Revamping Vietnam's Business Landscape: Key Proposals in the Amended Enterprise Law
Strengthened Enterprise Regulations for Enhanced Capital Supervision and Increased Inspection Activities
The recent draft amendment to Vietnam's Enterprise Law brings forth several substantial modifications aimed at bolstering corporate transparency and preventative measures against market manipulation, particularly in regards to publicly traded companies and capital contributions. Here's a rundown of the major changes:
1. Reinforcing Financial Foundations- Crystal Clear Definitions: The revision seeks to clarity pertinent terms like dividends and the market value of shares and capital contributions. Regulations are now aligned with standard accounting practices and live-action stock market trends to minimize confusion and ambiguity.- Standardized Share Valuation: The standard of a listed share's worth over a 30-day period will serve as the basis for certain corporate actions, such as mergers and acquisitions, thus alleviating risks of fraud and ensuring valuations represent authentic market conditions.
2. Cracking Down on Deceptive Practices- Unequivocal Ban on False Declarations: The proposed amendment clearly identifies "false declarations" as a prohibited act, although such practices are already deemed illegal in the Penal Code. By emphasizing this point in the Enterprise Law, the aim is to lessen loopholes and curb unscrupulous practices, such as forged signatures on business registration documents.
3. Empowering Diverse Entrepreneurs- Expanding Eligible Business Founders: Public university faculty and staff are now granted the opportunity to contribute capital and take part in the management of businesses focused on commercializing scientific research, if they obtain prior authorization from the required bodies. This provides a solid footing for promoting advancements in science, technology, and innovation.
4. Broader Goals- Upholding Transparency: By refining legal definitions and fortifying prohibitions, the revised law strives to create a more transparent, accountable, and secure investment environment.- Driving Digital Transformation: The draft also encourages digitalization and the use of IT within state administration, fostering transparency and efficiency.- Adhering to Global Standards: The proposed changes intend to make Vietnam's legal system more cohesive, modern, and in harmony with its international obligations.
Key Proposed Changes Summary
| Area of Rectification | Proposed Amendment/Explanation | Objective ||------------------------------|---------------------------------------|-----------------------------|| Share Valuation | Adopt 30-day average market value | Prevent manipulation, ensure fairness || Prohibited Acts | Explicitly ban false declarations | Close loopholes, prevent fraud || Eligible Business Founders | Include university staff (with approval) | Encourage science/tech commercialization || Digital Transformation | Encourage IT usage in state administration | Boost transparency and efficiency || Legal Alignment | Align with accounting/stock market standards | Consistency, credibility |
Collectively, these changes aim to modernize Vietnam's corporate governance framework, establishing it as a robust, transparent, and globally competitive system.
Chairman of the Bắc Ninh People's Committee, Vương Quốc Tuấn (second from left) visits a company at Tiên Sơn Industrial Park. VNA/VNS Photo Thái Hùng
[1] Vietnam Net (2023)[2] Vietnam News (2023)[3] Ministry of Planning and Investment (2023)[4] Ministry of Finance (2023)[5] Ministry of Justice (2023)
- The amendment to Vietnam's Enterprise Law focuses on enhancing transparency and prevents market manipulation in business, particularly in publicly traded companies and capital contributions.
- The revisions aim to clarify terms like dividends and the market value of shares, aligning them with standard accounting practices and stock market trends.
- The standard of a listed share's worth over a 30-day period is to be the basis for certain corporate actions, such as mergers and acquisitions.
- False declarations are explicitly prohibited, with the aim of lessening loopholes and curbing unscrupulous practices.
- Public university faculty and staff are granted the opportunity to participate in the management of businesses focused on commercializing scientific research, subject to prior authorization.
- The revised law aims to create a more transparent, accountable, and secure investment environment, adhering to global standards.
- It also encourages digitalization and IT usage within state administration to foster transparency and efficiency.
- The proposed changes seek to modernize Vietnam's corporate governance framework, making it a robust, globally competitive system, with the draft accessible on various government websites.
