Law on Enterprises no. 59/2020/QH14 has just been passed by the National Assembly and will come into effect from January 1, 2021. Here are ten (10) new points as well as notable changes of the Enterprise Law 2020 compared with the effective Enterprise Law 2014 before.
1. Regulations on seal sample notification.
Rejecting regulations on notification procedures for seal samples in the Law version 2014;
Enterprise’s seal includes a seal sample in the form of a digital signature in accordance with the Law on E-Transactions (Law on E-Transactions 2005);
The enterprise will autonomously manage and use the seal based on the company’s charter or the law (Article 43 The enterprise’s seals 1 ).
2. Time of capital contribution to the company’s charter capital.
The 90-day period for capital contribution procedures does not include the time for transportation or import the contributed assets, time for conducting administrative procedures to transfer ownership of property (Article 472, Article 753)
3. Notification of information change Enterprise Manager
Rejecting some of the following regulations:
Enterprises are required to notify the Department of Planning and Investment where the company is headquartered within five (05) days from the date of change of information related to Full Name, Temporary address, Nationality, Identification/Citizen identification card number, Passport or other legal personal documents of the following people:
Member of the Board of Directors, for joint stock companies;
Member of the Member/Partner Assembly or the Board of Supervisory;
Director/General Director, or holder of another managerial position
4. Notice for the notification period for business suspension
The period time of the priority notice of the business suspension has been reduced from fifteen (15) to three (03) working days (Article 2064).
5. Legal representative.
Previously, the Law on Enterprises 2014 stipulated that limited liability companies and joint stock companies could have one or more legal representatives and specify the number, managerial positions, powers and duties of the legal representative of the enterprise as provided in the company’s charter. Meanwhile, the Law on Enterprises 2020 has added some more specific regulations. Responsibilities of the legal representative are stipulated in more detail and clearer when the enterprise can have many legal representatives. Accordingly, if the division of rights and obligations of each legal representative is not specified in the company’s charter, each legal representative of the company is the authorized representative of the business to a third party. All legal representatives must be jointly responsible for the damage caused to the enterprise in accordance with the civil law and other relevant laws.
6. Regulation on the subjects who are not allowed to establish and manage the business.
Some subjects are added to the list of prohibited entities participating in the establishment and management of the enterprises:
People in agencies and units of Vietnam People’s Army, police authorities and units;
People having difficulties controlling their behaviors;
Juridical persons that are banned from business operation or banned from certain fields as prescribed by the Criminal Code.
7. The organization and management structure of a single-member Limited Liability company owned by an Organization.
|Law on Enterprises 2014||Law on Enterprises 2020|
|Single-member limited liability company owned by an Organization is managed and operates under one of the following two models:|
Company President, Director or General Director and Controller.
Board of Members, Director or General Director and Controller.
|Single-member limited liability company owned by an Organization is not required to have a Board of Supervisory or Controllers (Article 795 ).|
8. Suspension of business.
In the Law on Enterprises 2014, the business registration authority, the competent authority has the right to request the enterprise to suspend business only for the subject doing business in restricted business lines but do not have enough conditions as prescribed by law.
The Enterprise Law 2020 will come into effect on January 1, 2021, extending the case of business suspension. It includes tax authorities, environmental management agencies and other management agencies that have the right to require enterprises to suspend or terminate their business in a number of cases according to the regulations of law on tax administration, environment and relevant laws (Article 2066).
9. State-owned enterprises.
Changing the definition of state-owned enterprises, in which enterprises with more than 50% of charter capital held by the State or the total number of shares with voting rights (Article 887).
10. Name of the branch, branch office, business location.
Supplementing the regulations that the name must include the name of the enterprise together with the phrase corresponding to the type (Article 408):
- The phrase “Chi nhánh” for a branch;
- The phrase “Văn phòng đại diện” for a representative office;
- The phrase “Địa điểm kinh doanh” for a business location./
Bach Khoa Luat.
1Article 43 of Law on Enterprises 2020
“1. The enterprise’s seals can be physical or digital as prescribed by e-transaction laws.
2. The enterprise shall decide the type, quantity, design and content of its seal and the seals of its branches, representative offices and other units.
3. The management and storage of seals shall comply with the company’s charter or regulations of the enterprise, branch, representative office or unit that owns the seal. Seals shall be used by enterprises in transactions as prescribed by law.”
2Article 47.2 of Law on enterprises 2020
“2. The members shall contribute sufficient and correct assets as promised when applying for enterprise registration within 90 days from the issuance date of the Certificate of Enterprise Registration. The time needed to transport or import the contributed assets and for completing ownership transfer procedures will be added to this 90-day period. During this period, the members shall have rights and obligations that are proportional to their promised contribution. The members may only contribute assets that are different from the promised ones if the change is approved by more than 50% of the remaining members.”
3 Article 75.2 of Law on Enterprises 2020
“2. The owner shall contribute adequate and correct assets as promised when applying for enterprise registration within 90 days from the issuance date of the Certificate of Enterprise Registration. The time needed to transport or import the contributed assets and for completing ownership transfer procedures will be added to this 90-day period. During this period, the owner shall have rights and obligations that are proportional to the promised capital.”
4 Article 206.1 of Law on Enterprises 2020
“1. An enterprise shall send a written notification to the business registration authority at least 03 working days before the suspension or resumption date.”
5Article 79.1 of Law on Enterprises 2020
“1. A single-member limited liability company owned by an organization shall apply one of the two models below:
a) A company with a President and the Director/General Director;
b) A company with a Board of Members and the Director/General Director.”
6 Article 206.2(b) of Law on Enterprises 2020
“b) Relevant authorities request the suspension in accordance with regulations of law on tax administration, environment and relevant laws;”
7 Article 88.1(b) of Law on Enterprises 2020
“b) Partially state-owned enterprises (over 50% of charter capital or voting shares is held by the State, except the enterprises specified in Point a Clause 1 of this Article).”
8 Article 40.2 of Law on Enterprises 2020
“2. The name of a branch, representative office or business location shall consist the enterprise’s name and the phrase “Chi nhánh”, “Văn phòng đại diện” or “Địa điểm kinh doanh” respectively.”