The new Law on Enterprise No. 59/2020/QH14 (LOE 2020) which was released on 17 June 2020 and took effect from 1 January 2021 reduces the compliance burden for investors.
Company seal
Unlike the previous rules, the new regulation does not require the specific compulsory contents for the seal or registration obligation. The company shall decide on the type, quantity, form and content of the seal of the company,
its branches, representative offices and other units. The management and keeping of the seal shall comply with the provisions of the company’s charter or regulations promulgated by the company.
Simplified administrative procedures
Under previous laws, in theory, any change in business registration information of an enterprise must be registered with the licensing authority. However, under the LOE 2020, there is no requirement to notify on changes to enterprise’s management position (i.e. members of the Board of Managers, members of the Inspection Committee or Inspectors) and on private placement of joint stock companies.
Minority shareholder protection
The LOE 2020 increases the protections of minority shareholders by allowing a shareholder, or group of shareholders, owning just 5% (previously 10%) of the total ordinary shares of an enterprise to request a General Meeting of Shareholders. The minority of shareholders may also request an inspection committee to investigate issues relating to the management and administration of the company. Furthermore, to exercise these rights, such shareholders are no longer required to hold their shares for a period of at least six consecutive months.
Changes in the management structure of limited liability companies
Under the LOE 2020, a Limited Liability Company (LLC) is no longer required to have an inspection committee (in respect of a multi-member LLC) or an inspector (in respect of a single-member LLC). An inspection committee (or inspector) is now only required in respect of an LLC that is a State Owned Enterprise (SOE) or its subsidiary.
By FIA