Wide impacts to be made with new law changes

Tran Hao Hung, director of the Legal Department under the Ministry of Planning and Investment

The overall targets of the amended Law on Enterprises are to facilitate the establishment and business registration activities; slash costs and required time for startups; perfect the mechanism to shield the rights and legitimate benefits of investors, shareholders, and enterprise members; and push corporate governance to reach international standards. Another important objective is to raise the efficiency, publicity, transparency, and accountability of enterprises in which the state holds the controlling stake.

Along with this, substantial changes in the law involve annulling the procedures announcing seal models and allowing businesses to use digital seals to supersede traditional ones.

Additionally, the law aims at facilitating smooth online business registration procedures and simplifying business by not requiring companies to submit additional paper records. Shareholders now have extended rights, and the law supplements regulations on shareholding management pursuant to good international practice on business management.

Moreover, the law amends the concept of state-owned enterprises (SOE) and defines both types of SOEs, the one in which the state holds 100 per cent of charter capital and the one in which the state holds more than 50 per cent, in order to introduce suitable governance and supervision methods.

The law also supplements regulations on centralised control to avoid conflicts of interest and ensure information transparency of enterprises with state ownership.

One important point is the addition of a regulation on non-voting depository certificates to diversify offerings in the local stock market.

Meanwhile, the prime targets of the amended Law on Investment are to enhance the quality and efficiency of investment attraction in compliance with the planning and development orientation of sectors while assuring defence, national security, sustainable development, and environmental protection goals.

The law adds “debt collection services” to the list of fields and professions that are forbidden for trading while omitting 22 investment fields with irrational conditions that hinder market entry processes.

The list of fields and professions for foreign investors to access the Vietnamese market is built up under an approach in which any sector and profession prohibited from investment will be published. This is aiming at enhancing the transparency and viability in applying Vietnam’s commitment on an open market in light of its many free trade agreements.

Furthermore, the Law on Investment has amended and supplemented some fields and professions with incentives to ensure attracting quality investment on a selective basis, and also added a new regulation allowing the prime minister to apply special incentives in a timely manner.

One highlight of the law is that provincial-level people’s committees are conferred the right to approve investment proposals for golf courses and projects with a capital scale from VND5 trillion ($215 million), and to not apply the procedures of approving investment proposals for individuals and family households.

The Law on Public-Private Partnership Investment aims at constituting a highly-effective and more secure regulatory framework to boost the efficiency of investment attraction under the PPP model, creating incentives and mechanisms to ensure investment attractiveness and mitigate risks for investors engaging in infrastructure development and public service provision.

On that basis, this law regulates five essential fields eligible for investment: transport; power networks plants; water resources, fresh water supply, drainage, and wastewater and waste treatment; healthcare, education, and training; and IT.

In light of the new law, the minimum investment value for a PPP project stands at VND200 billion ($8.7 million). For areas with difficult conditions for socio-economic development, and projects in healthcare, education, and training. However, the investment value is halved to VND100 billion ($4.35 million). Regulations on investor selection are for the first time integrated into the law to ensure unity and continuity in PPP project implementation. Simultaneously, the law narrows down cases of investor appointment.