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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
No.
60-2005-QH11 dated 29 November 2005;
Having considered the
proposal of the Minister of Planning and Investment;
Decrees:
Article 1
Governing scope
This Decree provides
detailed guidelines on implementation of a number of articles of the
Law on Enterprises relating to the
establishment, managerial organization and operation, restructuring and dissolution of
enterprises.
Article 2
Applicable
entities
This Decree shall apply
to:
1. Limited liability
companies, shareholding companies, partnerships and private enterprises
including limited liability
companies [and] shareholding companies after conversion from 100% State owned enterprises, 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).
2. Joint venture
enterprises and enterprises with 100% foreign owned capital which have not 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).
3. Individual family
households.
4. Other organizations and
individuals involved in the establishment, managerial organization and operation, restructuring
and dissolution of enterprises.
Article 3
Applicability of
the Law on Enterprises, international treaties and [other] relevant laws
1. The
Law on Enterprises
shall apply to
the establishment, managerial organization and operation of enterprises, except for
the cases stipulated in clauses 2 and 3 of this article.
2. In a case where an
international treaty of which the Socialist Republic of Vietnam is a member contains other provisions
on application files, order and 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.
In this case, if bilateral
commitments contain different items from multilateral commitments, then the undertakings which contain
the more favourable benefits to enterprises and investors shall apply.
3. If there are
differences between the provisions in the
Law on Enterprises
and the
following laws on application files, order
and procedures and conditions for establishment and business registration; on the structure of
managerial organization, on the 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:
(a)
Law on Credit
Institutions;
(b)
Law on Petroleum;
(c)
Law on Civil
Aviation of Vietnam;
(d)
Law on Publishing;
(dd)
Law on Press;
(e)
Law on Education;
(g)
Law on Securities;
(h)
Law on Insurance
Business;
(i)
Law on Lawyers;
(k)
Law on Notarization;
(l) Any law amending one
of the laws stipulated in this clause and any other special law1
which the National Assembly
passes after this Decree takes effect.
Article 4
Prohibited lines
of business
1. The list of prohibited
lines of business shall comprise:
(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 spare parts, accessories, and materials and
technology used to manufacture the former items;
(b) Business in all types
of drugs of addiction;
(c) Business in List I
chemicals (stipulated in international treaties);
(d) Business in products
of reactionary culture and pornographic products; products serving superstitious purposes or
products which are harmful to aesthetic education and personal development;
(dd) Business in all types
of firecrackers;
(e) Business in all types
of games and toys which are dangerous or harmful to the personal development and health of
children or to the security, order and safety of society;
(g) Business in all types
of rare wild animals and plants, including both living animals and 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;
(h) Brothel businesses,
organizing prostitution, trafficking in women and children;
(i) Business services
being organized gambling or keeping a gambling house in any form;
(k) Business services
being investigation [private detective] services into infringement of State rights or the rights and
legitimate interests of organizations and citizens;
(l) Business services
being marriage broking involving a foreign element;
(m) Business services for
foster parents or adoption involving a foreign element;
(n) Business in all types
of imported scrap causing environmental pollution;
(o) Business in all types
of products, goods and equipment which are prohibited from circulation or use, or not yet permitted
to be circulated or used in Vietnam;
(p) Other lines of
business which are prohibited by specialized branch laws, ordinances and decrees.
2. Business in the lines
stipulated in clause 1 above in a number of specific cases shall be applicable pursuant to the relevant
specialized branch law, ordinance or decree.
Article 5
Lines of
business which are subject to conditions, and business conditions
1. The provisions of
specialized branch laws, ordinances and decrees or relevant decisions of the Prime Minister of the
Government (hereinafter all referred to as
specialized branch
laws) shall
apply to lines of business which
are subject to conditions and to the business conditions which are applicable.
2. Business conditions
shall be expressed in the following forms:
(a) Business licences;
(b) Certificates of
satisfaction of business conditions;
(c) Practising
certificates;
(d) Certificates of
professional indemnity insurance;
(dd) Certification of
legal capital;
(e) Other approvals from
competent State authorities;
(g) Other requirements
which an enterprise must implement or satisfy before it shall have the right to conduct business in
such line of business without the need for any certification or approval in any form from a
competent State authority.
3. All provisions
regarding the types of lines of business subject to conditions and such business conditions in other legal
instruments other than those mentioned in clause 1 of this article shall no longer be effective as
from 1 September 2008.
Article 6
Lines of
business which require a practising certificate
1. A practising
certificate as referred to in article 7.2 of the
Law on Enterprises
means a
document which is 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.
2. Whether any one line of
business requires a practising certificate and the conditions for issuing such practising certificate
shall be decided by application of the relevant specialized branch law.
3. In the case of an
enterprise conducting business in a line for which the law requires a practising certificate, then business
registration or registration of such additional line of business shall be conducted in accordance
with the following provisions:
(a) The director of the
enterprise or the head of the business establishment must have a practising certificate if the
enterprise conducts business in a line for which the law requires that the director or head of the
business establishment have such practising certificate;
(b) The director of the
enterprise and at least one other specialized senior staff member as 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;
(c) At least one
specialized senior staff member as stipulated by the relevant specialized branch law must have a practising
certificate if the enterprise conducts business in a line for which the law does not require the
director or the head of the business establishment to have a practising certificate.
Article 7
Lines of
business which require legal capital
1. The provisions of
specialized branch laws shall apply to lines of business requiring legal
capital, to 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.
2. The chairman of the
members’ council or the chairman of the company and the director (general director) in the 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.
3. When an enterprise
conducts business registration for a line of business requiring legal capital or conducts registration of
an additional line of business requiring legal capital, then there must also be certification from the
authorized body or organization about the legal capital, unless the amount of equity recorded in the
list of overall assets of the enterprise on the most recent occasion is more
than or equal to the stipulated
level of legal capital.
4. The person who directly
certifies legal capital shall be jointly liable for the accuracy and
truthfulness of the amount of such
capital as at the time of making the certification.
Article 8
Right to
business registration and right to carry out business activities
1. Enterprises shall the
right to take the initiative in conducting business registration and in
conducting business activities
without applying for permission or approval, and without seeking the opinion of any State body, if such
line of business:
(a) Is not on the list of
prohibited lines of business;
(b) Is not on the list of
lines of business which are subject to conditions pursuant to a provision of a specialized branch law.
2. In the case of a line
of business which is subject to conditions, an enterprise shall have the right
to conduct business in such
line as from the time it satisfies all the stipulated conditions.
If an enterprise conducts
business when it fails to satisfy all the stipulated conditions, then the following persons shall be
jointly liable for such business: the chairman of the members’ council or the chairman of the
company and the director (general director) in the 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.
Article 9
Right to
establish enterprises
1. All organizations being
legal entities including enterprises with foreign owned capital in Vietnam 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 the establishment of an enterprise in Vietnam
in accordance with the provisions of the
Law on Enterprises.
2. Any one individual
shall only have the right to register the establishment of one private
enterprise or one individual family
household business, or to be a partner of one partnership unless the other partners have some other
agreement. An individual owner of a private enterprise or an individual household business shall
have the right to establish [and] to participate in the establishment of a one member limited liability
company, a limited liability company with two or more members, [and/or] a shareholding company.
3. Any foreign
organization or individual investing for the first time in the establishment of
an enterprise in Vietnam must comply
with the following provisions:
(a) If more than 49% of
the charter capital of the enterprise proposed to be established will be owned by a foreign
investor, then there must be an investment project and registration of the investment shall be
conducted together 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 business registration certificate (hereinafter referred to
as the
investment certificate).
(b) If the foreign
investor will not own more than 49% of the charter capital in the enterprise proposed to be
established, then establishment of the enterprise shall be implemented in accordance with the
provisions of the
Law on Enterprises
and Decree
88-2006-ND-CP of the Government dated 29 August
2006 on business registration (hereinafter referred to as
Decree 88).
In this case the same regulations which apply to domestic investment projects shall apply to
registration of the investment.
Article 10
Right to
contribute capital and to purchase shareholding
1. All organizations being
legal entities including enterprises with foreign owned capital 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 do not belong to the entities in 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 amount 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 ownership ratio of
foreign investors in special cases shall be implemented in accordance with the laws specified in
article 3.3 of this Decree and other relevant specialized branch laws;
(c) The ownership ratio of
foreigners in 100% State owned enterprises undergoing equitization or otherwise converting their
form shall be implemented in accordance with the law on equitization and
conversion of 100% State owned enterprises;
(d) The ownership ratio of
foreigners in business services enterprises shall be implemented in accordance with the list
of specific commitments on commercial services (in the appendix to the Decree on Vietnam's
WTO accession).
2. Any foreign investor
contributing capital to a limited liability company or receiving an assignment
of the capital contribution
portion of a member or owner of the company shall implement the regulations on capital contribution or
assignment of capital contribution portion; and shall register change of membership in accordance
with the corresponding provisions of the
Law on Enterprises
and Decree 88.
Registration of change of
membership of a company which has been issued with an investment certificate shall be
conducted at the competent State body for administration of investment.
Registration of change of
membership in other cases shall be conducted at the competent business registration office.
3. A foreign investor
purchasing newly issued shares or receiving an assignment of shares shall do so in accordance with the
regulations on purchase of shareholding and assignment of shareholding, and shall register as a
shareholder or shall register a change of share ownership in the register of shareholders in accordance
with the corresponding provision of the
Law on Enterprises.
In a case of receipt of
the shareholding contribution of a founding shareholder as stipulated in article 84.3 of the
Law on
Enterprises or
an assignment of shares of a founding shareholder as stipulated in article 84.5
of the
Law on Enterprises,
then there must also be
registration of change of a founding shareholder in
accordance with Decree 88 at the competent business registration office or State body for
administration of investment.
Article 11
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
1. It shall be strictly
prohibited for any State body or unit of the people’s armed forces to use State assets or public funds to
establish an enterprise, or to contribute capital or to purchase shareholding in an enterprise in order
to earn private profit for such body or unit.
2. State assets and public
funds as stipulated in this article shall comprise:
(a) Assets procured with
State budget funds or with capital sourced from the State budget;
(b) Funding issued by the
State budget;
(c) Land allocated for use
in order to exercise functions and discharge duties stipulated by law;
(d) Other assets and
revenue created from the use of the above-mentioned assets and funding.
3. Private profit for a
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:
(a) Distribution in any
form to one or a number of senior officials or staff of such body or unit;
(b) Supplementing the
operational budget of such body or unit contrary to the law on the State budget;
(c) Establishing or
supplementing a fund which services the private interests of such body or unit.
Article 12
Supplementary guidelines on a number of rights and obligations of members of a
limited liability company
1. In a case where an
individual member of a limited liability company is subject to temporary
detention or imprisonment, sentenced
by a court to a term of imprisonment or has his or her right to practise withdrawn by a court for a
crime of smuggling, making counterfeit goods, illegally conducting business, evading tax,
cheating customers or any other crime as stipulated by law, then such member shall have the
right to appoint another person to participate in the members' council managing the company.
2. In the case of a
limited liability company with two members, if one of the members is an
individual who is the legal
representative of the company and is subject to temporary detention or imprisonment, hides from
his or her place of residence, loses capacity for civil acts or has his or her capacity for civil acts
restricted, or has his or her right to practise withdrawn by a court for a crime
of smuggling, making
counterfeit goods, illegally conducting business, evading tax, cheating
customers or any other crime as
stipulated by law, then the other member shall automatically become legal representative of the
company until there is a new decision made by the members' council.
3. In a case where a
company fails to redeem a capital contribution portion, fails to pay for such redeemed portion or fails
to agree on a price for the redemption as stipulated in article 43 of the
Law on Enterprises,
then the member which demanded that the company redeem [its capital contribution portion] shall have the
right to assign such portion to another person. In this case, it shall not be mandatory for the
assignment to be implemented in accordance with article 44 of the
Law on Enterprises.
4. Any capital
contributing member who fails to fully pay up and on time the amount of capital
as undertaken must pay
interest on the outstanding capital amount to the company at the highest loan interest rate of
commercial banks until such time as the member fully pays up the capital amount undertaken, unless the
company charter stipulates otherwise or the members have some other agreement.
Article 13
Supplementary guidelines on director (general director) and members of the board
of management
1. The director (general
director) of a shareholding company or limited liability company with two or more members must satisfy
the following criteria and conditions:
(a) Have full capacity for
civil acts and not be prohibited from establishing and managing an enterprise as stipulated
in article 13.2 of the
Law on Enterprises;
(b) A shareholder being an
individual must own at least five (5) per cent of the ordinary 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 in the case of 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 provisions of the company
charter shall apply.
(c) In the case of a
subsidiary company of a company which contributes capital or has shareholding owned by the
State of more than 50% of the 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 company may not be the spouse, parent or foster parent, child, adopted child or sibling
of a manager of the parent company or of the authorized representative of the
State owned capital portion in the parent company.
2. The director (general
director) of a one member limited liability company where such member is an organization must satisfy
the following criteria and conditions:
(a) Have full capacity for
civil acts and not be prohibited from establishing and managing an enterprise as stipulated
in article 13.2 of the
Law on Enterprises;
(b) Have expert
qualifications in or actual experience in business management or in the
principal line of business of the
company, unless the company charter stipulates otherwise;
(c) If the owner of the
company is a State body or enterprise with more than 50% State ownership, 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, adopted child or sibling
of the head or deputy head of the State body or of the authorized representative of the
State owned capital portion in such company.
3. The members of the
board of management of a shareholding company must satisfy the following criteria and conditions:
(a) Have full capacity for
civil acts and not be prohibited from establishing and managing an enterprise as stipulated
in article 13.2 of the
Law on Enterprises;
(b) A shareholder being an
individual must own at least five (5) per cent of the total ordinary shares; or a shareholder
must own at least five (5) per cent of the total shares [i.e. ordinary shares plus other classes
of shares], or in the case of a person not a shareholder then he or she 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 those in this clause, then the provisions of the
company charter shall apply.
4. Unless otherwise
stipulated by the company charter, the chairman of the members’ council, the chairman of the company,
the chairman of the board of management and the director/general director of such 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 (except the director/general director
of a shareholding company) of another company.
5. Where a foreign
individual is assigned to be legal representative of an enterprise, he or she
must reside in Vietnam for the
entire term of office and must register temporary residence in accordance with law. Where he or she
exits Vietnam for over thirty (30) consecutive days, he or she must:
(a) Authorize another
person in writing in accordance with the company charter to perform the rights and obligations of
the legal representative of the company;
(b) Send, at least two
days' prior to exiting Vietnam, a copy of such power of attorney to the Department of Planning and
Investment or to the management committee of the industrial zone or economic zone
where the enterprise has registered its head office.
Article 14
Number of
authorized representatives who may participate in the members’ council or attend the general meeting
of shareholders
1. Unless otherwise
stipulated by the company charter:
(a) An organization being
a member of a limited liability company owning at least thirty-five (35) per cent of the charter
capital shall have the right to appoint up to three authorized representatives to
participate in the members' council.
(b) An organization being
a shareholder of a shareholding company owning at least ten (10) percent of the total number
of ordinary shares shall have the right to authorize up to three people to attend the general
meeting of shareholders.
2. The company owner shall
have the power to decide the number of members of the members' council of a one member limited
liability company when such one member is an organization.
Article 15
Founding
shareholders
1.
Founding
shareholder
means a person contributing shareholding capital [and] who is involved in formulating, approving and
signing the first charter of the shareholding company.
2. A newly established
shareholding company must have a founding shareholder/s; a shareholding company which was
converted from a 100% State owned enterprise or limited liability company which was divided or
demerged from, or consolidated or merged into another shareholding company need not necessarily have
a founding shareholder/s.
If there is no founding
shareholder/s then the charter of the shareholding company in the application file for business
registration must be signed by the legal representative of such company.
3. If after three years
from the date of issuance of the business registration certificate the number of shares carrying the right
to offer for sale as stipulated in article 84.4 of the
Law on Enterprises
is not fully sold, then the
company must register an amendment being a reduction of the amount of capital the company is entitled to
issue carrying the right to issue so that it is equal to the number of shares actually issued.
Article 16
Establishment of branches and representative offices of an enterprise with
foreign owned capital
1. 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 conducting investment procedures in
accordance with the law on investment. The application file, order and procedures for registering
the operation of a branch or representative office shall be implemented in accordance with the
corresponding provisions in Decree 88, and the registration of the operation of the branch or
representative office shall be conducted at the competent state body
administering investment.
2. If registration of the
operation of a branch is conducted simultaneously with registration of the investment project, then
the application file shall include both the application file for registration of
the operation of a branch
stipulated in Decree 88 and an application file for registration of the
investment in accordance with the law
on investment.
In this case, the branch
shall be established and issued with an investment certificate which will concurrently be the
certificate of registration of the operation of the branch when the investment project is registered or
evaluated for approval and the application file for registration of the
operation of the branch is valid. In
this case the contents of the investment certificate shall comprise items on registration of the
operation of the branch and items on registration of the investment project in accordance with law.
Article 17
Method of
cumulative voting
1. The method of
cumulative voting stipulated in article 104.3(c) of the
Law on Enterprises
shall apply to all shareholding companies
including listed companies, unless the law on securities otherwise provides.
2. Before and during the
general meeting of shareholders, shareholders shall have the joint right to form a group in order to
nominate a candidate/s and to cast cumulative votes for their candidate/s.
3. The number of
candidates which each group shall have the right to nominate shall depend on the number of candidates
decided by the general meeting and the share ownership ratio of each group.
Unless the company charter
stipulates otherwise and unless the general meeting of shareholders decides otherwise, the
number of candidates which a group shall have the right to nominate shall be regulated as follows:
(a) A shareholder or a
group of shareholders holding from ten (10) to below twenty (20) per cent of the total voting shares
shall have the right to nominate a maximum of one candidate;
(b) A shareholder or a
group of shareholders holding from twenty (20) to below thirty (30) percent of the total voting shares
shall have the right to nominate a maximum of two candidates;
(c) A shareholder or a
group of shareholders holding from thirty (30) to below forty (40) per cent of the total voting shares
shall have the right to nominate a maximum of three candidates;
(d) A shareholder or a
group of shareholders holding from forty (40) to below fifty (50) per cent of the total voting shares
shall have the right to nominate a maximum of four candidates;
(dd) A shareholder or a
group of shareholders holding from fifty (50) to below sixty (60) per cent of the total voting shares
shall have the right to nominate a maximum of five candidates;
(e) A shareholder or a
group of shareholders holding from sixty (60) to below seventy (70) percent of the total voting
shares shall have the right to nominate a maximum of six candidates;
(g) A shareholder or a
group of shareholders holding from seventy (70) to below eighty (80) percent of the total voting
shares shall have the right to nominate a maximum of seven candidates;
(h) A shareholder or a
group of shareholders holding from eighty (80) to below ninety (90) percent of the total voting shares
shall have the right to nominate a maximum of eight candidates.
Where the number of
candidates nominated by a shareholder or group of shareholders is lower than the number of candidates
they are entitled to nominate, then the remaining candidates shall be nominated by the board of
management or by the inspection committee or by other shareholders.
4. Persons elected to be
members of the board of management or of the inspection committee shall be verified on the basis of a
count from the highest number down to the lowest number of votes, starting with the candidate with
the highest number of votes and then moving to the candidate with the next highest number until all
the number of members as required by the company charter have been elected.
Article 18
Supplementary guidelines on meetings of the board of management
1. The meeting of the
board of management convened by the first notice convening a meeting shall be conducted when
three-quarters or more of the total number of members are present.
2. Where the stipulated
number of members are not present at the meeting convened as stipulated in clause 1 of this article,
the meeting shall be convened for a second time within fifteen (15) days of the date of the intended first
meeting. In this case, a meeting shall be conducted when there are more than one-half of the total
number of members of the board of management present.
Article 19
Conversion
of a one member limited liability company into a limited liability company with
two or more members
1. A one member limited
liability company shall be permitted to convert into a limited liability company
with two or more members when
the owner of the company has contribute the full amount of capital as undertaken. The company
may convert by the following forms:
(a) The owner of the
company assigns or donates a part of its ownership portion in the company to one or more other people;
or
(b) The company raises
additional capital contributions from one or more other people.
2. In a case of conversion
as stipulated in clause 1(a) of this article, the application file for
conversion shall comprise:
(a) Request for
conversion;
(b) Charter of the
converted company with the contents stipulated in article 22 of the
Law on Enterprises;
(c) List of members
containing the items stipulated in clauses 1 and 3 of article 23 of the
Law on Enterprises and the equivalent
capital contribution portion of each member;
(d) Contract on
assignment, or document certifying the donation of a part of the ownership of
the company.
3. In a case of conversion
as stipulated in clause 1(b) of this article, the application file for
conversion shall comprise:
(a) Request for
conversion;
(b) Charter of the
converted company with the contents stipulated in article 22 of the
Law on Enterprises;
(c) List of members as
stipulated in article 23 of the
Law on Enterprises;
(d) Decision of the owner
of the company on raising additional capital contributions.
4. Within a time-limit of
fifteen (15) business days from the date the owner of the company assigns or donates a part of its
ownership portion in the company to one or more other people, or from the date the company raises
additional capital contributions, or from the date one or more other people undertake to make capital
contribution portions, the company shall lodge or send the application file for conversion to the business
registration office or to the competent State body administering investment which issued the
investment certificate.
Within a time-limit of
five business days from the date of receipt of an application file for
conversion, the business registration
office or the State body administering investment shall re-issue the equivalent business registration
certificate or investment certificate; and at the same time it shall recover the previous business
registration certificate or investment certificate of the company prior to its
conversion.
5. Any converted company
shall inherit all the rights and legal interests and shall be responsible for
all debts including tax debts
and labour contracts and other obligations of the company prior to conversion.
6. Within a time-limit of
seven (7) business days from the date of issuance of the business registration certificate or investment
certificate referred to in clause 4 above, the business registration office or
the State body administering
investment shall notify the relevant State bodies stipulated in article 27.1 of the
Law on Enterprises,
and at the same time shall delete the name of the company prior to conversion from the business
register.
Article 20
Conversion
of a shareholding company or a limited liability company with two or more
members into a one member
limited liability company
1. A shareholding company
or a limited liability company with two or more members may convert into a one member limited
liability company by the following methods:
(a) One shareholder or one
member receives an assignment of the entire shares or entire capital contribution portions of
all the other shareholders or members;
(b) One shareholder or
member being a legal entity receives an investment capital contribution made by the entire shares
or entire capital contribution portions of all of the other shareholders or members; or
(c) A person other than a
member or a shareholder receives an assignment or receives an investment capital
contribution by the entire shares or entire capital contribution portions of all of the shareholders or
members of the company.
2. An application filed
for conversion shall comprise:
(a) Request for
conversion;
(b) Charter of the
converted company;
(c) Contract of assignment
of the shares or capital contribution portions, or agreement on receipt of investment capital
contribution by shares or by capital contribution portions.
3. Within a time-limit of
fifteen (15) business days from the date on which a shareholder or member receives an assignment as
stipulated in clause 1(a), or receives an investment capital contribution as stipulated in clause
1(b), or on which another person receives an assignment or an investment capital contribution as
stipulated in clause 1(c) of this article, the company shall send or lodge its application file for
conversion with the business registration office at the place where the
enterprise has such registration or
with the State administrative body for investment which issued the investment certificate.
Within a time-limit of
five business days from the date of receipt of the application file, the
business registration office or the
State administrative body for investment shall re-issue the business registration certificate
or investment certificate; and at the same time shall also recover the business registration certificate
or investment certificate which was issued to the company prior to conversion.
4. A converted company
shall inherit all the rights and legal interests and shall be responsible for
all debts including tax debts and
labour contracts and other obligations of the company prior to conversion.
5. Within a time-limit of
seven (7) business days from the date of issuance of the business registration certificate or investment
certificate referred to in clause 3 above, the business registration office or
the State body administering
investment shall notify the relevant State bodies stipulated in article 27.1 of the
Law on Enterprises,
and at the same time shall delete the name of the company prior to conversion from the business
register.
Article 21
Conversion
of a limited liability company into a shareholding company
1. A limited liability
company may convert into a shareholding company. If the limited liability
company has less than three
members, then attracting new members may take place at the same time as conversion of the company.
A new member may be a person receiving an assignment of a capital contribution portion of a
current member, or may be a person contributing additional capital to the company.
2. An application filed
for conversion shall comprise:
(a) Request for
conversion;
(b) Decision of the owner
of the company or of the members' council approving conversion of the company;
(c) Charter of the
shareholding company;
(d) List of founding
shareholders (if any) or list of ordinary shareholders with the items required
by article 19.3 of the
Law on
Enterprises;
(e) Contract/s on
assignment of capital contribution portions, or agreement on investment capital contribution.
3. Within a time-limit of
fifteen (15) business days from the date of the decision of the owner of the company or of the members'
council approving conversion, the company shall lodge or send the application file for
conversion to the competent business registration office or State body
administering investment which issued
the investment certificate.
Within a time-limit of
five business days from the date of receipt of an application file for
conversion, the business registration
office or the State body administering investment shall re-issue the equivalent business registration
certificate or investment certificate; and at the same time it shall recover the previous business
registration certificate or investment certificate of the company prior to its
conversion.
4. A converted company
shall inherit all the rights and legal interests and shall be responsible for
all debts including tax debts and
labour contracts and other obligations of the company prior to conversion.
5. Within a time-limit of
seven (7) business days from the date of issuance of the business registration certificate or investment
certificate referred to in clause 3 above, the business registration office or
the State body administering
investment shall notify the relevant State bodies stipulated in article 27.1 of the
Law on Enterprises,
and at the same time shall delete the name of the company prior to conversion from the business
register.
Article 22
Basic
contents of a request for conversion
The request for conversion
stipulated in articles 19, 20 and 21 of this Decree must contain at least the following particulars:
1. Name of the company to
be converted;
2. Name of the converted
company (if it is proposed that the company will change its name on being converted);
3. Head office address,
telephone and fax numbers, and e-mail address (if any);
4. Line/s of business;
5. Current charter capital
and proposed charter capital after raising additional capital contributions or shareholding;
6. Form of conversion;
7. Full name, permanent
residential address, number of people's identity card or passport of the legal representative of the
company;
8. Other items as
stipulated in clauses 5 and 6 of article 21 of the
Law on Enterprises.
Article 23
Contents of
a business registration certificate or of the business registration items in an investment
certificate applicable to a case of conversion
The business registration
certificate in the case of a company converted pursuant to articles 19, 20 and
21 of this Decree shall
contain the following basic particulars:
1. Name of the company
prior to conversion, number and date of issuance of its business registration certificate or investment
certificate, and charter capital.
2. Name of the converted
company, number and date of its business registration certificate or investment certificate.
3. Head office address,
address of any branch or representative office; telephone and fax numbers and e-mail trading address (if
any) of the converted company.
4. Charter capital of the
converted company in the case of a limited liability company; number of shares and value of shares
already sold; and number of shares carrying the right to offer for sale in the
case of a shareholding company.
5. Line/s of business.
6. Full name and permanent
residential address or registered temporary address (in the case of a foreigner), nationality
and number of people's identity card or passport (in the case of a foreigner) or other legal personal
identification of the legal representative of the company.
7. Other items as
stipulated in clause 3 of article 25 of the
Law on Enterprises.
Article 24
Conversion
of a private enterprise into a limited liability company
1. A private enterprise
may convert into a limited liability company pursuant to the decision of the
owner of the private enterprise
if it satisfies all the following conditions:
(a) It satisfies the
conditions stipulated in article 24 of the
Law on Enterprises;
(b) The owner of the
private enterprise must be the owner of the company (in the case of conversion to a limited
liability company with one member who is an individual), or must become a member (in the
case of conversion to a limited liability company with two or more members);
(c) The owner of the
company must provide a written undertaking to be personally liable to the extent of all assets owned
by him or her to pay all unpaid debts of the private enterprise, and must undertake to pay all
debts when they mature;
(d) The owner of the
private enterprise must have written agreements with parties to unliquidated contracts that the
converted limited liability company will accept and perform such contracts;
(dd) The owner of the
private enterprise must have written undertakings or written agreements with other capital contributing
members to take over and employ the current employees of the private enterprise..
2. An application file for
conversion shall comprise:
(a) Company charter;
(b) Request for conversion
and for business registration;
(c) List of creditors and
amount of unpaid debts (including tax debts) and the period for payment; list of current employees;
list of contracts not yet liquidated and the corresponding data as stipulated in sub-clauses
(c), (d) and (dd) of clause 1 of this article;
(d) Business registration
certificate of the private enterprise;
(dd) List of members
stipulated in article 23 of the
Law on Enterprises
in the case of
conversion into a limited liability
company with two or more members.
4. Within a time-limit of
ten (10) business days from the date of receipt of a file, the business registration office shall
consider and issue a business registration certificate to the new limited
liability company if all the
conditions stipulated in clause 1 of this article are satisfied. In a case of
refusal, the business registration
office must provide a written response specifying its reasons, and including guidelines for amendments
or additions to the application file.
5. Within a time-limit of
seven (7) business days from the date of issuance of the business registration certificate referred to in
clause 4 above, the business registration office or the State body administering investment shall notify
the relevant State bodies stipulated in article 27.1 of the
Law on Enterprises, and at the same time shall
delete the name of the private enterprise prior to conversion from the business register.
Article 25
Joint
venture enterprises or enterprises with 100% foreign owned capital which do not
register or which have not
yet re-registered pursuant to Decree 101:
1. They shall only have
the right to conduct business in the line/s and for the duration stipulated in
their investment licences; and
shall not be permitted to expand the scope of business to other lines.
2. They shall have the
right to implement new investment projects and open branches to operate in places other than their
head office, but [only] within the scope of the line/s of business stipulated in their investment licences.
3. Internal managerial
organization and the operation of the enterprise shall be implemented in accordance with the
provisions in the charter; in a case where the charter does not contain provisions, the
corresponding provisions of the
Law on Enterprises
and its
implementing guidelines shall apply.
4. They shall have
corresponding rights and obligations as stipulated in the
Law on Enterprises,
the Law on Investment
and other
relevant laws during the conduct of their business operation within the scope of the line/s of
business stipulated in their investment licences.
Article 26
Supplementary guidelines on economic groups
1.
An economic group
means a group
of companies which have independent legal entity status, formed on the basis of a
conglomeration or association by means of investment, capital contribution,
merger, acquisition, restructuring
or other forms of association; such companies associating with each other on a long-term basis for
their economic, technological and market interests and other economic services to form a
business group with two or more levels of enterprise in the form of a parent - subsidiary company.
2. An economic group shall
not have legal entity status and shall not be required to conduct business registration in accordance
with the
Law on Enterprises.
The companies forming the
economic group shall make their own
decision on the operational organization of the economic group.
3. The parent company
shall be organized in the form of a shareholding company or limited liability company which satisfies
the conditions stipulated in article 4.15 of the
Law on Enterprises.
The subsidiary companies shall
be organized in the form of shareholding companies or limited liability companies in accordance
with the provisions in the
Law on Enterprises
or other
relevant laws.
The parent company,
subsidiary companies and other companies forming the economic group shall have rights and
obligations, and the organizational structure of management and operation consistent with the form
of organization of an enterprise as stipulated in the
Law on Enterprises, [other] relevant laws and
the company charter/s.
4. The expression
"economic group" may be used as a subsidiary element of the discrete name of the parent company, in
compliance with articles 31 to 34 inclusive of the
Law on Enterprises
on naming enterprises.
5. The Ministry of Finance
shall provide guidelines on consolidated financial reporting by, and on supervision of the
financial operation of economic groups, and of groups of parent - subsidiary companies within an
economic group.
The Ministry of Industry
and Trade shall provide guidelines on implementation by economic groups and groups of parent -
subsidiary companies within an economic group of the provisions regarding restraint of competition,
dominant market position and monopoly position.
Article 27
Supervision
by the business registration office of the order and procedures for conducting
the general meeting of
shareholders and of decisions of the general meeting of shareholders
1. A shareholder or a
group of shareholders stipulated in article 79.2 of the
Law on Enterprises
shall have the right to request
the competent business registration office or State administrative body for investment to supervise
the order and procedures for convening and conducting the general meeting of shareholders and the
decisions of the general meeting of shareholders when the latter is convened pursuant to
article 97.6 of the
Law on Enterprises.
2. The request must be
made in writing and contain at least the following main particulars:
(a) Name and head office
address of the company;
(b) Number and date of
issuance of business registration certificate;
(c) List of the
shareholder or group of shareholders requesting the convening of the general meeting of shareholders,
including full names of individuals and names and head office addresses of legal
entities, number of ordinary shares and ownership ratio, and date and number of registration of
shareholding in the register of shareholders;
(d) Reason for convening
the general meeting of shareholders, and time and location of the meeting;
(dd) Signatures of all the
shareholders or group of shareholders convening the meeting.
3. The request stipulated
in clause 2 of this article must enclose the following documents:
(a) Request made to the
board of management and to the inspection committee to convene the general meeting of
shareholders as referred to in article 97.3(c) of the
Law on Enterprises;
(b) Invitation to attend
the general meeting of shareholders;
(c) Agenda and other data
servicing the meeting.
4. The competent business
registration office or State administrative body for investment shall appoint a representative to
supervise the general meeting of shareholders if such office or body receives an application file complete
in terms of the number and contents stipulated in clauses 2 and 3 of this article at least three
days prior to the meeting, and if the shareholder or group of shareholders convening the meeting are
registered in the register of shareholders of the company as owning the required ownership ratio
stipulated in article 79.2 of the
Law on Enterprises.
5. The representative of
the business registration office or State administrative body for investment shall be responsible to
supervise the order and procedures for conducting the meeting and for making a decision on
issues relating to the agenda for the meeting in accordance with the provisions in the
Law on Enterprises
and its
implementing guidelines.
If the chairman of the
meeting so requests and if considered necessary, the representative of the business registration
office or State administrative body for investment may explain guidelines on methods and procedures for
conducting the meeting and for voting.
6. One day after the
closure of the general meeting of shareholders, the representative of the
business registration office or
State administrative body for investment shall provide a written report on
results of supervision of the
meeting, including observations on the legality of the order and procedures for conducting the meeting.
Article 28
Dissolution
of enterprises
1. An enterprise shall be
dissolved in the cases stipulated in article 157.1 of the
Law on Enterprises, and shall have its
investment certificate revoked in the circumstances stipulated in article 68 of Decree 108 on
implementation of the
Law on Investment
or if a court
announces that the enterprise is dissolved.
2. The order and
procedures for dissolution and for liquidation of assets of the enterprise shall
be implemented in accordance
with clauses 1 to 4 of article 158 of the
Law on Enterprises.
3. Within a time-limit of
seven (7) business days from completion of dissolution of the enterprise and
full payment of all debts of
the enterprise, the legal representative of the enterprise shall submit documents relating to the
dissolution to the competent business registration office or State administrative body for
investment. The file on dissolution stipulated in article 158.5 of the
Law on Enterprises shall comprise:
(a) Decision on
dissolution, or decision revoking the business registration certificate or
decision revoking the investment
certificate, or decision of the court pronouncing dissolution of the enterprise;
(b) List of creditors and
amount of debts paid, including full payment of tax debts and payment of social insurance
contributions;
(c) List of current
employees and interests of such employees which have been resolved;
(d) Business registration
certificate or investment certificate;
(dd) Seal, certificate of
registration of the specimen seal, and certificate of registration of the tax code of the enterprise;
(e) Unused value added tax
invoices;
(g) Summarized report on
conduct of the dissolution procedures, including an undertaking that all debts have been fully paid
including tax debts, and that the lawful interests of employees have been resolved.
4. Members of the board of
management, members of a limited liability company, the owner of a company, the owner of a
private enterprise, the director (general director), and partners of a
partnership shall be liable for the
truthfulness and accuracy of the file on dissolution of the enterprise.
5. If the file on
dissolution is inaccurate or contains false material, then the persons referred
to in clause 4 of this article
shall be jointly liable to pay all unpaid debts, to pay unpaid tax debts, and
for interests of employees
which remain unresolved; and they shall be personally liable for any consequences arising
during a period of three years as from the date of lodging the file on
dissolution of the enterprise to the
competent business registration office or to the State administrative body for investment.
6. Within a time-limit of
seven (7) business days, the body receiving the file on dissolution of the enterprise stipulated in
clause 3 of this article shall notify the tax office and the police office about
the dissolution and shall
delete the name of the enterprise from the business register or from the investment register unless
the tax office and the police office have some other requirements.
7. The dissolution of any
enterprise or economic institution established and operating under a law referred to in article 3.3
of this Decree shall be implemented in accordance with the law on such specialized branch.
Article 29
Dissolution
of branches
1. The branch of an
enterprise shall be dissolved pursuant to the decision of such enterprise or pursuant to a decision
revoking the operational certificate of the branch made by the competent State administrative body.
2. An application file for
dissolution of a branch shall comprise:
(a) Decision of the
enterprise to dissolve its branch or decision of the competent State administrative body
revoking the operational certificate of the branch;
(b) List of creditors and
amount of debts to be paid including tax debts of the branch and outstanding social
insurance contributions;
(c) List of employees and
current corresponding interests of the employees;
(d) Certificate of
registration of the operation of the branch;
(dd) Seal, certificate of
registration of specimen seal, and certificate of registration of the tax code of the branch of the
enterprise;
(e) Unused value added tax
invoices.
3. The legal
representative of the enterprise and the director of the branch which is being
dissolved shall be jointly liable
for the truthfulness and accuracy of the application file for dissolution of the branch.
4. An enterprise whose
branch is dissolved shall be responsible to perform all contracts, to pay all
debts including tax debts of the
branch, and to continue to employ the employees of the branch or to fully resolve the legal
interests of such employees in accordance with law.
5. Within a time-limit of
seven (7) business days from the date of receipt of a complete file as
stipulated in clause 2 of this
article, the competent business registration office or State administrative body
for investment shall notify
the tax office and the police office about the dissolution of the branch of the enterprise, and shall
delete the name of the branch from the business register of operational branches unless the tax
office and the police office have some other requirements.
Article 30
Effectiveness
This Decree shall be of
full force and effect after fifteen (15) days from the date of its publication
in the Official Gazette.
Article 31
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