Legal Factors Affecting Vietnam
Article 4 of Law 80 specifies and classifies legal documents into 15 levels of validity, of which the Constitution has the highest degree of validity. Under Vietnam`s WTO commitments, foreign service suppliers are allowed to provide their services to clients in Vietnam in most sectors (including architectural services, engineering services, IT services, legal services, accounting services, advertising services, etc.), even without establishing a commercial presence. This type of service provision is called “cross-border provision”, since in this case only the service crosses national borders. Several well-known law firms have proven to be pioneers in the market, and in recent years have built their offices and a solid foundation in the Vietnamese legal market. Speaking to Chambers, sources point to the moves of their competitors, noting, “We are seeing Japanese law firms setting up representative offices in regional hubs, including Singapore, Vietnam and China.” Several Japanese law firms, including Mori Hamada & Matsumoto, Anderson Mori & Tomotsune, Nagashima Ohno & Tsunematsu and Nishimura & Asahi, have opened offices in Ho Chi Minh City and Hanoi. Korean law firms are also active in this growing market, with renowned law firms such as Kim & Chang, Bae, Kim & Lee, Lee & Ko, Yulchon and Jipyong having a local presence in Ho Chi Minh City and Hanoi. We have also seen the market entry of other well-known regional and international law firms such as Allen & Gledhill and Dentons. Therefore, before establishing a legal presence in Vietnam, foreign investors should carefully consider whether such establishment is actually necessary under Vietnamese law with respect to the business they intend to do and whether other options (e.g. cross-border supply) are commercially preferable. Depending on the specific circumstances, when a foreign investor wishes to establish a business under its sole management control, an LLC1 is often considered the most appropriate and simplest form. However, there are several ownership, management, business, and governance factors to consider when deciding whether to structure a 100% FOE in the form of an LLC1, LLC2 or JSC. In 2016, the government issued two important regulations guiding the 2012 Labour Law (LOL) regarding foreign workers, namely Decree 11/2016/ND-CP implementing certain articles of the LOL on Foreign Workers in Vietnam (Decree 11) and Circular 40/2016/TT-BLDTBXH, which guides Decree 11 (Circular 40).
This section will focus on introducing some notable points of these rules. Work permit subject: Apply for a work permit from the labor authorities to work legally in Vietnam. In case of violation, not only the foreign worker risks deportation ordered by the Vietnamese government, but also the employer who employs the foreign worker is punished in accordance with the law. In addition, a company may have more than one legal representative and more than one corporate seal. The number of legal representatives and seals must be specified in the company`s articles of association. Before officially using a new corporate seal, the company must publish a sample of the new seal on Vietnam`s national business registration portal by sending the sample to the Business Registration Authority and paying a fee. The following list, from highest to lowest legal validity, contains some common legal documents in the Vietnamese legal system. 1. The Constitution; 2. Code, law and resolution of the National Assembly; 3.
Decree and decision of the Standing Committee of the National Assembly; 4. Order and decision of the President; 5. Government decree; 6. Decision of the Prime Minister; 7. Decision of the Judicial Council of the Supreme Court; 8. Circulars from Ministers and Heads of Ministerial Agencies; the President of the Supreme Court; the Attorney-General of the Supreme Public Prosecutor`s Office; 9. Resolution of the People`s Councils of the provinces; and 10. Resolution of the provincial people`s committees.
Viet Nam is a member of the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Foreign investors tend to resort to foreign arbitration whenever they can, as they lack confidence in the capacity and transparency of Vietnamese courts. Until recently, the enforcement of foreign arbitral awards was problematic due to the narrow definition of “commercial activities” in Vietnamese law. The New York Convention only guarantees national recognition of foreign arbitral awards in matters considered commercial in nature under national law. The recent expansion of the concept of “commercial activities” was an important step in Vietnam`s legal reform. International treaties play an important role in the development of Vietnam`s legal system and are another source of law. An international treaty becomes a source of law after being ratified by the National Assembly. Several legal documents are published to interpret the provisions of the Treaty in national law and to replace the existing rules refuted by the ratified Treaty. Finally, the lower authorities of the system of government will base their decisions on both the ratified treaty and the newly published legal documents for implementation. The owners of the MLLC form the Council of Members, which has the power to make decisions regarding all rights and obligations of the MLLC.
The President of the Council of Members shall be elected from among the members of the Council. The president may also be the director. Public limited company (JSC): A JSC is a legal entity with limited liability established by at least three shareholders. There is no limit to the number of shareholders; This is the first major difference between an LLC and a JSC. If a JSC has fewer than three shareholders after its formation due to stock transfers, it must be converted to an LLC. Decree 15 also provides a legal framework for “unsolicited projects”, under which foreign investors can propose the implementation of a project to the relevant ministries and local authorities for review. A controller is a person appointed by the owner. The owner decides the number of controllers. The Comptroller has the right to access all LLSC documents and materials for inspection purposes and to report directly to the owner. Five years is the maximum service life of a controller.
This guide will help you explore the legal systems of the 10 Southeast Asian countries that make up the Association of Southeast Asian Nations (ASEAN) – Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar (Burma), Philippines, Singapore, Thailand and Vietnam. Information on ASEAN and human rights can be found on the Southeast Asia page of our Human Rights Research Guide. Japan and Korea have also been added to this research guide. Conducting thorough due diligence of the target company is, of course, the first step for any foreign investor considering investing in a domestic company. Despite some systemic challenges, it is common today to conduct legal due diligence investigations at a level of detail similar to that common in more developed jurisdictions. The Communist Party of Vietnam and the State are making great efforts to improve the legal environment and develop the rule of law, especially for businesses, to make Vietnam an attractive destination for investment. Continuous legal reforms are being carried out to liberalize the business environment, and restructuring the economy to improve growth, productivity and competitiveness is equally important. Bill 80 contains provisions on the types of legal documents and the legislative process, which consist of many types of legal documents, with differences in legal validity. • Increase the proportion of equal shares in each SOE to a level that results in a significant change in management.
Decision 58/2016/QD-TTg of the Prime Minister of Vietnam: Decision 58/2016/QD-TTg of 28. December 2016 on Classification Criteria for SOEs is another recent important legal document regarding Vietnam`s equestrian regulation. In 2015, the National Assembly adopted Law No. 80/2015/QH13 on the promulgation of legal documents, which entered into force in July 2016 (Law 80). Another important law, the amended and supplemented Investment Law, entered into force on 1 January 2017. The number of conditional investment companies was reduced from 267 to 243. This law demonstrates the state`s efforts to remove legal barriers and encourage private sector investment in Vietnam. In 2017, as stated in resolution 22/2016/QH14 of 29 July 2016, the National Assembly plans to adopt a new law to support small and medium-sized enterprises in the country.
This law is intended to serve as a legal framework to promote entrepreneurship. Vietnam is a member of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention) and therefore the recognition and enforcement of foreign arbitral awards in Vietnam is carried out in accordance with the rules of the New York Convention. Accordingly, a foreign arbitral award recognized and enforced by a Vietnamese court has the same legal effect as a valid decision of a Vietnamese court. This article reflects legal market trends and developments in the rapidly developing Vietnamese market. The following information is primarily based on the extensive telephone interviews Chambers conducted with lawyers in Vietnam and abroad during recent research for the Asia-Pacific Guide. When the new decision is published, the public will have more information on the government`s action plans for the withdrawal process by 2020.
