Amendments to the Enterprise Law are necessary to create a smooth business environment

Amendments to the Enterprise Law are necessary to create a smooth business environment

That was the speech of Mr. Phan Duc Hieu - Deputy Director of the Central Institute for Economic Management (CIEM) at the seminar "Consultation on the drafting of the Enterprise Law (amended)" held by the CIEM in collaboration with the Australia supports Vietnam's economic reforms (Aus4Reform) Program and the Vietnam International Trade Law Club (VBLC) on May 27, 2020.

Specifically, Mr. Phan Duc Hieu emphasized that the amendment and supplement of the Enterprise Law are necessary to create a simple, clear, synchronized and clear business environment, convenient for businesses. Amendments and supplements in the draft are aimed at overcoming the shortcomings of the current Law, in accordance with good international practices, reducing the burden of costs and time for enterprises in compliance.

Mr. Phan Duc Hieu - Deputy Director of the Central Institute for Economic Management (CIEM) at the seminar

Accordingly, some of the main amendments in this Draft Law include:

1. Procedures for notification of seal samples of enterprises: To abolish "procedures for notification of seal samples" to business registration offices, supplementing the regulations that may use "digital seals" (digital signatures), not completely abolish the use of enterprise seal

2. Age of business establishment: expected from full 16 years old to be able to set up (old rule: adult people).

3. Clearly stipulating the joint responsibilities of many legal representatives in Limited Liability Companies(LLC) and Joint Stock Companies (JSC) if the company's Charter is not clearly decentralized.

4. Regarding corporate governance, it is mainly to amend the regulations of the JSC, not to other types of enterprises.

- Provisions on the Independent Inspection Committee, instead of the Internal Inspection Committee.

- Enhance the role of the Secretary of the Company, as a title in the organizational structure rather than the "maid" for the Chairman or the Board of Directors.

- Expanding the rights and scope of shareholders and groups of shareholders: Removing the condition of continuous ownership for 6 months for shares to exercise rights; Adjusting the shareholders ownership percentage of this group from 10% to 5%.

- Provisions that shareholders have the priority to buy shares in any issue or offer of shares of the company.

- Independent Board of Directors’ members: encourage this model; not more than 02 terms; candidates are not nominated by shareholders, the group of "very large" shareholders (owning more than 10% of the shares).

- Authorization to attend the meeting: Removing the regulation “must follow the company's form”; allowing authorization for multiple authorization (currently authorized by the employer for ONE individual).

5. Capital mobilization: there is an additional mechanism for issuing non-voting depository receipt (NVDR) certificates.

6. Many other new points on bonds and regulations related to commercial legal entities committing crimes which are banned from business and practicing; ...

7. No definition of "dominant shares or contributed capital".

8. The issue of the effective time of the legal representative confirmed by members of the Drafting Board is according to the decision or resolution of the Company (avoiding the current dispute is under ERC).

9. Many related comments on the time of capital contribution (90 days is short); Dividend definition is not compatible with dividend preference shares; The time of becoming a shareholder or a member (procedures for notifying the company); procedures for collecting written opinions of the Board of Directors, ...