THE AMENDED VERSION OF THE 2020 LAW ON ENTERPRISES HAS REMOVED VARIOUS ENTANGLEMENTS IN PRACTICAL APPLICATION

Since March 1, 2022, the Law No. 03/2022/QH15 amending and supplementing a number of articles of the Law on Public Investment, the Law on Investment in the form of public-private partnership, the Law on Investment, the Law on Housing, the Law on Bidding, the Law on Electricity, the Law on Enterprises, the Law on Special Consumption Tax and the Law on Execution of Civil Judgments (“Law 03”) has been officially taking effect. Particularly regarding the amendments of the Law on Enterprises, we assess that these contents have assisted to remove many obstacles in the practical operation of enterprises. This article will review the adjustments of Law 03 to the Enterprise Law 2020.

Amendments and supplementations to the form of the multi-member limited liability company (“MLLC”)

1. Under Clauses 1 and 2, Article 7 of Law 03, the subjects specified in Articles 49 and 50 of the 2020 Law on Enterprises have clearly distinguished the roles, rights, and obligations of “company members” and “members of the Board of Members”. Accordingly, the previous regulations are being “mixed up” between these two statuses. This leads to difficulties when determining the rights and obligations of members of the Board of Members who are authorized representatives of the capital contributors being organizations.
2. The minutes of the meeting of the Board of Members are no longer required to bear the signatures of those attending the meeting who disagree to approve such minutes. This literally removes obstacles and facilitates businesses in the management and administration process compared to the previous rigid regulations.

Amendments and supplementations to the form of the joint-stock company (“JSC”)

1. Precise regulations on the determination way of the passing rate of the General Meeting of Shareholders’ resolutions[1]

Law 03 amends the subject in Article 148 from “participating shareholders” to “participating and voting shareholders”. In fact, the number of shareholders attending the meeting is not always similar to the number of voting shareholders (for example: in case a shareholder has an unexpected job and leaves in the middle of the meeting). Therefore, such adjustment is reasonable, in order to increase the accuracy of determining whether the resolution of the General Meeting of Shareholders could be passed.

2. The minutes of the meeting of the Board of Directors (“BOD”) are not required to be signed by all other members when the Chairman refuses to sign[2]

 Law 03 stipulates that in case the chairman and the minute's taker refuse to sign the minutes of the meeting of the Board of Directors, these minutes will still be valid upon the conditions that all other members of the Board of Directors attend and agree to approve it. The signer will be jointly responsible for the accuracy and truthfulness of the contents of the minutes.

[1] Clause 5 Article 7 of Law 03.

[2] Clause 6 Article 7 of Law 03.