Vietnam Legal Briefing Decree No. 95/2008/ND-CP dated 25 August 2008: Organisation and operation of finance leasing companies Decree No. 97/2008/ND-CP dated 28 August 2008: Management, provision and use of Internet services and electronic information on the Internet Circular No. 79/2008/TT-BTC dated 15 September 2008: Registration fees Decree No.109/2008/ND-CP dated 10 October 2008: Sale and assignment of enterprises with 100% State-owned capital Decree No. 114/2008/ND-CP dated 3 November 2008: Law of Bankruptcy applicable to enterprises conducting business in insurance, securities and other finance sectors Issue 2 September - November 2008
Decree No. 95/2008/ND-CP dated 25 August 2008: Organisation and operation of finance leasing companies Decree No. 95/2008/ND-CP ( Decree 95 ) was issued by the Government on 25 August 2008 and took effect from 23 September 2008. Decree 95 amends Decree No. 16/2001/ND-CP (the Principal Decree ) of the Government dated 2 May 2001 which deals with the organisation and operation of finance leasing companies ( FLCs ). Following amendment by Decree 95, the Principal Decree provides that a FLC means a non-banking credit institution which is a Vietnamese legal entity. FLCs shall be established and operate in Vietnam in the following forms: multiple member limited liability FLC; single member limited liability FLC; or shareholding FLC. The conversion of form of ownership, and change of form, of a FLC shall be implemented in accordance with the regulations of the State Bank of Vietnam. The Principal Decree also provides that a joint venture FLC must be established in the form of a multiple member limited liability company, while a FLC with 100% foreign owned capital must be established in the form of a limited liability company. A joint venture FLC is a FLC established in Vietnam with capital contributed by a Vietnamese party and a foreign party on the basis of a joint venture contract. A FLC with 100% foreign owned capital is a FLC established in Vietnam with 100% of the charter capital owned by one or more foreign credit institutions. The assignment of capital contribution portions by parties to a joint venture FLC or a FLC with 100% foreign owned capital must be implemented in accordance with the law and guidelines of the State Bank of Vietnam. A company in the following cases will be deemed to be a subsidiary of a FLC: (a) (b) (c) where more than 50% of the charter capital of the company or all its issued ordinary shares are owned by the FLC; where the appointment of all or the majority of the members of the board of management and of the general director of the subsidiary company is within the decision-making power of the FLC; where the amendment of or addition to the charter on organisation and operation of the subsidiary company is within the decision-making power of the FLC. Following amendment by Decree 95, the Principal Decree provides that, aside from other conditions, a joint venture FLC or a FLC with 100% foreign owned capital must satisfy the following conditions: have permission from the competent authority in its country of origin to conduct a finance leasing operation in Vietnam; have total assets in an amount exceeding USD10 billion at the end of the year prior to the time of lodging the application, except where a bilateral investment treaty between Vietnam and the country of origin provides otherwise. 2
Decree No. 97/2008/ND-CP dated 28 August 2008: Management, provision and use of Internet services and electronic information on the Internet Decree No. 97/2008/ND-CP ( Decree 97 ) was issued by the Government on 28 August 2008 and took effect from 11 December 2008. Decree 97 provides that an Internet Service Provider (an ISP ) refers to an enterprise in any economic sector established according to Vietnamese law to provide the public with Internet services. An ISP may refuse to provide services in some cases, e.g. where a user violates the law on the Internet according to the written conclusion of a competent State body, or where a user fails to pay the agreed service charges. Decree 97 also provides for Internet agents. An Internet agent refers to an individual or an organisation in Vietnam, which in the name of an ISP, provides users with Internet access services and Internet application services in telecommunications through an agency contract and receives a commission. Decree 97 provides that an entity owning a hotel, restaurant, office, or airport (among others), must, when providing users with free Internet services within the premises of the hotel, restaurant, office, or airport, sign an agency contract with an ISP and abide by regulations governing agencies, except for those regulations relating to service charges. The establishment of websites and the provision and use of electronic information on the Internet must comply with the laws and regulations governing information technology, intellectual property, the press, publishing, State secrets, advertising and regulations governing the management of electronic information on the Internet. Press agencies which are granted an Electronic Press Operation Licence are allowed to establish websites used for press activities. Enterprises establishing websites to provide online social network services are required to register with the Ministry of Information and Communications. The national domain.vn, Internet addresses and network numbers managed by Vietnam are part of the national informational resources, and must be managed, developed, and used purposefully and effectively. All organisations and individuals are entitled to register and use the Vietnamese national domain name.vn as well as other international domain names. Circular No. 79/2008/TT-BTC dated 15 September 2008: Registration fees Circular No. 79/2008/TT-BTC (the Circular ) was issued by the Government on 15 September 2008 and took effect from 17 October 2008. The Circular provides guidance on the implementation of the following decrees in relation to registration fees: Decree No. 176/1999/ND-CP of the Government dated 21 December 1999; Decree No. 47/2003/ND-CP dated 12 May 2003; and Decree No. 80/2008/ND-CP dated 29 July 2008. The Circular also repeals Section 2 of Part II of Circular 95/2005/TT-BTC issued by the Ministry of Finance and dated 26 October 2005. In accordance with the Circular, the rate at which the registration fee is payable will be calculated as a percentage of the value of the asset subject to payment of the 3
registration fee. The following table sets out the applicable rates for the various assets: Type of asset Registration fee rate Land and housing 0.5% Ships and boats 1% Deep-sea fishing boats 0.5% (Deep-sea fishing boats refer to boats with an installed main engine of 90 CV or more. The person paying the registration fees must present to the tax office the identification papers on the legal origin of the boat, showing the engine number and main engine capacity of the boat.) Motorcycles generally 2% Motorcycles where the registration fee is declared and paid in a city or province under central authority or in a town where a provincial people s committee office is located 5% for declaration and payment of registration fees for the first time 1% for declaration and payment of registration fees on subsequent ocassions Passenger vehicles with less than 10 seats including the driver s seat (not including three wheeled motorised vehicles or vehicles designed to transport both passengers and cargo) 10% to 15% Decree No.109/2008/ND-CP dated 10 October 2008: Sale and assignment of enterprises with 100% State-owned capital Decree No.109/2008/ND-CP ( Decree 109 ) was issued by the Government on 10 October 2008 and took effect from 7 November 2008. Decree 109 provides that the sale and assignment of enterprises with 100% Stateowned capital ( State-owned enterprises or SOEs ) are permitted provided the specified conditions are satisfied. The parties allowed to purchase a SOE include: the employee community of the SOE; the employees of the SOE; enterprises with 100% foreign capital; all entities which were incorporated in Vietnam (excluding intermediary financial entities which advise on the appraisement and auction of SOEs); and authorised Vietnamese citizens. 4
Entities allowed to be assignees of a SOE include the employee community of such SOE. The selling price of SOEs must not be less than the total State-owned capital or total value of the enterprise. If there are two or more purchasers, the sale of the SOE must be carried out by auction. The application for purchasing the SOEs and the deposits to be paid must be made at least five working days before the date of the auction of the SOE. The amount to be deposited is 10% of the price at which the auction will start. The purchaser must make payment as stipulated in the purchase contract. Payment must be made within one year from the date of signing the purchase contract. The first payment must be made within one month from the date of signing the purchase contract and the amount paid has to be more than 70% of the selling price. If the purchaser of the SOE pays for the purchase in a one single payment, it may receive a discount of up to 5% of the selling price (excluding the value of the land use right). Payment for the purchase of a SOE must be made in Vietnam Dong. Foreign investors intending to purchase SOEs must open a deposit account at a bank operating legally in Vietnam. Payment for the purchase of the SOE must be made through this account. Decree No. 114/2008/ND-CP dated 3 November 2008: Law of Bankruptcy applicable to enterprises conducting business in insurance, securities and other finance sectors Decree No. 114/2008/ND-CP ( Decree 114 ) was issued by the Government on 3 November 2008 and took effect from 29 November 2008. Decree 114 implements the Law on Bankruptcy applicable to enterprises conducting business in insurance, securities and other finance sectors. Decree 114 applies to the following: Insurance sector: Enterprises conducting insurance business established and operating in Vietnam pursuant to the Law on Insurance Business (save for insurance broking companies) (hereinafter referred to as insurance enterprises ); Securities sector: Securities companies, securities investment fund management companies and securities investment companies established and operating in Vietnam pursuant to the Law on Securities (hereinafter referred to as securities enterprises ); and Other finance sectors: Lotteries companies conducting lotteries business pursuant to Decree 30-2007-ND-CP of the Government dated 1 March 2007 on lotteries business. Decree 114 also provides for the grounds upon which the Prime Minister of Vietnam may announce an addition to the list of enterprises operating in the other finance sectors to which Decree 114 applies (hereinafter referred to as other finance enterprises ). 5
The entities which are entitled to file petitions to commence bankruptcy proceedings against insurance enterprises, securities enterprises and other finance enterprises are: unsecured or partly secured creditors; an elected representative or a union representative of the employees; the owner of the enterprise or the legal representative of the enterprise; the representative of the owner of a State-owned enterprise; shareholders of a shareholding company; and a partner in a partnership. If the Ministry of Finance, the State Securities Commission or other body concerned observes, while exercising its functions and powers, that an insurance, securities or other finance enterprise has become insolvent, it must provide written notice to the entities entitled to file a petition to enable them to consider commencing bankruptcy proceedings. The body providing such notice shall be liable for the accuracy of the notice. The court will issue a decision to commence bankruptcy proceedings if the following conditions are met: (i) The State administrative body or the owner of the enterprise has provided a notice of failure to take or termination of measures to recover solvency of such insurance, securities or other finance enterprise; (ii) The insurance, securities or other finance enterprise remains unable to pay its debts as they fall due. After the court has issued a decision to commence bankruptcy proceedings, the insurance, securities or other finance enterprise shall continue with their business activities as usual, subject however, to the supervision and inspection of the judge and the committee for management and liquidation of assets. Once the insurance, securities or other finance enterprise has received the decision to commence bankruptcy proceedings, it is strictly prohibited from carrying out the following acts: conceal or dispose of assets; pay any unsecured debt; abandon or reduce any right to claim a debt; convert unsecured debts into debts secured by assets of the enterprise; receive orders to open securities trading accounts from clients, or to conduct any securities broking activities; conduct any investment activities or other activities relevant to monetary and securities accounts of clients of the enterprise. 6
Contact Partners Le Net +84 8 3821 2357 net.le@agzilct.com Chau Huy Quang +84 8 3821 2357 quang.chau@agzilct.com Tel: Fax: Website: AGZI LCT Limited Vietnam Lawyers Unit 1605, Saigon Trade Centre 37 Ton Duc Thang Street District 1, Ho Chi Minh City Vietnam +84 8 3821 2357 +84 8 3821 2382 www.agzilct.com M01, Atlanta Place 49 Hang Chuoi Street Hai Ba Trung District Hanoi Vietnam Tel: +84 4 6278 2768 +84 4 6278 2769 Fax: +84 4 6278 2766 The contents of the AGZI LCT Vietnam Legal Briefing are intended to provide general information. Although we endeavour to ensure that the information contained herein is accurate, we do not warrant its accuracy or completeness or accept any liability for any loss or damage arising from any reliance thereon. The information in this AGZI LCT Vietnam Legal Briefing should not be treated as a substitute for specific legal advice concerning particular situations. If you would like to discuss the implications of these legal developments on your business or obtain advice, please do not hesitate to approach your usual contact at AGZI LCT or the coordinator of the AGZI LCT Vietnam Legal Briefing, Vu Thanh Minh (minh.vu@agzilct.com)