Legal Briefing December 2014

Transcription

1 Legal Briefing December 2014 Disclaimer: This Briefing is for information purposes only. Its contents do not constitute legal advice and should not be regarded as detailed advice in individual cases. For legal advice, please contact our Partners.

2 Corporate Dispute Resolution Financial Services Intellectual Property Real Estate & Infrastructure AS SEEN IN COURT Freedom to maintain one s own capital structure...page 2 NEWLY ENFORCEABLE LAWS Laws that Take Effect on 1 st January, Page 3 LEGAL December 2014 Corporate Corporate Compliance New Regulations on Functional Food Products...Pages 5 New Guidance on the Management of E-commerce Websites...Page 6 Severe Restrictions on Animal Feed Are Lifted...Page 6 Corporate Labour Detailed Procedure of Managing Escrow Deposit for Labor Outsourcing Enterprises...Page 7 Financial Services Regulatory Approval for Share Purchases in Vietnamese Credit Institutions by Foreign Investors...Page 8 SBV s Guidance on Non-Cash Payment...Page 9 1

3 Corporate Dispute Resolution Financial Services Intellectual Property Real Estate & Infrastructure Freedom to maintain one s own capital structure The facts of the case: A company maintains a large amount of cash on hand. However, it decides to open a credit line at a bank and takes a loan. The company pay interest on the loan, and claim that those interest payments are legitimate expenses and thus tax deductible. The tax authorities disagree. The law applicable: Interests on loans are tax deductible business expenses. Rationale from the tax authorities: Since the company has a large amount of cash on hand, it does not need to take a loan. Therefore the loan interest payments are not legitimate expenses, thus not tax deductible. Decision of the court: The appellate court affirms the decision of the court of first instance that companies are free to make its own business decision regarding its capital structure and cash on hand. The loan interest is tax deductible. 2

4 Corporate Dispute Resolution Financial Services Intellectual Property Real Estate & Infrastructure Laws that take effect on January 1 st, 2015 On January 2015, the following laws shall officially take effect. Please make sure to get updates and apply the following newly enforceable laws: 1. Law on amendments to the tax laws, document: 71/2014/QH13, issued on 26 th November, Law on Environmental Protection, document: 55/2014/QH13, issued on 23 rd June, Law on Bankruptcy, document: 51/2014/QH13, issued on 19 th June, Law on Employment, 38/2013/QH13, issued on 16 th November, Amended Health Insurance Law, document: 46/2014/QH13, issued on 13 th June, Law on Immigration, document: 47/2014/QH13, issued on 16 th June Law on Construction, document: 50/2014/QH13, issued on 18 th June,

5 Corporate Dispute Resolution Financial Services Intellectual Property Real Estate & Infrastructure Key contact Ms. Quyen Hoang Mr. Hong Bui Key contact Dr Net Le Mr. Huy Do Corporate Corporate - Compliance 1. New Regulations on Functional Food Products Page 5 2. New Guidance on the Management of E-commerce Websites 3. Severe Restrictions on Animal Feed Are Lifted Corporate Labor Page 6 Page 6 4. Detailed Procedure of Managing Escrow Deposit for Labor Outsourcing Enterprises Financial Services Page 7 5. Regulatory Approval for Share Purchases in Vietnamese Credit Institutions by Foreign Investors 6. SBV s Guidance on Non-Cash Payment Page 8 Page 9 4

6 Corporate 1. New Regulations on Functional Food Products On 24 November 2014, the Ministry of Health issued Circular No. 43/2014/TT-BYT regulating the management of functional food products (Circular 43). Circular 43 will replace current regulations, which were introduced in There are more regulations of functional foods in Circular 43 than in the current regulations. Noticeable regulations of Circular 43 are as below. The following products are categorized as functional food: health supplement, food supplement, and dietary supplement (collectively thực phẩm bảo vệ sức khỏe in Vietnamese); food for special medical purposes or medical food ( thực phẩm dinh dưỡng dùng cho mục đích y tế đặc biệt or thực phẩm dinh dưỡng y học, respectively in Vietnamese); and food for special dietary use ( thực phẩm dùng cho chế độ ăn đặc biệt in Vietnamese food for special dietary use ( thực phẩm dùng cho chế độ ăn đặc biệt in Vietnamese) Under Circular 43, functional foods, imported or locally manufactured, must satisfy following general requirements. test and declaration on compliance and conformity with food safety regulations; test for effects on human health; product labeling; and advertising. Manufacturers of functional foods who have obtained Certificate of Good Manufacturing Practice (GMP) for pharmaceutical products will be exempted from having to obtain certificate of satisfaction of food safety conditions. Food functional manufacturer must implement GMP and Hazard Analysis and Critical Control Points (HACCP) systems in accordance with regulations issued by MOH. During trading activities, health supplement, food supplement, and dietary supplement must be sold separately from the areas of other foods. Drug store must have a separate area for functional food products. This Circular 43 takes effect on 15 January

7 2. New Guidance on the Management of E-commerce Websites On 5 December 2014, the Ministry of Industry and Trade (MOIT) issued Circular No. 47/2014/TT-BCT (Circular 47) on managing e- commerce websites, providing critical issues as business through e- commerce websites, procedures for notification, registration of e- commerce websites and information disclosure on the e-commerce operation management portal. However, Circular 47 does not govern websites engaging in finance, banking, credit, insurance, sale and purchase gold, foreign exchange as well as game online, betting services and games with prizes, which are is governed by their respective specialized laws. Most significantly, Circular 47 requires a social network to be registered as an e-commerce trading floor with the MOIT, if such social network: allows participants to open stalls for display and introduction of goods or services; allows participants to set up sub-websites for display and introduction of goods or services; or has a forum for sale and purchase which allows participants to post information sale and purchase of goods or services. Accordingly, organizations and individuals who set up or sell on such social networks must comply with all respective requirements as applied to those who set up or sell on e-commerce trading floor. Circular 47 takes effect on 20 January 2015 and replaces Circular 12/2013/TT-BCT dated 20 June 2013 on procedures to notify, register, and publicize information relating to e-commerce websites. 3. Severe Restrictions on Animal Feed Are Lifted The Ministry of Agricultural and Rural Development (MARD) passed Circular 50/2014/TT-BNNPTNT on December 24 th 2014 to provide certain amendments to Circular 66/2011/TT-BNNPTNT dated October 10 th 2011 regarding management of animal feeds. The new Circular lifted many restrictions on the circulation of animal feeds. First of all, all animal feeds approved for circulation shall not have to be a result of a scientific research theme recognized by a scientific council of MARD anymore. Additionally, only new animal feeds must be tested, experimented and accredited by a 6

8 specialized scientific council established by DLP or DOF whilst the finished mixed feeds can be tested, experimented and accredited by the company itself following a testing procedure issued by MARD. Second, specifications and quality of animal feeds shall comply with the applicable standards issued by companies. If there are national technical standards which apply to specifications and quality of animal feeds, then companies shall complete the procedure of standard conformity announcement in respect of such animal feeds. The list of animal feeds to be circulated in Vietnam must be approved by the Minister of MARD and then accredited by the Department of Livestock Production (DLP) or the Directorate of Fisheries (DOF) with satisfying all conditions of circulation. Such list shall be published on websites of both departments on a monthly basis. This new Circular also provides some changes to appendices of Circular 66 on the technical criteria for animal feeds production and quality control. Circular 50 takes effect on February 7 th, Detailed Procedure of Managing Escrow Deposit for Labor Outsourcing Enterprises On December 11 th, 2014, SBV issued Circular 40/2014/TT-NHNN guiding the implementation of Decree No.55/2013/ND-CP dated May 22 nd, 2013 regarding the deposit of labor outsourcing companies. Accordingly, labor outsourcing companies are required to deposit to the commercial bank where the labor outsourcing companies open their main transactional accounts and be granted the certificate of deposit used for labor outsourcing services by that commercial bank. Labor outsourcing companies are required to retain a minimum deposit of 2 billion VND in the account. Following 30 days from the date of any withdrawal, the bank shall notify MOLISA of such withdrawal if the companies do not credit the account. In return, the outsourcing companies are entitled to interests over the deposit based on the agreed interest rate. This Circular 55 takes effect on February 1 st,

9 Financial Services 5. Regulatory Approval for Share Purchases in Vietnamese Credit Institutions by Foreign Investors On December 8 th 2014, the State Bank of Vietnam (SBV) promulgated Circular No. 38/2014/TT-NHNN (Circular 38) explaining the provisions in Decree No. 01/2014/ND-CP (Decree 01) regarding the application files and approval procedure to purchase shares of Vietnamese credit institutions (VCI) by foreign investors. Circular 38 shall apply when the foreign investors purchase shares of the VCI if such purchase would : (i) result in an equity stake of 5% or more of the charter capital of the VCI; (ii) be an additional purchase of shares when the foreign investors have already owned 5% or more of the charter capital of the VCI; (iii) result in an equity stake of 10% or more of the charter capital of the VCI; (iv) cause the foreign investors to become foreign strategic investors in a VCI; and (v) occur in a weak VCI - the foreign investors shareholding ratio higher than the threshold provided in Decree 01. This article is to present notable issues in preparing and submitting applications files and procedural timing set forth under Circular 38. Application files When a share purchase is one of five transactions above, the application files will show some discrepancies. Moreover, the applications files for transactions (i) to (iv) may be differentiate slightly depending on whether the shares of the VCI are listed or traded on a stock exchange or not. In terms of complications, it appears that the larger percentage of the equity the foreign investors desire to own, the more documents are required for the application files. For example, the application files for transaction (iii) include the same documents required for transactions at (i) but with the notable addition of the following documents: credit rating documents issued by an international credit rating organization; reports issued by relevant authority regarding the foreign investors compliance with the monetary, banking, and securities regulations; and audited financial statements. The foreign investors shall prepare and submit application files to the authority in case the foreign investors wishes to purchase VCI s 8

10 shares listed or traded on stock exchange, given that the resulting share ownership shall not exceed threshold provided by Decree 01. Regarding other cases, the VCI shall prepare and submit the application files to the authority. Procedure Timing Circular 38 mandates that the SBV must receive and review the application files. If the application files are full and complete, the SBV shall send a written confirmation within 5 working days. Otherwise, the SBV shall request the applicant to supplement the application with additional documents. Within 40 working days from the receipt of full and complete application files, the SBV shall: for the transactions at (i) to (iv) above, make a written decision whether it will approve the transactions; and for the transactions at (v), submit the application files to the Prime Minister for his decision. It is noted that Circular 38 does not contain a deadline for the Prime Minister to decide. Circular 38 takes effect on February 1 st SBV s Guidance on Non-Cash Payment On December 31 st 2014, SBV issued Circular 46/2014/TT-NHNN which guides Decree 101/2012/ND-CP dated November 22 nd 2012 on non-cash payment services. The non-cash payment services shall include the following services: separate payments through the payment account opened at the central bank; processing payment orders ( thanh toán lệnh chi và ủy nhiệm chi in Vietnamese); processing collection ( thanh toán nhờ thu và ủy nhiệm thu in Vietnamese); bank transfer; account processing ( thu hộ và chi hộ in Vietnamese) and so forth. Payment services via cheques or inter-bank payment services shall follow other separate regulations from the SBV. According to this Circular, providers of payment services must be one of the following institutions: the central bank, banks (including branches of foreign banks), people s credit funds and microfinance institutions. This Circular mainly details the procedures on how to conduct payment services, including procedures for payment, for handling vouchers and accounting. Circular 46 takes effect on March 1 st,

11 For more information about any of these legal briefs, please contact the authors: Mr. Hong Bui Corporate Dr. Net Le Financial Services, Real Estate Ms. Quyen Hoang Corporate Dr. Tuan Nguyen Competition, IP Dr. Vinh Nguyen Dispute Resolution Mr. Su Tran Dispute Resolution Mr. Huy Do Intellectual Property/ TMT Mr. Binh Tran Real Estate & Infrastructure For further information, please contact: Ho Chi Minh City Head Office Unit 03, Level 21, Bitexco Financial Tower No.02 Hai Trieu Street, District 1 Ho Chi Minh City, VIETNAM Tel: Fax: Hanoi Office Unit 08A, Level 2, International Centre 17 Ngo Quyen St., Hoan Kiem Dist. Hanoi, VIETNAM Tel: Fax: LNT & Partners is a leading full-service independent local law firm based in Vietnam with offices in Ho Chi Minh City, Hanoi, San Francisco and an affiliated presence in Hong Kong. The firm is among Vietnam s most prominent, representing a wide range of multinational and domestic clients, including Fortune Global 500 companies as well as well-known Vietnamese listed companies on a variety of business and investment matters. For more information about any of these legal briefs, please contact the individual authors or your usual LNT contact. Disclaimer: This Briefing is for information purposes only. Its contents do not constitute legal advice and should not be regarded as detailed advice in individual cases. For legal advice, please contact our Partners. San Francisco Office 101 California Street Suite 2710 San Francisco, CA USA Tel: Fax: Hong Kong Office (Affiliate) Two International Finance Centre Level 19, 8 Finance Street Central, Hong Kong CHINA Tel: Fax: