On 17th June, 2020, the National Assembly has officially passed the amendment of Law on Enterprise. With 10 Chapters and 218 Articles, the new Law on Enterprise has the following notable changes:
- Removing the regulation of notifying the enterprise’s seal to the business registration authority, establishing amechanism of business registration via business registration portal with an electronic dossier instead ofsubmitting additional paper dossiers
- Removing the regulations on business households in Law on Enterprise, considering and promulgating a new Decreeguiding the registration and operation of business households before having a separate Law on Business Households
- Amending the definition of state-owned enterprises in accordance with the principle of dividing the types of state-owned enterprises with each level of ownership, whereby enterprises with more than 50% of charter capital owned by the State are considered as state-owned enterprises.
- Stipulating the percentage of ownershipup to 5% for common shareholders to protect the rights of minority shareholders and groups of shareholders in the business, and to conform with the definition of a major shareholder in Law on Securities, the percentage of ownership of shareholders or groups of shareholders must ensure the rights and reasonable interests of minority shareholders and groups of shareholders in business, to create favorable conditions for production and business activities of enterprises.
- Removing the regulation on the possessing time of “at least 06 consecutive months” of shareholders or groups of shareholders owning 10% and above of the common shares. In reality, there are many cases that the investors have purchased a lot of shares in the business but lost their rights and benefits since they could not meet the regulations on ownership period for at least 06 consecutive months. Therefore, this regulation is to protect the legal interests of shareholders.
- Supplementing the rights of common shareholders, accordingly, shareholders or groups of shareholders owning 5% and above of the total ordinary shares shall have the right to review and extract minutes and resolutions, decisions of the Board of Directors, financial statements, request to convene a meeting of the General Meeting of Shareholders in a few cases…
- Supplementing the provision of having only 01 Supervisor on the Supervisory Board. In that case, the Supervisor is also the Head of the Supervisory Board and he should meet the standard of the Head of Supervisory Board stipulating in Clause 1, Article 103 of the Amended Law.
- Amending the regulation on public companies, the Chairman of the Board of Directors must not concurrently act as the Director / General Director in order to limit the conflicts of interest, centralization of power that may affect the interests of other shareholders. At the same time, this regulation is in line with good corporate governance practices of the Organization for Economic Co-operation and Development (OECD).
- Supplementing the provision of enterprise dissolution due to the revocation of enterprise registration certificate. Accordingly, in order to ensure the consistency with the provisions of Law on Tax Administration, the revocation of an enterprise registration certificate in case of enforcing administrative decisions on tax administration shall not lead to business dissolution.
The amendment of Law on Enterprise shall officially take effect from 01stJanuary, 2021.