“New Law”), effective from 01 January 2021. The New Law will completely replace the current Law on Securities No. 70/2006/QH11 as amended by the Law No. 62/2010/QH12 (“Current Law”). The New Law is said to be a radical improvement to regulations on securities market in Vietnam, and is expected to overcome those shortcomings observed for the past 10 years.

One of the remarkable points of the New Law is the imposition of stricter qualifications to become a public company. In particular, in order to become a public company, the required minimum paid-up charter capital of a company will be VND30 billion, in which at least 10% voting shares must be held by at least 100 shareholders other than major shareholders. The Current Law requires the minimum paid-up charter capital of a public company to be VND10billion and held by 100 shareholders only. The current public company which fails to reach such conditions after the effective date of the New Law shall be reverted to be non-public.  Alternatively, a non-public company may also become a public company after its successful initial public offering (“IPO”).

With respect to public offering, the New Law set out separately conditions for IPO and follow-on public offer, rather than the same conditions for both under the Current Law. For IPO, the conditions on charter capital, profit and accumulated loss before IPO and minimum voting shares to be offered in an IPO are more stringent than those provided in the Current Law. In particular,

  • The company must have paid-up charter capital of at least VND30billion (VND10billion is required under Current Law);
  • There must be profit in two preceding years (one year is required under Current Law), and no accumulated losses till the year of IPO.
  • At least 15% of the company’s voting shares must be sold (or at least 10% with the company having charter capital of VND 1,000 billion or more) to at least 100 investors other than major shareholders; and
  • Major shareholders must commit to hold at least 20% of the company’s charter capital within at least one year from the completion date of the IPO.

The subscription price shall be deposited on an escrow account during IPO process and be released only upon the completion of IPO. Furthermore, the company’s shares are also demanded to be listed on the Stock Exchange after the IPO. For follow-on public offer, it is required below conditions:

  • The company must have paid-up charter capital of at least VND30billion;
  • There must be profit in preceding year, and no accumulated losses till the year of follow-on public offer;
  • The total par value of offered shares shall not exceed the total par value of outstanding shares, excepting the case that the unsold shares are guaranteed to be subscribed by an underwriter.

If a public offering is to raise capital for project, at least 70% of the total offered shares must be issued. The company must prepare a plan to make up the short fall of the capital intended to be raised from such public offering for the project’s implementation.

Regarding private placement, only strategic investors and professional securities investors are allowed to participate in private placement of a public company under the New Law. The lock-up period will be three years for strategic investors, or one year in case of professional securities investors, except for transfers among professional investors or so ruled by the court/arbitration or in case of inheritance. As compared with the Current Law, the scope of professional investors under the New Law covers further, among others, the company with charter capital over VNDN100 billion, the listed company, individual having securities practice certificate, individual having portfolio of listed shares valued at VND2billion, or individual having yearly taxable income of VND1billion or more.

The New Law also introduce certain new regulations on listing and registration for trading, securities depository, registration of securities, securities settlement and clearance, information disclosure, protection of client’s assets, securities investment funds, and sanctions.

https://www.inhousecommunity.com/article/vietnam-sweeping-reform-securities-market/

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