What are Forms of Arbitration Agreement under Vietnam Laws

Under Article 16 of Vietnam Law on Commercial Arbitration, forms of arbitration agreement resolving disputes are in written form.  In particular:

An arbitration agreement may be made in the form of an arbitral clause in a contract or in the form of a separate agreement.

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An arbitration agreement must be in writing. The following forms of agreement may also be regarded as written form:

1.Agreement made through communication between the parties by telegram, fax, telex, email or other forms provided for by law;

2.Agreement made through exchange of written information between the parties;

3.Agreement recorded in writing by a lawyer, notary public or competent institution at the request of the parties:

4.In their transactions, the parties make reference to a document such as a contract, document, company charter or other similar documents which contains an arbitration agreement;

5.Agreement made through exchange of petitions and self-defense statements which reflect the existence of an agreement proposed by a party and not denied by the other party.

In case multiple arbitration agreements are reached on the same dispute, the latest lawful agreement shall apply.

If the contents of an arbitration agreement are not clear or could be understood in more than one way, regulations of the Civil Code shall apply.

When there is a handover of rights and obligations under a transaction or contract which contains a lawful arbitration agreement, such agreement is still applicable to the transferee and the transferor, unless otherwise agreed by the parties concerned.

Multiple legal relationships to resolve the same case shall be combined if the parties agree to combine multiple legal relationships to resolve the same case, or the arbitration rules allow for combination of multiple legal relationships to resolve the same case.

ANT Lawyers - a Law firm in Vietnam with international standard, local expertise and strong international network. We focus on customers’ needs and provide clients with a high quality legal advice and services. For advice or service request, please contact us via email ant@antlawyers.vn, or call us +84 24 730 86 529.

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How Non-voting Depositary Receipt Work?

Decree No. 60/2015/ND-CP (Decree 60) amending and supplementing a number of articles of Decree No. 58/2012/ND-CP issued by the Government on May 26th, 2015 has lifted foreign ownership limit of the public enterprises (with conditions) and permitted enterprises operating in all sectors and areas without restriction on foreign ownership to self-set out limits of foreign ownership. 

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Although the Government has been facilitating foreign investor investing in the Vietnam stock market as well as Vietnam enterprises whom raise capital, the foreign investors still faced a number of challenges. The Decree 60 has taken effect since September 1st, 2015, but most public companies did not lift their foreign ownership limit over 51%. One of the reasons is that, the enterprises with 51% foreign ownership shall meet the statutory conditions and therefore have to follow the investment procedures applicable to foreign investors in accordance with the Law on Investment, Law on Securities and other guiding legislations. Having said that, Vietnam enterprises with over 51% foreign ownership shall be treated as foreign investor. These requirements shall significantly impact on business plans and procedures that an enterprise must comply and restrict them from doing business in some sectors. Accordingly, the daily purchase and sale of shares by foreign investors around the threshold of 51% of the charter capital makes it difficult to determine the legal status of an enterprise.

In order to facilitate the attraction of foreign capital inflows, the Government has been reviewing acceptance of non-voting depositary receipt (NVDR). The promulgation of the Enterprise Law 2020 effective from January 1st, 2021, initially recognized NVDR. Ordinary shares used as underlying assets to issue NVDR are called as underlying ordinary shares. Non-voting depository receipts have interest and obligations proportional to the underlying ordinary shares, excepting for voting rights. NVDR is a negotiable financial instrument issued by a third party which is a subsidiary of the Stock Exchange (Issuing Organization). The Issuing Organization will then hand over to investors all financial benefits attached stocks such as dividends, rights offering. This is a solution from other country that helps foreign investors to invest in public enterprises, even they such enterprises reached limit boundary of foreign ownership. NVDR can be converted into ordinary shares in case the public company has not yet reached foreign ownership limit.

ANT Lawyers - a Law firm in Vietnam with international standard, local expertise and strong international network. We focus on customers’ needs and provide clients with a high quality legal advice and services. For advice or service request, please contact us via email ant@antlawyers.vn, or call us +84 24 730 86 529.

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Whom is Exempted from Work Permit Since 2021?

On December 30, 2020, the Government issued Decree No. 152/2020/ND-CP regulating foreign workers working in Vietnam and recruiting and managing Vietnamese employees to work for the foreign employers in Vietnam.

 

In which, foreign workers in Vietnam are not required to be granted work permits include:

The employee is the owner or capital contributor of a limited liability company with a capital contribution of at least 3 billion VND; Chairman of the Board of Directors or a member of the Board of Directors of a joint stock company with a capital contribution of at least 3 billion VND;

Intra-corporate transferees within 11 service sectors in Vietnam’s service commitment schedule with the World Trade Organization, including: business services, communication services, construction services, distribution services, educational services, environmental services, financial services, health services, tourism services, recreational and cultural services, and transport services;

The person responsible for establishing a commercial presence;

The employee enters Vietnam to work as manager, executive, expert or technical worker for a working time of less than 30 days and not more than 3 times a year;

The employee who enters Vietnam for a period of less than 03 months to offer services;

The employee enters Vietnam for a period of less than 03 months to handle complicated incidents, technical or technological situations that affect or risk affecting production and business that Vietnamese experts and the foreign experts currently in Vietnam cannot handle it;

Foreign lawyer who has been granted a law practice license in Vietnam in accordance with the Law on Lawyers; The employee is licensed by the Ministry of Foreign Affairs to operate information and press in Vietnam in accordance with the law; The person certified by the Ministry of Education and Training to enter Vietnam for teaching and researching;

The employee enters Vietnam to provide professional and engineering consulting services or perform other tasks intended for research, formulation, appraisal, supervision, evaluation, management and execution of programs and projects using official development assistance (ODA) in accordance with regulations or agreement in international treaties on ODA signed between the competent authorities of Vietnam and foreign countries;

The employee is sent to Vietnam by competent foreign agency or organization to teach and research at international schools under the management of foreign diplomatic missions or the United Nations; establishment and organization established under the agreement which Vietnam has signed and acceded to;

The employee enters Vietnam to implement an international agreement to which a central or provincial authority is a signatory as per the law;

Person obtains an official passport to work for a regulatory agency, political organization, or socio-political organization;

Relatives of members of foreign representative missions in Vietnam;

In cases where the provisions of an international treaty to which the Socialist Republic of Vietnam is a signatory;

Head of representative office, project or is responsible for the activities of international organizations, foreign non-governmental organizations in Vietnam;

The employee is a volunteer;

The student studies at a foreign school or training institution which has a probation agreement with an agency, organization or enterprise in Vietnam; or a probationer or apprentice on a Vietnam sea-going ship;

The employee is a foreigner who marries a Vietnamese and lives in the territory of Vietnam.

This Decree takes effect from February 15, 2021.

ANT Lawyers is a law firm in Vietnam located in the business centers of Hanoi, Danang, Ho Chi Minh city. We provide convenient access to our clients. Please contact our lawyers in Vietnam for advice via email ant@antlawyers.vn or call our office at +84 28 730 86 529.

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What Are Tax Obligations of a Representative Office in Vietnam?

Vietnam-based representative office of a foreign trader means a dependent unit of the foreign trader, which is established under the provisions of Vietnamese law to conduct market survey and a number of commercial promotion activities permitted by Vietnamese law.

Representative office of foreign trader in Vietnam has the rights and obligations in accordance with the law of Vietnam. Foreign trader is responsible before the law of Vietnam for all operations of its representative office in Vietnam.

Accordingly, representative office in Vietnam is not allowed to conduct business activities, nor carry out other activities for profit-generating purposes. The representative office in Vietnam only performs the activities for the right purposes, scope and duration specified in the certificate to establish the representative office. Besides, the representative office in Vietnam has the right to rent the head office, rent and buy the facilities and materials necessary for the operation of the representative office; to recruit Vietnamese and foreign employees to work at the representative office in accordance with the provisions of Vietnamese law; to use an account in foreign currency, in Vietnam dong of foreign currency origin opened by a foreign trader at a bank licensed to operate in Vietnam and only use this account for the operation of the representative office; to have a seal bearing the name of the representative office according to the provisions of Vietnamese law. Representative office in Vietnam can sign contracts, perform transactions with partners when authorized by the enterprise.

Hence, due to the limited scope of activities, the tax liability of a foreign representative office in Vietnam is narrower than that of an enterprise.  As the representative office does not produce or trade in goods and services, it is not required to pay license fees as prescribed. Representative office of foreign trader in Vietnam is dependent unit of foreign trader, established to investigate the market and carry out some trade promotion activities permitted by Vietnamese law, does not carry out production and business activities, so it is not required to pay license fees.

The fact that the representative office has the right to recruit Vietnamese or foreign employees to work at the office is the basis for arising personal income tax obligation. At the same time, representative office of foreign organization is subject to personal income tax registration. For employees working at foreign representative office in Vietnam, the taxable incomes are based on salaries and wages. Declaring, withholding, paying taxes and settling personal income tax of employees working at foreign representative office is the responsibility of such representative office.

ANT Lawyers, a law firm in Vietnam with offices in Hanoi, Da Nang and Ho Chi Minh City could help client to set up representative office in Vietnam and advise on the compliance on regular basis.

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Several Noted Points on Law Competition of 2018

On Jun 12th,2018, The National Assembly promulgated Competition Law which will take effect from July 1st, 2019 and replace the Competition Law 2004. According to Article 3.9, violation of regulations on economic concentration is one of three signs of violation of competition law.

Firstly, economic concentration includes the following forms: (1) Merger of enterprises; (2) Consolidation of enterprises; (3) Acquisition of enterprises; (4) Joint venture between/among enterprises; (5) Other forms of economic concentration under regulation of the laws (Article 29). Subject carrying out activities of economic concentration is enterprises and the purpose of economic concentration is to gain control the objective enterprises and to govern the market to a certain extent.

Secondly, economic concentration shall be prohibited if it makes or potentially makes significant competition-restraining impact on the Vietnamese market. Specifically, the National Competition Commission shall assess the impact or ability making significant competition-restraining impact of economic concentration based on the following factors: (1) Combined market share of enterprises engaging in the economic concentration on the relevant market; (2) The degree of concentration on the relevant market before and after the economic concentration; (3) The relationship of the enterprises engaging in the economic concentration in the production, distribution or supply chain for a certain kind of goods/service or the business lines of the enterprises engaging in the economic concentration which are inputs or complementary to one another; (4) Competitive advantage brought about by economic concentration in the relevant market; (5) The ability of enterprises after the economic concentration for increasing significantly their prices or Return on sales; (6) The ability of enterprises after the economic concentration for removing or preventing other enterprises from market entry or expansion; (7) Particular factors in the sectors, areas which enterprises are engaging in economic concentration.

Thirdly, enterprises engaging in the economic concentration shall submit notification dossier of economic concentration to the National Competition Commission before initiating economic concentration if they reach the threshold of economic concentration notification. The notification threshold shall be determined based on one of the following criterias: (1) Total assets of the enterprises engaging in the economic concentration on the Vietnamese market; (2) Total turnover of enterprises engaging in the economic concentration on the Vietnamese market; (3) The transaction value of the economic concentration; (4) Combined market share of enterprises engaging in the economic concentration on the relevant market. For efficient preparation of dossiers, the consultation with M&A lawyers, anti competition lawyer are suggested.

Fourthly, regarding assessment procedure, the National Competition Commission shall receive notification dossier of economic concentration, preliminarily assess the economic concentration. Matters of preliminary assessment of economic concentration include: (1) Combined market share of enterprises engaging in the economic concentration on the relevant market; (2) The degree of concentration on the relevant market before and after the economic concentration; (3) The relationship of the enterprises engaging in the economic concentration in the production, distribution or supply chain for a certain kind of goods, service or the business lines of the enterprises engaging in the economic concentration which are inputs or complementary to one another. Within 7 working days from receipt of notification dossier of economic concentration, the National Competitive Commission shall notify the applicant in writing that whether the dossier is complete and valid. If the dossier is incomplete or invalid, the National Competition Commission shall notify the applicant in writing of specific content needed to amend, supplement within 30 days from the date of notice. Upon expiry of 30 days, if no amendment, supplementation is made or the dossier is not amended, supplemented completely at request, the National Competition Commission shall return the notification dossier.

After preliminary assessment of economic concentration, the National Competition Commission shall officially assess the economic concentration within 90 days from the date of notice of preliminary assessment result. In complicated cases, the National Competition Commission may extend the time limit of official assessment but it can not exceed 60 days and inform in writing enterprises submitting the notification dossier of economic concentration. Matters of official assessment of economic concentration include: (1) Assessing the impact or ability making significant competition-restraining impact of economic concentration; (2) Assessing the positive impact of economic concentration; (3) Assessing generally the ability making competition-restraining impact and ability making positive impact of economic concentration to. In process of official assessment of economic concentration, the National Competition Commission require the enterprise to submit notification dossier of economic concentration in order to supplement information, documents but this does not exceed 2 times. The enterprise submitting notification dossier of economic concentration shall be responsible for supplementing the information, documents relating to economic concentration and be responsible for the completeness and accuracy of such information, documents at the request of the National Competition Commission. This supplementation duration shall not be included in the time limit for assessing economic concentration. If the enterprise fails to supplement fully information, documents or supplement incompletely information, documents at request, the National Competition Commission shall consider, decide on the basis of available information, documents.

The fifth matter is right, responsibility and authority of the parties. In process of assessing economic concentration, the National Competition Commission is entitled to consult the bodies managing sectors, areas which enterprises are engaging in operating economic concentration, consult other relevant enterprises, organizations, and individuals; be responsible for ensuring confidentiality of information, documents provided under regulations of the laws; has the authority to handle complaints against decisions on settlement of violations against regulations on economic concentration. The consulted bodies are responsible for responding to consulted  matters in writing within 15 days from the date on which the request for consultation made by the National Competition Commission is received. Relevant bodies, organizations, and individuals is responsible for fully, accurately and promptly providing information, documents at request of the National Competition Commission in the process of assessing economic concentration unless otherwise stipulated.

Sixthly, regarding decision on economic concentration, after and based on the official assessment of economic concentration, the National Competition Commission shall issue a decision determining that: (1) The economic concentration is approved. This decision shall be sent to enterprises engaging in economic concentration within 5 working days from the date of issue; (2) the economic concentration is conditional; (3) the economic concentration is prohibited. If the National Competition Commission issues a decision behind schedule which causes damage to enterprises, it shall compensate for such damage under regulation of the laws. Decision on economic concentration shall be announced, except for the matter relating to State secrets or trade secrets.

Seventhly, conditional economic concentration is economic concentration which is approved and it shall meet one or more of the following conditions: (1) Division, split, resale of a part of capital contribution and property of enterprises engaging in economic concentration; (2) Control of the matters relating to the purchase and sale prices of goods, services or other trading conditions in contracts of enterprises formed after the economic concentration; (3) Other measure for remedying the ability making competition-restraining impact on the market; (4) Other measures for enhancing the positive impact of economic concentration.

Finally, violations against regulations on economic concentration includes the following violations: (1) An enterprise fails to notify of economic concentration; (2) An enterprise implements economic concentration without receiving a notification of preliminary assessment from the National Competition Commission; (3) An enterprise in cases of official assessment implements economic concentration before the National Competition Commission issues a decision; (4) An enterprise fails to perform or incompletely perform conditions specified in the decision on economic concentration; (5) An enterprise implements economic concentration which is prohibited.

For consultation, we at ANT Lawyers, a law firm in Vietnam will be available for legal help.

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