Midterm Review

Enterprise Law 2020 & Bankruptcy Law 2014

 Course: Business Law

 Lecturer: Ms. Danh Thao
 Presenter: TA Nhu Lien
Material provided by Nhu Lien 1
 A)
Enterprise Law 2020

2
1) General Regulations &
Definition

3
 Business Entities vs Enterprise
• Organization
• Has own name
• Has assets
• Individual & • Has transaction
organization office
• Conduct • Conduct business
commercial ENTERPRISE activities
activities BUSINESS • Has enterprise
• Have registration ENTITIES registration
for commercial certificate.
activities
Article 4.10,
Article 6.1, Enterprise Law 2020
Commercial Law 2005 Business
Cooperative
household

4
Business Activities
Example: TRUE / FALSE
1. Honda sells an SH for William.
2. Kate buys an SH from Harry.
3. Coca Cola buys stationary from Thien Long Group.
4. Coca Cola buys coca leaves from Binh.

 Conducted regularly
 Conducted professionally
 Conduced for profits (Profits = Main income)
 Conducted between traders/business entities
 Exceptions: Education & Healthcare

5
Classification Of Enterprises
Limited liability
company

Joint stock
Based upon legal company
forms
Partnership
company

Private enterprise

ENTERPRISE Private owned

Based upon State owns 100% capital
ownership (LOE 2014)
State owned
State owns 50% capital
(Article 4.11, Enterprise Law 2020)
Limited Liability
Base upon the scope
of liability of owner
Unlimited Liability 6
 Types of Enterprise
Private Partnership LLC1 LLC2+ JSC
Establishment Individual Individual & Organization
requirements 1 At least 2 GP 1 At most 50 At least 3
Management Contributed
Full Number of members Full Number of shares
power of Owner capital
• GP: Unlimited
Scope of liability Unlimited Limited
• LP: Limited
Funding method Cannot funding Limited partners Bonds Shares & Bonds
Capital transfer No Restricted Freely Restricted Freely
Legal person No Yes
• One or More than 2 • One or More than 2
• More than 2 • Company President / Chairman • Chairman of BOD &
Legal • General partners of MC & General Director General Director
Owner
representative • Equal rights and Depending on company charter:
responsibilities • With specific regulations: shared rights & responsibilities
• Without specific regulations: equal rights & responsibilities
• GMS: 1 time / 1 year
Depend on company’s
Meeting No Member Council: ≥ 1 time / 1 year • BOD: ≥ 1 time / 1 quarter / 3
need 7
months
Legal person / Legal entity Article 74, Civil Code 2015

Example: TRUE / FALSE

1. Vingroup Joint Stock Company establishes the Vin Fast LLC.
2. Hai, owner of Hoa Hong private enterprise, buys shares at PNJ Joint Stock Company.
3. Hung Dung Partnership buys a penthouse in District 1 of HCMC.
4. Hieu, a general partner of IU Partnership, becomes a member of Apple LLC.
5. Vingroup Joint Stock Company sell Vinmart and Vinmart+ to Masan Group JSC.
6. Hoa Hong private enterprise will cease to exist when Hai, its owner dies.

8
 Legal Representative / Representative At Law
Article 12, Enterprise Law 2020

Requirements:
 Individual
 Reside in Vietnam

Private Partnership LLC1 LLC2+ JSC

How many legal
1 2+
representatives?
Who is legal Company President/Chairman of MC & Chairman of BOD &
Company’s owner General partners
representative? General Director General Director
Article 190.3, Article 184.1, Article 79.3 & 54.3, Article 137.2,
Legal text
Enterprise Law 2020 Enterprise Law 2020 Enterprise Law 2020 Enterprise Law 2020
Depending on company charter:
Equal responsibilities
Notes --- • With specific regulations: shared rights & responsibilities
& rights
• Without specific regulations: equal rights & responsibilities
9
 Legal Representative / Representative At Law
With new Perform new
authorization made authorization
Leave Vietnam
Continue
Private
Authorize to Expired until return
another individual authorization term

 Leave Vietnam > 30 days Assign another

without authorization Without new Partnership,
legal
authorization made LLC, JSC
representative
Only one legal
representative left
 Dead, missing
 Kept in temporary detention LLC 1, LLC 2+, JSC
 Faced criminal prosecution
 Lost or restricted civil act capacity
The other member
 Limited cognition or behavior control
replaces temporary
 Served an imprisonment penalty or an LLC 2
UNTIL new ones
administrative penalty in a correctional
assigned
institution or rehabilitation center 10
Rights of Establishment & Management
Article 17.2, Enterprise Law 2020

Example: TRUE / FALSE

1. Minh, a 16-year-old high school student.
2. Hai, a police officer.
3. Trung, a prisoner.
4. Hieu, a government official.
5. TOSA, IU Team of Office of Student Affairs

11
Relatives
Article 4.22, Enterprise Law 2020
Spouse Biological Adoptive In-law
• Husband • Father • Father • Father
• Wife • Mother • Mother • Mother
• Son • Son • Son
• Daughter • Daughter • Daughter
• Brother • Brother
• Sister • Sister

Attention:
1. Grandson / Granddaughter
2. Aunt / Uncle
3. Adoptive brother / sister
4. Cousin
5. Ex-husband / Ex-wife
6. Pregnant girlfriend
7. Stepmother / Stepfather / Stepbrother / Stepsister 12
Confusingly Similar Name
Article 41, Enterprise Law 2020

Example: TRUE / FALSE

1. Doanh nghiep tu nhan Hoang Hao – Doanh nghiep tu nhan Hoan Hao

2. Cong ty TNHH mot thanh vien Binh Minh – Cong ty TNHH mot thanh vien Binh Minh 1
3. Cong ty TNHH TM AB – Cong ty TNHH TM A&B
4. Cong ty co phan Hoan Cau – Cong ty co phan Tan Hoan Cau

5. Cong ty hop danh Hoa Sen – Cong ty hop danh Hoa Sen mien nam
6. Doanh nghiep tu nhan Hoan Hao and Cong ty TNHH Hoang Hao

Remember to check whether they are the SAME FORM OF ENTERPRISE first
13
 Re-organization Enterprise Article 198 – 205, Enterprise Law 2020

Forms or reorganisation Which type of enterprises can be reorganised Consequences of the reorganisation

- Divided companies cease to exist

1 Division of enterprises
- Limited liability companies - New companies are established
- Joint stock companies - Separated companies still exist
2 Separation of enterprises
- New companies are established
- New companies are established
3 Consolidation of enterprises - Partnership companies
- Consolidated companies cease to exist
- Limited liability companies
- No new companies
4 Merger of enterprises - Joint stock companies
- Merged companies cease to exist
- Transformed enterprises ceases to exist:
o LLC  JSC
- Limited liability companies
o JSC  LLC
5 Transformation of enterprises - Joint stock companies
o Private  LLC, JSC & Partnership
- Private enterprises
14
2) Private Enterprise
Article 188 – 197, Enterprise Law 2020

15
Organizational Structure
Article 190, Enterprise Law 2020

Owner

Director

16
Owner of Private Enterprise
Article 188, Enterprise Law 2020

Example: TRUE / FALSE

1. Hanh, a limited partner of ABC Partnership Company.
2. Hao, a shareholder of Vin Group.
3. Tung, an owner of MTV Private Enterprise.
4. Trang, a member of TF Limited Liability Company.
5. Nghi, an owner of Huynh Hoa Bakery.

17
Owner’s Rights in Special Cases
Article 193, Enterprise Law 2020
With heir
Dead Transfer owner status to legal or designated heir
Without
Handle accordance with Civil Codes
heir
• Temporary Detention
• Imprisonment Sentence
Authorize another person to perform some or all
• Administrative Penalty in a
rights & obligations
Correctional Institution or
Rehabilitation Center

• Loss/Restricted Civil Act Capacity

Perform rights & obligations through
• Limited Cognition or Behavior
representatives
Control

Stop doing the job/business in the company

Court’s prohibition of doing
certain jobs/businesses
Terminate/Suspend business in the same line 18
Owner’s Liability when Lease / Sale
Article 191 & 192, Enterprise Law 2020

Example 1:
According to the LOE 2020, who will be liable for the debt in the following case? Thanh was the
owner of Thien Thanh Private Enterprise. In January 2015 due to personal issues, Thanh was unable
to manage the enterprise. Therefore she sold the enterprise to Binh. In September 2015, Binh
borrowed 200 million dong from An on behalf of the enterprise which had not been returned by
March 2016. In January 2016, Tuan was appointed to help Binh operate the enterprise.
Example 2:
According to the LOE 2020, who will be liable for the debt in the following case? Nguyen Gia private
enterprise is owned by Long. In 2010 Long leased the enterprise to Dung for 2 years. Dung
employed My to work as a director in the enterprise. In 2011, My was authorized to take out a 2
billion dong loan from OCB to buy a car valued at 3 billion dong for the enterprise. In 2015, OCB
requested the enterprise to pay off the due loan.

19
3) Partnership Company
Article 177 – 187, Enterprise Law 2020

20
Organizational Structure
Article 182 & 184, Enterprise Law 2020

General Partners Elect from General Partners Chairman of

Member’s Council
Limited Partners
Member Council

Work concurrently
General Director/ Director

21
Convene Meeting
Article 183, Enterprise Law 2020

Chairman of Fail to convene

General Partners
Member Council

Necessary General partners’

(at Chairman’s discretion) requirement

22
Meeting Resolution
Article 182, Enterprise Law 2020

𝟐
Normal cases: ≥ of total general partners
𝟑
𝟑
Special cases: ≥ total general partners
𝟒
• Amend, supplement the charter
• Admit new partners
• Decide on getting or providing a loan valued at or above 50% of the capital charter
• Decide on buying or selling assets valued at or above the charter capital
• Decide on dissolution and bankruptcy
• Ratify annual financial statements, profit distribution
• Decide investment in projects
• Decide on oriented development
• Permit capital withdrawals and exclusion of general partners 23
General Partner Status Termination
Article 185, Enterprise Law 2020

1. Willingly withdraw the capital

2. Died or declared as missing, having restricted or lost of civil act capacity or limited cognition
and behavior control
3. Serving imprisonment penalties or banned from certain jobs
4. Expelled from the company in cases:
a. Being unable to contribute or failing to contribute capital as committed after the second
notice of reminding
b. Causing serious damages to the company and other partners
c. Violating the Article 180:
• Owner of private enterprise, General partners of another Partnership
• Do business in same industry/field of the company on behalf of individual or company
• Transfer one or all capital to another without other General partner’s approval
d. Failing to properly perform his/her obligations

24
 Liability of General Partner Status Termination
Article 185, Enterprise Law 2020

Example 1:
According to the LOE 2020, which owners will be liable for the debt in the following case? Viet Cuong Partnership Company had 4
general partners including Toan, Huong, Nghia and Van. In 2015, Toan decided to withdraw his contributed capital and Van
transferred her contributed capital to Nam. In March 2016, Vietinbank requested the company to pay off the 5 billion dong loan
from 2014.
Example 2:
According to the LOE 2020, who will be liable for the debt in the following case? Hong Hai Partnership Company was established
by Hong and Hai. In 2010 Hong donated his capital to Nhat and Phuong who were approved to become general partners of the
company. In January 2012, Nhat withdrew his capital and Hai transferred his capital to Ngan who was approved to become a
general partner of the company. In December 2015, Vietcombank requested the company to pay off the 10 billion dong debt
which the company borrowed in 2009.
Example 3:
How will Ngoc be liable for the debt in the following case? Hong Ngoc Partnership Company was established by Hong and Ngoc.
Each person contributed 4 billion dong into the company. In 2017, in order to expand the project in Gia Lai, Hong took out a 15
25
billion dong loan from City bank on behalf of the company without Ngoc s approval.
 4) Limited Liability Company
with Single member
Article 74 – 87, Enterprise Law 2020

a) General Regulations
b) Limited Liability Company with Single member owned by Individual
c) Limited Liability Company with Single member owned by Organization

26
a) General Regulations

27
 Insufficient Committed Capital’s Contribution
Article 75, Enterprise Law 2020

Consequences:
• Register for adjustment of the charter capital within 30 days from the last due date.
• Be liable for all financial obligations arising before the registration for the adjustment within
the amount committed to contribute.
• Be liable for all damages caused from the failure with all of the owner’s property
Note: Time duration for capital contribution is 90 days after being granting an enterprise
registration certificate.

On time Late
Debt adjustment adjustment

30 days
Grant the enterprise 90 days Due date of capital Due date of capital
registration contribution adjustment
28
certificate
 Insufficient Committed Capital’s Contribution
(cont.)
Example:
According to the LOE 2020, how will the owner be liable for the debt in the following case? Loan is
the only member of Tyre Limited Liability Company (hereafter Tyre). Loan committed to contribute
500 million dong into Tyre in 2012. However till 2015 Loan contributed only 300 million dong. The
company informed the business registration office about this in 2015. In March 2016, Ngoc
requested the company to pay off 7 billion dong debt from 2014.

On time Late
Debt adjustment adjustment

30 days
Grant the enterprise 90 days Due date of capital Due date of capital
registration contribution adjustment
29
certificate
Capital Withdrawal
Article 77.5 & 78.1, Enterprise Law 2020

Withdraw Capital = Transfer Capital

Individual
1. Reorganize
company model
Company Owner
2. Jointly obligation of
liability
Organization

30
Increase Capital Charter
Article 87.1 & 87.2, Enterprise Law 2020

Additional investment
Re-register company’s capital charter
by Owner

Limited Liability Company with

Two or more members

Outsiders’ contribution

Joint Stocks Company

31
Decrease Capital Charter
Article 87.3, Enterprise Law 2020

Owner’s Capital Withdraw part of

Withdrawal Owner’s capital

Requirements • 2 years operation

• Ensure all debts and property obligations are paid in full
after returning.

Uncompleted Owner’s
Re-register company’s capital charter accordingly Article 75.3
Capital Registration

32
b) Limited Liability Company with
Single member owned by Individual

33
Organizational Structure
Article 85, Enterprise Law 2020

Company President
(Company Owner)

concurrently

Hire outside
Legal

Work
Representative

General Director

34
Owner’s Rights
Article 76, Enterprise Law 2020

1. Draw up and revise the company's charter

2. Decide increase or decrease in the company’s charter capital, transfer part or all of the
company’s charter capital to another organization or individual; decide issuance of bonds
3. Decide the use of profits after the company’s tax liabilities and other financial obligations have
been fulfilled
4. Decide the company’s reorganization, dissolution or file bankruptcy
5. Recover all assets of the company after the dissolution or bankruptcy process is complete
6. Decide investment, business operation
7. Decide the company’s administration

35
Owner’s Rights in Special Cases
Article 78.2 – 78.5 & 78.7, Enterprise Law 2020

Dead Transfer owner status to legal or designated heir

Missing Handle accordance with Civil Codes

• Temporary Detention
• Imprisonment Sentence
Authorize another person to perform some or all
• Administrative Penalty in a
rights & obligations
Correctional Institution or
Rehabilitation Center

• Loss/Restricted Civil Act Capacity

Perform rights & obligations through
• Limited Cognition or Behavior
representatives
Control

Stop doing the job/business in the company

Court’s prohibition of doing
certain jobs/businesses
Terminate/Suspend business in the same line 36
c) Limited Liability Company with
Single member owned by Organization

37
 Organizational Structure
Article 79, Enterprise Law 2020

MODEL 1: One representative MODEL 2: More than 2 representatives

Appoint Appoint
Company Owner Company Owner
Appoint

Appoint

Elect
Chairman of
Member Council
Company President Member Council
(3 – 7 members)
concurrently

Board of Controllers

Work concurrently
Work

Appoint/Hire
(1 – 5 controllers) Board of Controllers
(1 – 5 controllers)

• Stated-owned: Work
General Director
COMPULSORY concurrently
General Director
• Private-owned:
Optional 38
 Owner’s Rights
Article 76, Enterprise Law 2020

1. Draw up and revise the company's charter

2. Decide the company’s annual business plan and development strategy
3. Decide the company’s organizational structure; designate, dismiss the company’s executives and controllers
4. Decide the company’s investment projects
5. Decide solutions for market development, marketing and technology
6. Approve contracts for borrowing, lending, sale of assets and other contracts prescribed by the company's
charter whose value are at least 50% of the total assets written in the latest financial statement (or a smaller
ratio or value specified in the company's charter)
7. Ratify the company’s annual financial statements
8. Decide increase or decrease in the company’s charter capital, transfer part or all of the company’s charter capital
to another organization or individual; decide issuance of bonds
9. Decide establishment of subsidiary companies and contribution of capital to other companies;
10.Organize the supervision and assessment of the company’s performance
11.Decide the use of profits after the company’s tax liabilities and other financial obligations have been fulfilled;
12.Decide the company’s reorganization, dissolution or file bankruptcy
13.Recover all assets of the company after the dissolution or bankruptcy process is complete 39
Owner’s Rights in Special Cases
Article 78.6 & 78.7, Enterprise Law 2020

• Dissolution
Transfer ownership to stake receiver
• Bankruptcy

Reorganize the company

Stop doing the job/business in the company

Court’s prohibition of doing
certain jobs/businesses
Terminate/Suspend business in the same line

40
Convene Meeting
Article 80.4, 49.2 & 49.3, Enterprise Law 2020
Fail to convene
1 Chairman of
Member Council

Chairman’s Request from member/group of

discretion members of Category 2 & 3

2 Members or Group of members representing 10% AND ABOVE

of the capital charter

Members or group of members representing LOWER THAN 10%

3 of the capital charter IF there is ONE member representing
MORE THAN 90% of the capital charter
41
 Meeting Resolution
Article 80.5 & 80.6, Enterprise Law 2020

 Meeting MUST BE CONDUCTED successfully first:  Voting principle:

𝟐 1 member = 1 vote
≥ of total members attend the meeting
𝟑
Normal cases:

≥ 50% of attending members approve OR attending members holds ≥ 50% of total votes
Special cases:

≥ 75% of attending members approve OR attending members holds ≥ 75% of total votes
• Resolutions relating to amendment, supplementation to the charter
• Reorganization of the company
• Transfer of capital charter
42
Meeting Resolution (cont.)
Example 1:
According to the law on enterprises 2020, in order to become the chairman of the members council,
Binh needs at least approvals of who in the following case. FED limited liability company (hereafter
FED) was established by Cosmos joint stock company (hereafter Cosmos). Cosmos appointed 4
representatives in FED including Binh, Viet, Hoai and Trang. Binh represents 6 billion dong of the
contributed capital while Viet represents 1 billion dong, Hoai 1 billion dong, and Trang 2 billion
dong. Trang is unable to attend the meeting.
Example 2:
According to the law on enterprises 2020, in order to pass a resolution on restructuring the
following company in the first meeting, it needs at least approvals of who in the following case. FED
limited liability company (hereafter FED) was established by Cosmos joint stock company (hereafter
Cosmos). Cosmos appointed 4 representatives in FED including Binh, Viet, Hoai and Trang. Binh is
the chairman of the members council in FED who represents 6 billion dong of the contributed
capital while Viet represents 1 billion dong, Hoai 1 billion dong, and Trang 2 billion dong. Trang is
unable to attend the meeting.

43
5) Limited Liability Company
with Two or more members
Article 46 – 73, Enterprise Law 2020

44
Organizational Structure
Article 54, Enterprise Law 2020
Chairman of
Member Council

Member Council Elect

(3 – 7 members) Work concurrently
Appoint/Hire

Board of Controllers
(1 – 5 controllers)

• Stated-owned: COMPULSORY
Work • Parent: ≥ 50% company capital
concurrently
General Director • Subsidiary: regardless of contributed
capital
• Private-owned: Optional

45
Requirements of General Director
Article 64, Enterprise Law 2020

Individuals who meet all the following requirements can be hired or appointed

Not forbidden to manage an enterprise by

article 17.2, the law on enterprises 2020.

Must not a relative of the parent

company and representatives for the
state capital Hold professional
qualifications and experience
(If the company is a subsidiary in business administration
company of state-owned enterprises
or a state – owned enterprises)

46
Requirements of Controller
Article 168.2 & 169, Enterprise Law 2020 Controllers at Joint Stock Company are the same.

Individuals who meet all the following requirements can be hired or appointed

• Not being a person specified in Article 17.2, the law on enterprises 2020

• Not being relatives of members of the management board, the director/general director, or
other managers
• Not working as a manager of the company.
• Not required to be a shareholder or employee of the company
• Having a qualification in economics, finance, accounting, auditing, law, business
administration and a major related with the company’s business

Must not a relative of the parent company and representatives for the state capital
(If the company is a subsidiary company of state-owned enterprises or a state – owned enterprises)
47
Requirements of General Director, Controller
(cont.)
Article 64, 65.2, 168.2 & 169, Enterprise Law 2020

Example: TRUE / FALSE

1. Big C Limited Liability Company hires Hung, an official, to be their general director.
2. Anh, a former executive at Pepsi JSC, agrees to become general director at Big Hit LLC.
3. Binh, the brother-in-law of the Chairman MC, becomes general director at EVN Company.
4. Trang, the representative of EVN LLC’s contributed capital, becomes general director at Mattel
LLC – a subsidiary of EVN LLC.
5. Quang, the representative of state contributed capital, is also the general director at EVN
Company.
6. Trung, an engineer senior of Alpha LLC, is also the controller of the company.
7. Tung, an auditor senior at Beta LLC, is also the controller of the company.
8. Minh, a Bachelor of Laws, becomes the Chief of the Board of Controllers.

48
Convene Meeting
Article 57.1, 49.2 & 49.3, Enterprise Law 2020
Fail to convene
1 Chairman of
Member Council

Chairman’s Request from member/group of

discretion members of Category 2 & 3

2 Members or Group of members representing 10% AND ABOVE

of the capital charter

Members or group of members representing LOWER THAN 10%

3 of the capital charter IF there is ONE member representing
MORE THAN 90% of the capital charter
49
Conduct Meeting
Article 58.1 & 58.2, Enterprise Law 2020

LLC2+ Duration

1st meeting Attendees hold ≥ 65% contributed capital

2nd meeting Attendees hold ≥ 50% contributed capital 15 days

3rd meeting Irrespective 10 days

50
Attendee of Member Council’s Meeting
Article 58.3, Enterprise Law 2020

Member Attendee Note

Individual • Capital contributor of the company

• Organization with ≥ 35%

contributed capital can have
Organization • Authorized representatives
3
maximum representatives.
(Article 14.2, Enterprise Law 2020)

51
Meeting Resolution
Article 59, Enterprise Law 2020

Vote at meeting Collect written opinion

≥ 75% of the total ≥ 65% of the total

contributed capital of the contributed capital of the ≥ 65% of the total capital
attending members attending members

- Decide to sell assets valued ≥ 50%

of the total assets

- Amend, supplement the charter Other All

- Reorganize or dissolve of the

company

52
Meeting Resolution (cont.)
Example 1:
According to the LOE 2020, in order to pass a resolution on merger of the company in the first
meeting, it needs at least approvals of who in the following case. Calla Limited Liability Company
has 4 members including Huong, Giang, Thanh and Binh. Huong contributed 2,5 billion dong while
Giang invested 1,5 billion dong, Thanh 1 billion dong and Binh 3 billion dong. Binh is unable to
attend the meeting.
Example 2:
In order to pass a resolution relating to amendment of the charter, whose approval must the
members council at least have in the following case? Cao Viet Limited Liability Company has 5
members including Binh, Trang, Nguyen, Hieu and Tuan. Trang and Hieu contributed 250 million
dong (25% of the charter capital) each. Binh contributed 50 million dong (5%) while Tuan
contributed 170 million dong (17% of the charter capital). Nguyen contributed 280 million dong (28
% of the charter capital). For the meeting to amend the charter, only Trang, Hieu and Tuan attends

53
 Insufficient Committed Capital’s Contribution
Article 47, Enterprise Law 2020
Consequences:
• Cease to be a member of the company if failing to contribute the capital as committed.
• Having rights and obligations respective to the contributed amount if failing to contribute the capital in full.
• Unpaid capital can be offered for sales under a decision of the member’s council
• Register for adjustment of the charter capital within 30 days from the last due date.
• Be liable for all financial obligations arising before the registration for the adjustment within the amount
committed to contribute.
• Be liable for all damages caused from the failure with all of the owner’s property
Note: Time duration for capital contribution is 90 days after being granting an enterprise registration
certificate.
On time Late
Debt adjustment adjustment

30 days
Grant the enterprise 90 days Due date of capital Due date of capital
registration contribution adjustment
54
certificate
 Insufficient Committed Capital’s Contribution
(cont.)
Example:
How will Hieu be liable for his enterprise’s debt in the following case? Hieu committed to contribute
500 million dong (50% of the charter capital) into Huong Duong limited liability Company which has
4 members including Hieu in 2010. In 2011 Huong Duong got into debt of 3 billion dong which
would be due in January 2014. Till January 2014, Hieu just contributed 300 million dong and there
was no change made to the charter capital.

On time Late
Debt adjustment adjustment

30 days
Grant the enterprise 90 days Due date of capital Due date of capital
registration contribution adjustment
55
certificate
Capital Withdrawal

• LOE 2020 does not have nay specific regulations about capital withdrawal.
• Instead, in LOE 2020, capital withdrawal will be demonstrated in two forms
below:
1. Capital buy back
2. Capital transfer

56
 Capital Buyback
Article 51, Enterprise Law 2020

• ONLY when member disagree with the Member Council’s resolution about these cases:
1. Amendment, supplementation of member’s rights and obligations in the charter.
2. Company reorganization
• Member can freely transfer to anyone IF company does not perform payment.

Freely transfer

Member Council’s 15 days Due date of 15 days Due date of

resolution buyback request buyback payment
announced/passed
57
 Capital Transfer
Article 52, Enterprise Law 2020

1. Transfer contributed capital to other members

2. Transfer contributed capital to others

Termination of rights and

Freely transfer
obligations to the company

Capital transfer
succeeded
Information
Offer to other 30 days Offer’s registration of
members expired date new member
completed
58
 Capital Donation & Capital Inheritance
Article 53.1 & 53.4 – 53.6, Enterprise Law 2020

With heir Transfer to legal or

designated heir
Heir declined to be a
Without Handle accordance with member
heir Civil Codes
Company
Spouse, parent, Receiver was declined to be
buybacks
child or a relative a member by MC
Without MC capital
up to the third
approval
rank of Organization was
inheritance Company dissolved/bankrupt
Member

With MC
Others
approval
59
Capital Transfer as Debt Relief
Article 53.7, Enterprise Law 2020

Become a member with Member Council approval

Beneficiary

Transfer/Sell capital accordingly Article 52

60
Capital Settlement in other Special Cases
Article 53.2, 53.8 & 53.9, Enterprise Law 2020

Missing Perform rights & obligations through asset manager

• Loss/Restricted Civil Act Capacity

Perform rights & obligations through
• Limited Cognition or Behavior
representatives
Control

• Temporary Detention
• Imprisonment Sentence
Authorize another person to perform some or all
• Administrative Penalty in a
rights & obligations
Correctional Institution or
Rehabilitation Center

Stop doing the job/business in the company

Court’s prohibition of doing
certain jobs/businesses
Terminate/Suspend business in the same line
61
Increase Capital Charter
Article 68.1, Enterprise Law 2020

Additional investment
Re-register company’s capital charter
by members

New members’
contribution

62
Decrease Capital Charter
Article 68.3, Enterprise Law 2020
Requirements
• 2 years operation
Return part of the contributed capital to members in • Ensure all debts and property
proportion respective to their capital contribution ratios obligations are paid in full after
returning.

Buy back the contributed capital of its members

The capital has not been paid in full and on time

63
5) Joint Stocks Company
Article 111 – 176, Enterprise Law 2020

64
Organizational Structure
Article 137, Enterprise Law 2020

MODEL 1:

Elect
GMS Chairman
Elect of BOD
Elect

OPTIONAL: meet 2 conditions

1. Has < 11 shareholders
Control Board
Board of Directors 2. Organizational
(3 – 5 controllers)
(3 – 11 directors) shareholders own < 50%
of the company’s shares
member
Appoint

outside
Hire

EXCEPTIONS:
• Public company
Work concurrently
General Director • Stated-own company
(≥ 50% company capital)
65
 Organizational Structure (cont.)
Article 137, Enterprise Law 2020

MODEL 2:
Chairman
GMS Elect of BOD
Independent
Elect

Member of BOD
Board of Directors Chairman of
(3 – 11 directors) Audit Committee

Affiliated Member of
Independent Member to Audit Committee
Audit Committee
(≥ 20% of total members) Non-executive
(≥ 2 members) Member of BOD
member
Appoint

outside
Hire

Dependent Member
EXCEPTIONS:
• Public company
Work concurrently
• Stated-own company
General Director (≥ 50% company capital)
66
 Types of Share in JSC
Vote at the GMS’s
Shares’ Type Attend the GMS’s Meeting Transfer Company’s Buy back Convert
Meeting

YES RESTRICTED
Exception: Note:
Ordinary NO
Founding shareholders Only ≤ 30% issued
cannot transfer to other shares
YES

NO
Exception:
Voting preference NO
+ Court judgement
+ Inheritance YES
Note:
RESTRICTED + Voting preference:
Note: automatic convert into
Dividend preference ordinary after 3 YEAR of
Only ≤ 10% issued
shares operation.
NO + Dividend & Redeemable
Exception: preference: convert into
YES
Contain contents/decisions about changes to rights ordinary at will of
and obligations of preference shareholders YES
Redeemable Note: shareholders.
preference + Shareholder’s request
67
+ Share’s condition
 Confusing Management Decisions between GMS
and BOD
GMS BOD
• Request the types of authorized shares and quantity of
each type
Share • Decide the types of authorized shares and quantity of each
• Decide sale of certain types of unsold authorized shares
Authorization type
• Decide selling prices for the company’s shares and
bonds
• •
Management Decision

Dividend Decide the annual dividends of each type of shares Decide the time and procedures for paying dividends
• Decide the investment or transactions within its
• Decide investment in or sale of assets worth ≥ 35% of the total jurisdictions
Investment
assets • Execute contracts or transactions worth
≥ 35% of the total assets approved by GMS
• Decide repurchase of ≤ 10% of total sold shares of each
Shares
• Decide repurchase of > 10% of total sold shares of each type type
Repurchase
• Decide repurchase price
• Decide the appointment of the Chairman of BOD,
Personnel • Decide the personnel appointment of the BOD and Control
General Director.
Appointment Board
• Decide the dismissal of the Chairman of BOD, General
and Dismissal • Decide the personnel dismissal of the BOD and Control Board
Director.
68
Confusing Management Decisions between GMS
and BOD (cont.)
Example:

DECISION WHO
Buy back 35% issued shares
Issue 500,000 ordinary shares
Pay $10 dividend per share
Purchase a hotel valued 20% total assets
Buy back 15% issued ordinary shares
Pay dividend at the end of each quarter
Offer $10 per new issued share

69
Convene GMS’s Meeting
Article 140, Enterprise Law 2020
1. Necessary for the company at BOD discretion

1 Board of Directors
2. The remaining number of BOD & control
board is less than 3 members
3. The control board requests
Fail to convene

4. Shareholders / group of shareholders own

Regular meeting Irregular meeting consecutively 5% and above of the total
ordinary shares

2 Control Board
Fail to convene

3 Shareholders / group of shareholders own consecutively 05% and above of the

total ordinary shares
70
Conduct GMS’s Meeting
Article 145, Enterprise Law 2020

GMS Duration

1st meeting Attendees hold > 50% total voting shares

2nd meeting Attendees hold ≥ 33% total voting shares 30 days

3rd meeting Irrespective 20 days

71
 GMS’s Meeting Resolution
Article 148, Enterprise Law 2020

Collect written
Vote at meeting
opinion

≥ 75% of the same ≥ 65% of the total > 50% of the total
type of preference shares votes of the attending
votes of the attending
Cumulative Voting ≥ 65% of the total
of the attending shareholders capital
shareholders
shareholders
- Decide types and the
total number of each type
of shares
- Change business lines,
All
traders and fields, or
A resolution on adverse organisational structure Elect members of the BOD
changes to rights and Others
- Reorganise, dissolve the and Control Board
obligations of preference
shareholders company
- Decide to invest or sell Exception:
assets valued ≥ 35% of Adverse changes to rights
total asset and obligations72of
preference shareholders
 Cumulative Voting
Elect 3 members of the management board out of 5
candidates

Holding 3000
voting shares

A B C D E

According to principle of cumulative voting, David will have 9000 votes David

David’s votes = number of the holding shares x number of to-be elected members of the BOD
73
 GMS’s Meeting Resolution & Cumulative Voting
(cont.)
Example 1:
According to the law on enterprises 2020 , in order to pass annual financial statements, shareholders general meetings in Joint
Stock Companies need to gain at least approvals of………………
a. Shareholders who hold at least 51% of the total vote
b. Shareholders who hold more than ½ of the total vote of all attending shareholders.
c. Shareholders who hold at least 65% of the total vote
d. None of above
Example 2:
Thuong is a shareholder of Clinell Joint Stock Company (hereafter Clinell) who is holding 300 ordinary, 150 voting and 50
redeemable preference shares. In July 2017, Clinell has to select 5 new members of the director board out 9 candidates. How
many vote will Thuong have in this case?
Example 3:
According to the law on enterprises 2020 , ratification of a resolution relating to reorganisation of a joint stock company must be
conducted by………………………………………………………………………………………
a. Collecting written opinions
b. Voting at the meeting
c. Collecting opinions via mobile phones
d. Bath A&B 74
Member of the Board of Directors
Article 155, Enterprise Law 2020
Individuals meet all the following requirements:
Dependent members Independent members
Not working or worked for the company or its parent
Not forbidden to manage enterprises by the
company, and its subsidiary within at least the last 3
article 18.2
consecutive years
Having professional qualifications and experience
Not being entitled to salaries and remunerations from the
in Business administration unless otherwise
company
provided by the charter
Can be a member of the management board in Not be the spouse, natural father and mother, adoptive
other companies father and mother or natural and adoptive child or sibling
of the company’s large shareholder, manager of the
Not be relatives of the other managers, or of the
company or its subsidiary
manager and people with competence of appoint
managers of the mother company Not directly or indirectly owning at least 1% of the voting
shares
(For state owned enterprises and their subsidiary
Not being a member of the management or control board
companies)
within at least the last 5 consecutive years 75
Convene BOD’s Meeting
Article 157, Enterprise Law 2020

1 Chairman of BOD

1. Control board or Independent

Requested by members
Regular meeting Irregular meeting
2. General director or ≥ 5 managers
Fail to convene

3. ≥ 2 executive members of BOD

2 Requester

76
Conduct BOD’s Meeting
Article 157, Enterprise Law 2020

GMS Duration

𝟑
1st meeting ≥ total members
𝟒
𝟏
2nd meeting > total members 7 days
𝟐

77
BOD’s Meeting Resolution
Article 157.12, Enterprise Law 2020

 Meeting MUST BE CONDUCTED successfully first:  Voting principle:

1 member = 1 vote

ALL cases:

> 50% of attending members approve

78
BOD’s Meeting Resolution (cont.)

Example 1:
According to the LOE 2020, in order to pass a resolution on the price of shares offered for sale in the
first meeting, it needs approvals of who in the following case. The management board of Nuvento
Joint Stock Company has 7 members including Ngoc, Thuy, Hien, Trang, Nguyet, An and Quynh. Thuy
and An are unable to attend the meeting while Ngoc disagrees with the resolution.
Example 2:
According to the LOE 2020 , in order to decide buyback of shares, the management board needs at
least approvals of who in the following case. The management board of Dusagi Joint Stock Company
has 5 members including Khanh, Hoang, Vuong, Nhu and Huyen. Nhu and Khanh are unable to
attend the meetings while Vuong disagrees with the decision.

79
Cancel GMS & BOD Meeting’s Resolution

• Ordinary shareholders or a group of ordinary shareholders who holds at least 5%

of ordinary shares can request court to cancel resolutions of the general meeting
of shareholders
• Shareholders can request court to cancel or suspend implementation of
resolutions or decision of the BOD

80
Requirements of General Director
Article 162.4, Enterprise Law 2020

Individuals who meet all the following requirements can be hired or appointed

Not forbidden to manage an enterprise by

For ONLY article 17.2, the law on enterprises 2020.
public
companies,
state-owned
enterprises
Must not a relative of the parent
company and representatives for the
state capital Hold professional
qualifications and experience
(If the company is a subsidiary in business administration
company of state-owned enterprises
or a state – owned enterprises)

81
Pay Dividends
Article 135, Enterprise Law 2020

Preference share Respectively to share’s conditions

Ordinary share
• Determined according to the realized net profit and the dividend payment from the company’s retained
earnings
• Only pay dividend of ordinary shares when the following conditions are fully satisfied:
 Pay fully its tax liabilities and other liabilities
 Contribute company’s funds
 Make up all the previous losses
 After dividend payment, able to fully pay its debts and other liabilities

 Not company obligation to pay dividends for shareholders

82
 Insufficient Subscribed Share’s Contribution
Article 113, Enterprise Law 2020
Consequences:
1. Register for adjustment of the charter capital & founding shareholders within 30 days from the last due date.
2. Be liable for all financial obligations arising before the registration for the adjustment within the amount committed to contribute.
3. Shareholders not fully pay or partial pay their subscribed share:
• Not become shareholder if not fully pay
• Have rights & obligations respective to paid amount if partly pay.
• Cannot transfer unpaid shares to anyone
• BOD has rights to re-sell unpaid shares to others
4. Member of BOD, legal representative may be jointly responsible for the damage caused by the failure in respective cases.
Note: Time duration for subscribed share’s payment is 90 days after being granting an enterprise registration certificate.

On time Late
Debt adjustment adjustment

30 days
Grant the enterprise 90 days Due date of subscribed Due date of
registration certificate share’s payment adjustment 83
Share’s Buyback
Article 132 & 133, Enterprise Law 2020

Company’s Buyback

As shareholder’s request As company’s decision

• Conditions: • Conditions:
1. Disagree with reorganisation of the company 1. No more than 30% of the sold ordinary shares
2. Disagree with amendment of the charter’s 2. A part or all sold dividend preference shares
contents relating to rights and obligations of
• Types of buyback share: Ordinary & Dividend
shareholders
preference
• Types of buyback share: Irrespective
• Notes:
1. Send request to company after 10 days of the
GMS’s resolution
2. Have to buyback share within 90 days after
receiving the request.
84
Share’s Transfer

Shareholders are free to transfer their shares to others.

Except:
1. Within the first 3 years of establishment, founding shareholders can not transfer their shares
(registered at the time of establishment) to others rather than the remaining founding
shareholders unless approved by the shareholders’ meeting.
2. Voting preference shareholders
3. The charter restricts the transfer

85
 B)
Bankruptcy Law

86
 Bankruptcy & Dissolution
BANKRUPT DISSOLUTION

Operation duration
expires
Insolvency Decision of owners
Require minimum
Reason In insolvency situation numbers no longer
remaining for 6
BANKRUPT consecutive months

Registration withdrawn

Business registration
Authority to settle Court
Declaration office
of court Does not always
Outcome Terminate operations
terminate operations

Managers banned to
No restrictions applied
State’s attitude hold posts in a set of
for managers87
period of time
Insolvency
Failure to pay due financial obligations/liabilities within 3 months

Reflects serious financial difficulties

Does not mean having no property left

Not always shown in the appearance of loan or debt

Does not matter how much debt an enterprise/cooperative cannot pay

Does not always result in bankruptcy

88
Insolvency (cont.)

Example: TRUE / FALSE

1. Thuong Tin Limited Liability Company is unable to pay 1 million dong due debt for more than 4
months.
2. Binh Minh Joint Stock Company has no property left and took out a loan from a bank to pay off
its 3 billion dong due debt.
3. A&Z Private enterprise has still not paid off its 1 billion dong due debt for over 180 days.
4. Hoang Ha limited liability company which has no property left got a loan from a friend to pay
off due debt of 3 billion dong.
5. Binh Minh Joint stock company has not paid its director’s salary for 6 months
6. Hoang Gia private enterprise has not paid 1 million dong under a service contract for 1 years
since the due day

89
Bankruptcy’s Requester
Classification Period Of Time
CREDITORS Unsecured debts || Partly Secured debts
After 3 months
EMPLOYEES Employees || Internal/ Superior trade union

• Private: Company owner

• Partnership: General Partner
• LLC1: Company Owner
• LLC2+: Chairman Of Member Council
ENTERPRISES/ • JSC:
When entity is insolvent
COOPERATIVES o Chairman Of Management Board
o Shareholder/ Group of shareholders
hold ≥ 20% of total ordinary share
consecutively in ≥ 6 months
• Cooperative: Representative at law

90
Bankruptcy’s Requester (cont.)

Example 1:
According to the law on bankruptcy 2014, who can request for a bankruptcy process in the following
case? OTS Limited Liability Company has three members including Ngoc (25% of the charter capital),
Thang (65% of the charter capital), and Duy (10% of the charter capital). Ngoc is the representative
in law and Duy is the chairman of the member s council. In 2013, the company mortgaged its office
which was valued at 10 billion dong to take out a 6 billion dong loan from Citybank.
Example 2:
According to the law on bankruptcy 2014, who can request for a bankruptcy process in the following
case? Jesson Limited Liability Company has three members including An (25% of the charter
capital), Thinh (45% of the charter capital), and Thuong (30% of the charter capital). Thuong is the
representative in law and Thinh is the chairman of the member s council. In 2013, the company
mortgaged its office which was valued at 10 billion dong to get 6 billion dong loan from Citybank.

91
Send Bankruptcy’s Request
Provincial people’s court District people’s court
(entities registered in) (the headquarter located in)

Overseas assets or involving

entities
Other cases not under
the competence of the
Branches/representative provincial people’s court
office located in district of
various provinces

Real estate in district of

various provinces

Complicated bankruptcy
cases under the competence
of district people’s court
92
Send Bankruptcy’s Request (Cont.)
Example 1:
1. Gia Hong Private Enterprise in Binh Phuoc
2. ABC Bakery has branches in various district of Ho Chi Minh City
3. Viettel Group has projects in Laos & Africa
4. Muong Thanh Company has hotels in various provinces.
Example 2:
According to the law on bankruptcy 2014, to whom will a request for bankruptcy process be sent
in the following case? Bigbox private enterprise (hereafter Bigbox) is a domestic company located
in Hai Chau, Da Nang and has a factory in Thu Dau Mot, Binh Duong. Until June 2016, Bigbox had
not paid off its 50 billion dong debt which was due in May 2016.
a. Da Nang People s court
b. Hai Chau people s court
c. Binh Duong people s court
d. None of above

93
Regular vs Simplified Bankruptcy’s Procedures
Regular Simplified

Request for a Request for a

bankruptcy bankruptcy
process process

Accept the Dismiss the Accept the Dismiss the

request request request request

Refuse to Refuse to
Initiate Initiate
initiate initiate
bankruptcy bankruptcy
bankruptcy bankruptcy
process process
process process

Declare Declare
Resume Resume
bankrupt and bankrupt and
business business
liquidate liquidate
operations operations
assets assets
94
 Bankruptcy’s Declarations
CREDITOR’S
MEETING

Who attend: creditor (secured, unsecured & partly secured creditors)

When perform: ≥ 51% total unsecured debts

How convene
What decided: Declaration bankruptcy OR Resume operations

𝟏
When ratified: > attending unsecured debts AND presenting ≥ 65% total unsecured debts
𝟐

95
Bankruptcy’s Declarations (cont.)
Example:
According to the law on bankruptcy 2014, in order to resume business operations, the following

insolvent enterprise needs at least approvals of who in the following case. In 2013, Mezamart
Limited Liability Company took out a 10 billion dong loan from Daikin Joint stock company which
was secured by a property valued at 8 billion dong, while it borrowed from Toan 2 billion dong and

from Huong 1 billion dong. In 2014, the company entered into a construction contract, which was
valued at 15 billion dong, to build a factory in Binh Duong with Becamex Limited liability Company.
In December 2015, the company was in an insolvent situation and decided to request for a
bankruptcy process. Til December 2015, the company still owed Becamex Limited Liability Company
5 billion dong. Daikin Joint Stock Company disagrees with the resolution on resuming the business
operation. 96
Resume Operations
Enterprises/ Make plans within 30 days
Cooperatives
Get plan ratified: approvals from ≥ 51% total unsecured debts
MUST
Implement plan within 3 years
F
A
I
L

Liquidate asset
Suspend Declare
implementation bankrupt
Redistribute asset
97
Order of Division of Assets
1. Bankruptcy expenses
2. Salaries, severance allowances, social insurance and health insurance owed to employees
3. Debts arising after the initiation of bankruptcy procedures
4. Financial obligation toward the State
5. Unsecured debts payable to creditors on the list of creditors
6. Secured debts:
• Subtract from the secured property
• Subtract from other company’s property when secured property is insufficient

98
Bankruptcy’s Consequences
SUBJECTS EFFECTS
Creditors Debt collection risks

Chairman, general directors, directors, members

Can not hold such post in any
of management board – 100% state owned
other state-owned company
companies

Managers Representatives of the capital contribution of the Can not be a manager in any
state state-invested company

Can not be a manager of any

Managers of bankrupt entities
entities for 3 years

99
 Thank you for your attention

 Course: Business Law

 Lecturer: Ms. Danh Thao
 Presenter: TA Nhu Lien
100