Hanoi Luncheon – Compliance and Corporate Governance Changes in Vietnam: What You Need to Know

On 7 April, EuroCham hosted an event “Compliance and Corporate Governance Changes in Vietnam: What You Need to Know” in Hanoi with special guest speakers from Acclime and Allens.
  
EuroCham’s new Chairman, Mr Alain Cany, opened the luncheon and made his first official welcome to guests and members. He promised to continue  advocating for European business in Vietnam; as well as recognising the critical role of Sector Committees in contributing to EuroCham’s success.
   

Mr. Alain Cany, Chairman of EuroCham, delivered a speech at the event.
    

Matthew Lourney, Managing Partner of Acclime Vietnam, introduced the four main talking points of the afternoon: Labour Code changes from 1 January 2021; Work Permit updates from Decree 152; the Law of Tax Administration in Degree 126; and the current situation with COVID-19.
The Labour Code includes a number of changes that impact workplaces. These include labour contracts; crisis management; Decree 145 on labour code implementation; severance and retrenchment allowance; and labour regulations.
Mr. Lourney then discussed updates to Work Permits, including several exemption categories under Decree 152; Work Permit process and procedures; and how foreign currency and employment contracts work.

Turning to the Law on Tax Administration, Mr. Lourney discussed changes to taxation lodgements and general administration; the taxation of cross-border e-commerce activities; new anti-avoidance provisions and increased penalties for taxation enforcement; and tax rates and residency.
    

Mr. Lourney delivering his presentation
  

Lastly, Mr. Lourney talked about the expenditures on quarantining foreign experts serving prevention and control of COVID-19, and how work permits are impacted under the new law.
Ms. Giang Nguyen and Ms. Huong Tran, Senior Associates from Allens, then took the stage to present Vietnam’s new Law on Investment and Law on Enterprises.
Firstly, the new Law on Investment provides a new approach to market entry for foreign investors, which is more transparent and convenient. In regard to M&A approval, the conditions previously have only included considerations of the market approach, national defence and security, and Law on Land. However, there are now new circumstances in which M&A approval is required, more documents are required in application dossiers, and there are changes in procedures to obtain M&A approval.
  

Ms. Giang Nguyen delivering her presentation
   

Second, with the new Law on Enterprises, there are new provisions on legal representatives, with more than one now allowed. Ms. Giang Nguyen and Ms. Huong Tran explained that it is not compulsory to have an Inspection Committee in LLCs, except for those LLCs which are State-owned enterprises and their subsidiaries.
  

Ms. Huong Tran delivering her presentation
   

Furthermore, there are now changes of voting thresholds in shareholding companies as well as an expansion of minority shareholders’ rights. For example, now minority shareholders only need to possess 5 per cent of shares to request the convening of a GMS meeting, sight of the company’s records, and an inspection from the Inspection Committee. In addition, a shareholder or a group of shareholders owing at least 1 per cent of shares can initiate legal action against members of the Board of Management, director, or general director.
A few questions were raised in regard to working long-term in Vietnam as foreigners during the pandemic, how to obtain residence permits for spouses, and how the new laws will impact on bringing in foreign experts and investment to Vietnam.
      

Mr. Oliver Regner and guest speakers during the Q&A session.

    
Mr. Lourney, Ms. Giang Nguyen, and Ms. Huong Tran took turns answering the questions raised by the audience. Mr. Lourney explained there are two types of permits for foreigners and their spouses and explained the process of how to apply for them to the audience.
     
Meanwhile, Ms. Giang Nguyen and Ms. Huong Tran discussed how travel restrictions may affect investment into Vietnam, but stressed that we need to wait for some time to see the new law take effect before we can make conclusive analysis.