New laws to create breakthroughs for entrepreneurship

The National Assembly (NA) on November 26 passed two revised business laws, namely the Enterprise Law and the Investment Law, which are expected to create breakthroughs in nurturing the entrepreneurship.

Noteworthy changes in the revised Enterprise Law include simplified procedures, especially the abolishment of the mandatory use of seals by enterprises in business transactions, as well as clarifications on the scope of the new law.

Clarifications in Enterprise Law

Enterprise Law, Investment Law

The new law, effective from July 1, 2015, allows enterprises to determine whether to use seals in their business transactions or not. After opting for the use of seals, enterprises are obliged to notify competent State bodies of their seals, the intended usages and the contents of seals for storing in the national database so that other entities can verify the authenticity of such seals in business transactions.

As such, with the revised law, the use of seals is no longer legally binding, but it only helps ascertain the identity of enterprises.

The new law defines State-owned enterprises as those wholly owned by the State, while social enterprises are recognized when such entities pledge to use at least 51% of their after-tax profits for reinvestment to achieve social targets as registered. However, social enterprises are just ordinary business entities, but incentives will apply to help them realize social targets.

Enterprises established under the revised Enterprise Law but operating in specific business areas will be governed by laws prescribed for such areas.

The NA Standing Committee explained that the Securities Law, the Law on Credit Organizations, the Insurance Business Law, the Oil and Gas Law, and some other specific laws will prevail over the Enterprise Law in governing businesses in such sectors.

As such, Article 3 of the revised Enterprise Law makes it clear that “In case a specific law provides special regulations on the establishment, management, reorganization, disbandment and (other) activities related to enterprises, such regulations shall apply.”

Investment Law more liberal

The spirit that the people can do any business activity not banned by the law is thoroughly reflected in the revised Investment Law passed on the same day.

In the new law, only six business areas are banned compared to the previous number of 51 business areas. In fact, all these banned areas are already specified in prevalent legal documents, but specific provisions are integrated into the new law to clarify the people’s business freedom.

The new law also comes with an appendix listing 267 business areas as conditional, which chairman of the NA Economic Commission Nguyen Van Giau said would improve the transparency of policies of the State.

The NA Standing Committee explained that restrictions apply in conditional business areas so as to safeguard national defense and security, social order and safety, social ethics and community health among others.

Based on this list of conditional business areas specified in this law, the Government will provide on the business website specific terms and conditions to be applied for both domestic and foreign investors.

According to the new law, the foreign investor is defined as an individual with foreign nationality, or an organization established under the foreign country’s laws who invests or does business in Vietnam. The definition, according to the NA Standing Committee, is aligned with international conventions.

Enterprise Law, Investment Law