Providing detailed guidelines for implementation of a number of articles of the law on enterprise

Providing detailed guidelines for implementation of a number of articles of the law on enterprise, decree 102-2010-ND-CP

DECREE 102-2010-ND-CP PROVIDING DETAILED GUIDELINES FOR IMPLEMENTATION

OF A NUMBER OF ARTICLES OF THE LAW ON ENTERPRISES

TABLE OF CONTENTS

Article 1 Governing scope 1

Article 2 Applicable entities 1

Article 3 Applicability of the Law on Enterprises, international treaties and relevant laws 2

Article 4 Party and mass organizations within an enterprise 2

Article 5 Capital contribution using intellectual property rights 3

Article 6 Charter capital of company and number of shares which a shareholding company has the right to issue 3

Article 7 Prohibited lines of business 3

Article 8 Conditional lines of business and business conditions 4

Article 9 Lines of business which require a practising certificate 5

Article 10 Lines of business which require legal capital 6

Article 11 Right to business registration and to carry out business activities 6

Article 12 Right to establish enterprises 7

Article 13 Right to contribute capital and to purchase shareholding 7

Article 14 Prohibition on State bodies and units of the people’s armed forces using State capital and assets to contribute capital, purchase shareholding and establish enterprises in order to earn private profit 8

Article 15 Supplementary guidelines on director (general director) and members of board of management 9

Article 16 Authorization of legal representative of enterprise 10

Article 17 Establishment of branches and representative offices of enterprises with foreign owned capital 11

Article 18 Implementation of a capital contribution in, and rights and obligations related to capital contribution in a multiple member limited liability company 11

Article 19 Right of members to institute legal proceedings against chairman of members' council and director (general director) 12

Article 20 Supplementary guidelines on a number of rights and obligations of members of a limited liability company 13

Article 21 Signature of members or their representatives on minutes of meetings of members' council 13

Article 22 Number of authorized representatives who may participate in members’ council or attend general meeting of shareholders 13

Article 23 Founding shareholders 14

Article 24 Offer of shares for sale 15

Article 25 Right to institute legal proceedings against members of board of management and director (general director) 16

Article 26 Some issues relating to general meeting of shareholders 17

Article 27 Effectiveness of resolutions and decisions of the general meeting of shareholders, of the members’ council and of the board of management 17

Article 28 Disclosure of related persons and their transactions with company 17

Article 29 Method of cumulative voting 18

Article 30 Supplementary guidelines on meetings of board of management 19

Article 31 Conversion of a single member limited liability company into a multiple member limited liability company 19

Article 32 Conversion of shareholding company or multiple member limited liability company into single member limited liability company 20

Article 33 Conversion of a limited liability company into a shareholding company 20

Article 34 Basic contents of an application for conversion 21

Article 35 Contents of an enterprise registration certificate or business registration items in an investment certificate applicable to a case of conversion 21

Article 36 Conversion of a private enterprise into a limited liability company 22

Article 37 Joint venture enterprises and enterprises with 100% foreign owned capital which have not re-registered pursuant to Decree 101: 23

Article 38 Supplementary guidelines on economic groups 23

Article 39 Supervision by business registration office of order and procedures for conducting meetings of general meeting of shareholders and [for issuing] decisions of general meeting of shareholders 23

Article 40 Dissolution of enterprises 25

Article 41 Termination of operation of branches 25

Article 42 Effectiveness 26

Article 43 Organization of implementation 26

GOVERNMENT SOCIALIST REPUBLIC OF VIET NAM

Independence - Freedom - Happiness

No 102-2010-ND-CP

Ha Noi, 1 October 2010

DECREE PROVIDING DETAILED GUIDELINES FOR IMPLEMENTATION

OF A NUMBER OF ARTICLES OF THE LAW ON ENTERPRISES

The Government

Pursuant to the Law on Organization of the Government dated 25 December 2001;

Pursuant to the Law on Enterprises dated 29 November 2005;

Having considered the proposal of the Minister of Planning and Investment;

Decrees:

This Decree provides detailed guidelines for implementation of a number of articles of the Law on

Enterprises on establishment, managerial organization, operation, reorganization and dissolution of

enterprises

Article 2 Applicable entities

This Decree shall apply to:

100% State owned capital, enterprises of Party organizations and of socio-political organizations, and to joint venture enterprises and enterprises with 100% foreign owned capital (hereinafter all

referred to as enterprises)

re-registered pursuant to Decree 101-2006-ND-CP of the Government dated 21 September 2006 on re-registration, conversion and re-registration for replacement with investment certificates by

enterprises with foreign owned capital pursuant to the Law on Enterprises and the Law on

Investment (hereinafter abbreviated to Decree 101)

operation, reorganization and dissolution of enterprises

1

Article 3 Applicability of the Law on Enterprises, international treaties and relevant laws

enterprises, except for the cases stipulated in clauses 2 and 3 of this article

contains other provisions on application files, order, procedures, and conditions for establishment, business registration, ownership structure and the right to autonomy in business, then the provisions

of such international treaty shall apply

application files, order, procedures, and conditions for establishment and business registration; on the structure of managerial organization, on authority of internal management bodies within an enterprise, on the right to autonomy in business, and on restructuring and dissolution of enterprises, then the provisions of these following laws shall apply:

the National Assembly passes after this Decree takes effect

Article 4 Party and mass organizations within an enterprise

the Constitution, the law, and the organizational charters [of such organizations]

mass organizations within the enterprise, and the admission of employees at the enterprise into such organizations

2

Allens Arthur Robinson footnote: It is apparent from article 40.6 that an alternative translation here is "specialized branch law"

3 Enterprises shall create favourable conditions regarding material facilities, time and other necessary conditions in order for members of Party and mass organizations working at the enterprise to fully implement the regime on everyday pursuits prescribed in the charters and internal rules of such organizations

Article 5 Capital contribution using intellectual property rights

Intellectual property rights used for capital contribution shall comprise rights of authors and related rights of authors, industrial property rights, rights to plant varieties, and other intellectual property rights stipulated in the law on intellectual property Only individuals or organizations being owners of the aforesaid rights shall have the right to use such assets for capital contribution The Ministry of Finance shall provide guidelines

on valuation of capital contribution using intellectual property rights

to issue

capital contribution portions which members have made or undertake to make within a specified period and as stated in the company charter

owner has made or undertakes to make within a specified period and as stated in the company charter

undertaken and as prescribed in clauses 1 and 2 of this article shall not exceed 36 months from the date of issuance of the enterprise registration certificate or certificate registering an addition or change of member

The number of issued shares is the number of shares fully paid up to the company by shareholders The charter capital of a shareholding company on the date of registration of business [and] establishment of the enterprise is the total par value of shares for which founding and other shareholders have subscribed and as stated in the company charter; such number of shares must be paid in full within 90 days from the date of issuance of the enterprise registration certificate

which the general meeting of shareholders decides to issue in order to raise additional capital The number of shares which a shareholding company has the right to issue on the date of business registration is the total number of shares for which founding and other shareholders have subscribed

as at the date of business registration plus the number of additional shares which will be issued within a period of three years from the date of issuance of the enterprise registration certificate and

as stated in the company charter

Article 7 Prohibited lines of business

3

Allens Arthur Robinson footnote: Alternative translation is "limited liability company with two or more members" as used in our

translation of the Law on Enterprises.

(a) Business in weapons, military equipment and technical facilities, ammunition and specialized facilities for the army and police; military paraphernalia (including badges, medals and insignia

of the army and police); military supplies for the armed forces; and components, accessories and materials and technology used to manufacture the former items;

superstitious purposes or products harmful to aesthetic education and personal development; (dd) Business in all types of firecrackers;

and health of children or to the security, order and safety of society;

processed matter taken from animals, on the lists in international treaties of which Vietnam is a member, and all types of rare wild animals and plants on the lists prohibiting the use and exploitation of such animals and plants;

rights or the legitimate rights and interests of organizations and citizens;

not yet permitted to be circulated or used in Vietnam;

pursuant to the relevant specialized branch law, ordinance or decree

Article 8 Conditional lines of business4 and business conditions

Prime Minister of the Government (hereinafter all referred to as specialized branch laws) shall apply

to conditional lines of business and to the business conditions which are applicable

4

Allens Arthur Robinson footnote: The literal translation is "Lines of business subject to conditions".

(a) Business licences;

(dd) Certification of legal capital;

conduct business in such line of business without the need for certification or approval in any form from a competent State authority

other than those mentioned in clause 1 of this article shall no longer be effective

Article 9 Lines of business which require a practising certificate

issued by a competent State authority of Vietnam or by an occupational-professional association to which the State delegates authority to issue practising certificates, to individuals with the professional qualifications and experience required for a certain industry or profession

A practising certificate issued overseas shall not be effective in Vietnam, unless a specialized branch law or an international treaty of which Vietnam is a member contains a different provision

practising certificate shall be decided by application of the relevant specialized branch law

business in a line for which the law requires a practising certificate shall be conducted in accordance with the following provisions:

certificate if the enterprise conducts business in a line for which the law requires that the director of the enterprise or head of the business establishment have such practising certificate;

stipulated by the relevant specialized branch law must have practising certificates if the enterprise conducts business in a line for which the law requires the director and another person to have practising certificates;

law must have a practising certificate if the enterprise conducts business in a line for which the law does not require the director or head of the business establishment to have a practising certificate

Article 10 Lines of business which require legal capital

the specific levels of such legal capital, to the State body with authority regarding legal capital, to the body or organization authorized to certify legal capital, and to the application file, conditions and method of certifying legal capital

case of a limited liability company; the chairman of the board of management and the director (general director) in the case of a shareholding company; all partners in the case of a partnership; and the owner in the case of a private enterprise shall be liable for the truthfulness and accuracy of the amount certified as legal capital when establishing the enterprise The enterprise shall be responsible to ensure that the actual level of charter capital is no lower than the certified legal capital during the entire process of the business operation of the enterprise

legal capital, the file for enterprise registration must contain certification from a competent body or organization about such legal capital The person directly certifying legal capital shall be jointly liable for the accuracy and truthfulness of the amount of such capital as at the time of providing certification

not be necessary to have certification from a competent body or organization about such legal capital

if the equity recorded in the total list of assets of the enterprise on a date within three months prior to the date of lodging the file is equal to or more than the stipulated level of legal capital

Article 11 Right to business registration and to carry out business activities

business activities without applying for permission or approval from, and without seeking the opinion

of any State administrative body, if such line of business:

time it satisfies all the stipulated conditions

If an enterprise conducts business when it fails to satisfy all stipulated conditions, then the following persons shall be jointly liable before the law for such business: the chairman of the members’ council

or the company chairman and director (general director) in the case of a limited liability company; the chairman of the board of management and director (general director) in the case of a shareholding company; all partners in the case of a partnership; and the owner in the case of a private enterprise

to an enterprise already established in Vietnam with foreign investor ownership not exceeding 49% of the charter capital, unless an international treaty of which Vietnam is a member or a specialized branch law contains some other provision

an enterprise already established in Vietnam with foreign investor ownership exceeding 49% of the charter capital, unless an international treaty of which Vietnam is a member or a specialized branch

law contains some other provision

process of an enterprise implementing investment and business in the relevant sector

Article 12 Right to establish enterprises

irrespective of the place of registration of their head office and all individuals irrespective of their place of residence and nationality, so long as they are not in the categories stipulated in article 13.2

of the Law on Enterprises, shall have the right to establish and to participate in establishment of an enterprise in Vietnam in accordance with the provisions of the Law on Enterprises

individual family household business or to be a partner of one partnership, unless the remaining partners have some other agreement An individual owner of a private enterprise, an individual household business or an individual partner of a partnership shall have the right to establish [or] participate in establishment of a single member limited liability company, a multiple member limited liability company [or] a shareholding company

Vietnam shall conduct investment registration associated with establishment of an economic organization in accordance with the law on investment In this case the enterprise shall be issued with an investment certificate which shall concurrently be the enterprise registration certificate

establish a new enterprise in Vietnam shall implement the following provisions:

owned by the foreign investor/s establishing [or] participating in establishing it, then there must

be an investment project and registration of such investment associated with establishment of

an economic institution in accordance with the law on investment In this case the enterprise shall be issued with an investment certificate which shall concurrently be the enterprise registration certificate

own more than 49% of its charter capital, then establishment of the enterprise shall be

implemented in accordance with the provisions of the Law on Enterprises In this case the

same regulations which apply to domestic investment projects shall apply to registration of the investment

Article 13 Right to contribute capital and to purchase shareholding

the place of registration of their head office, and all individuals irrespective of their nationality and place of residence, so long as they do not belong to the categories stipulated in article 13.4 of the

Law on Enterprises, shall have the right to contribute capital and to purchase shareholding at an

unrestricted level in an enterprise pursuant to the corresponding provision of the Law on Enterprises,

except for the following cases:

(a) The ownership ratio of foreign investors in listed companies shall be implemented in accordance with the law on securities;

(b) The laws specified in article 3.3 of this Decree and other relevant specialized branch laws shall apply to the ownership ratio of foreign investors in special cases;

equitization or converting their form by other methods shall be implemented in accordance with the law on equitization and conversion of enterprises with 100% State owned capital;

implemented in accordance with the Schedule of specific commitments on commercial services (in the Appendix to the Decree on Vietnam's WTO accession)

the capital contribution portion of a member or owner of the company shall implement the provisions

on capital contribution or assignment of capital contribution portion and shall register change of

membership in accordance with the corresponding provision of the Law on Enterprises and relevant

in accordance with the provisions on purchase of shareholding [or] assignment of shareholding and shall register as a shareholder or shall register a change of shareholder in accordance with the

corresponding provision of the Law on Enterprises and relevant laws

There must also be registration of change of founding shareholder in accordance with the Law on

Enterprises at the business registration office or competent State administrative body for investment

in a case of receipt of the shareholding capital portion [undertaken to be] contributed by a founding

shareholder as stipulated in article 84.3 of the Law on Enterprises, or receipt of an assignment of shares of a founding shareholder as stipulated in article 84.5 of the Law on Enterprises

assets to contribute capital, purchase shareholding and establish enterprises in order to earn private profit

assets or public funds to establish an enterprise, or to contribute capital to or purchase shareholding

in an enterprise in order to earn private profit for one's own State body or unit

(dd) Funding donated by foreign governments, organizations and individuals

3 Private profit for one's own State body or unit means using revenue in any form which was earned from business activities, from a capital contribution or from the purchase of shareholding, for at least one of the following purposes:

company must satisfy the following criteria and conditions:

enterprise pursuant to article 13.2 of the Law on Enterprises;

shares (in the case of a shareholding company), or a member being an individual must own at least ten (10) per cent of the charter capital (in the case of a limited liability company), or any other person must have expert qualifications or actual experience in business management or

in the principal line of business of the company

If the company charter stipulates different criteria and conditions from the above, then the criteria and conditions stipulated in the company charter shall apply

shareholding of more than 50% charter capital, then in addition to the criteria and conditions stipulated in sub-clauses (a) and (b) above, the director (general director) of such subsidiary may not be the spouse, parent or foster parent, child or adopted child, or sibling of a manager

of the parent company or of the representative of the State owned capital portion in the parent

company

organization must satisfy the following criteria and conditions:

enterprise pursuant to article 13.2 of the Law on Enterprises;

line of business of the company, unless the company charter stipulates otherwise;

then in addition to the criteria and conditions stipulated in sub-clauses (a) and (b) above, the director (general director) may not be the spouse, parent or foster parent, child or adopted child, or sibling of the head or deputy head of the State body or of the representative of the

State owned capital portion in such company

3 Members of the board of management of a shareholding company must satisfy the following criteria

and conditions:

enterprise pursuant to article 13.2 of the Law on Enterprises;

shareholder must have expert qualifications or experience in business management or in the principal line of business of the company

If the company charter stipulates different criteria and conditions from those in this clause, then the criteria and conditions stipulated in the company charter shall apply

company chairman, the chairman of the board of management and the director (general director) of any one company may concurrently be the chairman of the members’ council, the company chairman, the chairman of the board of management or the director (general director) of another company, except that the director (general director) of a shareholding company may not concurrently

be the director (general director) of another company pursuant to article 116.2 of the Law on

Enterprises

Article 16 Authorization of legal representative of enterprise

from Vietnam for more than 30 days then he or she must provide written authorization to another

person ["the attorney"] to perform the rights and obligations of the legal representative of the

enterprise

representative of the enterprise has not returned to Vietnam and has not authorized another person:

representative of the private enterprise within the scope of such authorization until the legal representative of the enterprise returns to work at the enterprise;

representative of a limited liability company, of a shareholding company or of a partnership within the scope of the authorization until the legal representative of the enterprise returns to work at the company or until the members' council, company owner, board of management or members' council of the partnership makes a decision appointing another person to act as legal representative of the enterprise

person to exercise the rights and discharge the obligations of legal representative of the enterprise, the members' council, the company owner, the board of management or the partners' council of the partnership shall appoint another person to act as legal representative of the company

5

Allens Arthur Robinson footnote: The reference here is presumably to a shareholder being an organization.

Article 17 Establishment of branches and representative offices of enterprises with foreign owned capital

An enterprise with foreign owned capital established pursuant to the Law on Investment and the Law on

Enterprises or which has registered conversion in accordance with law, shall have the right to establish a

branch/es [and/or] representative office/s outside its head office The establishment of a branch need not necessarily be associated with or be conducted simultaneously with conduct of investment procedures in accordance with the law on investment The file, order and procedures for registering the operation of a branch or representative office shall be implemented in accordance with the corresponding provisions in the

Law on Enterprises, and the registration of the operation of a branch or representative office shall be

conducted at the competent State administrative body for investment

contribution in a multiple member limited liability company

members If capital contribution is made on more than one occasion, then the time for the final contribution by each member shall not exceed 36 months from the date the company was issued with its enterprise registration certificate or certificate of registration of an additional member or change of member; and on each occasion on which a member makes a capital contribution, such member shall be issued with a certificate certifying the amount of capital paid on such occasion

tranche as undertaken, report to the business registration office on the result of progress in paying capital contribution

If the legal representative of the company fails to make the stipulated report, then the chairman of the members' council or the director (general director) or the member owning the largest capital contribution portion in the company shall have the right to make such report in the name of the company

have the number of votes and shall be entitled to profit distribution corresponding to its ratio of paid

up capital, unless otherwise stipulated by the company charter

contribution in full to the company as undertaken shall automatically cease to be a member of the company and shall not have the right to assign such capital contribution to another person; and the unpaid amount of capital shall be dealt with in accordance with clause 5 of this article

90 days from the deadline for the final capital contribution tranche:

their ratios of paid-up capital to the company;

contributions and register change of membership of the company within 15 days from the expiry of the 90 day period stipulated in clause 5 of this article The file for registration of change of membership shall comprise:

(a) Request for registration of change of membership;

certificates of members as certified by the company;

file specified in this article, carry out registration and issue a registration certificate of change of membership to the company

If a member or authorized representative of a member fails to sign the list of members prescribed in clause 6(c) of this article, the business registration office shall send a notice of the aforesaid list to the relevant member and request confirmation in writing within 15 days from the date of receipt of such notice, of the amount of such member's capital actually contributed The notice must be sent by

a method guaranteeing the relevant member will receive it Where no written confirmation is received from the relevant member within the aforesaid time-limit, the business registration office shall conduct registration of change of membership pursuant to the request of the company If the member who failed to sign the list of members provides confirmation objecting to the amount alleged

in the list of members as the capital it contributed, the business registration office shall refuse to issue registration of change of membership

than the total amount undertaken to be contributed, the business registration office shall register the amount of capital actually contributed as the charter capital of the company when registering change

of membership of the company pursuant to clause 6 of this article; members who have failed to fully pay capital as undertaken shall be jointly liable corresponding to their respective unpaid capital amount for debts and other financial obligations of the company arising before registration of change

of membership conducted pursuant to clause 6 of this article

contributions upon request of one or more members owning capital contribution portions of at least 25% of the charter capital of the company The result of such inspection by the business registration office shall be used to determine the number of votes and profit distribution in accordance with clause 2 of this article and to prepare the file for registration of change of membership in accordance with clause 6 of this article

director (general director)

against the chairman of the members' council and/or the director (general director) in the following cases:

exercise assigned rights and duties; failed to perform or fully or promptly perform a decision of the members' council; or exercised assigned rights and duties contrary to the law or company charter;

know-how or business opportunities of the company for his or her personal benefit or for that

of another organization or individual;