Vietnam’s Ministry of Planning and Investment is reviewing and evaluating the implementation of the 2020 Enterprise Law after four years, with a view to proposing amendments and supplements. While the law has had positive impacts and contributed to an improved business environment, feedback from government agencies, local authorities, and businesses highlights persistent challenges and obstacles in its practical application.
The main issues stem from ambiguous and vague provisions, leading to differing interpretations, as well as certain rules being out of touch with reality. The Ministry identified three key problem areas: inconsistencies between the Enterprise Law and specialized laws, such as regarding private bond issuance by non-public companies; inadequate supervision, inspection, and state management of enterprises post-registration; and lack of specificity in measures to prevent and address fraudulent capital contributions, shadow investments, and fake legal documents for business establishment or invoice trading.
Furthermore, the current law does not restrict the number of enterprises an individual can establish or represent simultaneously, which has been exploited by unscrupulous individuals for fraudulent activities and personal gain. The Ministry also noted a lack of clarity in provisions on business establishment, including restrictions on individuals prohibited from establishing or managing enterprises, requirements for personal identification numbers and electronic identification accounts during registration, and notification obligations for changes to registration information. Issues were also identified regarding enterprise management and governance rules.
The Enterprise Law lacks specific measures to address fraudulent capital contributions and shadow investments.
To address these challenges, the Ministry of Planning and Investment will propose amendments based on feedback from various stakeholders, including government ministries, local authorities, associations, and businesses. Suggested changes include introducing the concept of beneficial owner based on anti-money laundering regulations, as business registration is the crucial first step for any enterprise entering the market. Additionally, the Ministry proposes restricting/banning the issuance of bearer shares and adopting the international practice of nominal directors.
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