Prohibited actions in the Law on Enterprises 2020

 

 

 

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7 GROUPS OF PROHIBITED ACTIONS

 

Pursuant to Article 16 of the Law on Enterprises 2020 stipulates the prohibited actions, as follows:

1. Issuing or refusing to issue the Certificate of Enterprise registration against regulations of this Law; requesting the founder to submit additional documents against regulations of this Law; delaying, obstructing, harassing enterprise founders and business operation of enterprises.

2. Obstructing the enterprise’s owner, members/partners/shareholders from performing their rights and obligations prescribed in this Law and the enterprise’s charter.

3. Doing business as an enterprise without applying for enterprise registration; carrying on busines operation after the Certificate of Enterprise Registration has been revoked or while the enterprise is being suspended.

4. Providing dishonest or incorrect information in the enterprise registration application or application for changes to enterprise registration information.

5. Declaring false charter capital; failure to contribute adequate charter capital as registered; deliberate contribution of assets with false value.

6. Engaging in banned business lines or business lines from which foreign investors are banned; engaging in restricted business lines without fulfillment of conditions or failure to maintain fulfillment of conditions during operation in restricted business lines.

7. Frauds, money laundering, terrorism financing

In comparison with the Law on Enterprises 2014, the Law on Enterprises 2020 maintain 7 groups of prohibited actions and there are some new regulations such as prohibiting enterprises from being suspended from doing business; prohibiting business in industries and occupations that have not yet allowed to access Vietnam market for foreign investment. Most notably in group 7, the new Law on Enterprises prohibits enterprises from sponsoring terrorism. This is the first time this behavior is specified in a specialized law. Currently, terrorism is an offense that has been specified in other legal documents such as Criminal Code.

SUBJECT TO ESTABLISHMENT AND BUSINESS MANAGEMENT

 

Clause 1.2, Article 17 of the Law on Enterprises 2020 regarding the right to establish, contribute capital, buy shares, buy contributed capital and manage enterprises.

1. Organizations and individuals have the right to establish and manage enterprises in Vietnam in accordance with this Law, except for the cases specified in Clause 2 of this Article.

2. The following organizations and individuals do not have the right to establish and manage enterprises in Vietnam:

a) State authorities, People’s armed forces using state-owned assets to establish enterprises to serve their own interests;

b) Officials and public employees defined by the Law on Officials and the Law on Public Employees;

c) Commissioned officers, non-commissioned officers, career military personnel, military workers and public employees in agencies and units of Vietnam People’s Army; commissioned officers, non-commissioned officers and police workers in police authorities and units, except for those designated and authorized representatives to manage state-owned stakes in enterprises or to manage state-owned enterprises;

d) Executive officers and managers of state-owned enterprises prescribed in Point a Clause 1 Article 88 of this Law, except those who are designated as authorized representatives to manage state-owned stakes in other enterprises;

đ) Minors; people with limited legal capacity; incapacitated people; people having difficulties controlling their behaviors; organizations that are not juridical persons;

e) People who are facing criminal prosecution, kept in temporary detention, serving an imprisonment sentence, serving an administrative penalty in a correctional institution or rehabilitation center, has limited legal capacity or is incapacitated, is not able to control his/her own behaviors, is banned by the court from holding certain positions or doing certain works; other cases prescribed by the Law on Bankruptcy and the Anti-corruption Law.

If requested by the business registration authorites, the applicant shall submit the judicial records;

g) Juridical persons that are banned from business operation or banned from certain fields as prescribed by the Criminal Code.

Accordingly, the Law on Enterprises 2020 stipulates that all organizations and individuals have the right to establish and manage enterprises in Vietnam, except for 7 cases as listed in Clause 2, the above Article. In comparison with the Law on Enterprises 2014, the Law on Enterprises 2020 has added many people who are not allowed to establish and manage enterprises, including individuals in government agencies and units under the Vietnam People's Public Security (except for those who are sent to work authorized legal representative to manage the State's capital contribution in enterprises), people with difficulty in awareness, mastering behavior, organizations that are commercial legal entities banned from doing business, banned from operating in some fields or most field in accordance with the Criminal Code.

 

The above amendment is consistent with the reality in some state-owned enterprises under the Ministry of Defense, which some professional officers and soldiers are in management positions even though they are not tatives. capital share at the same time ensuring compatibility with the Civil Code. Accordingly, adding entities are people with difficulty understanding, mastering the behavior.

 

ORGANIZATION, PERSONAL RIGHTS TO CAPITAL CAPITAL, BUY COMBINATION, BUY COMBINATION

 

Pursuant to Clause 3, Article 17 of the Law on Enterprises 2020 stipulates:

Organizations and individuals have the right to contribute capital, buy shares and stakes of joint stock companies, limited liability companies and partnerships in accordance with this Law, except:

a) State authorities, People’s armed forces contributing state-owned assets to enterprises to serve their own interests;

b) The entities that are not allowed to contribute capital to enterprises prescribed by the Law on Officials, the Law on Public Employees, and Anti-corruption Law.

The Law of Enterprises 2020 stipulates that not all individuals and organizations have the right to contribute capital, purchase shares, or purchase capital contributions of joint-stock companies, limited liability companies, and partnerships because the state agencies and units of the people's armed forces could use public assets to contribute capital to enterprises to serve their own interests; The restrictions on cadres, civil servants and public employees who are not allowed to contribute capital to enterprises according to the Law on Cadres and Civil servants, Law on Public Employees and Anti – corruption Law.

 

(Extracted from the book of questions and answers to the Law on Enterprises 2020 of the authors group TS. Tran Viet Long, PhD. Nguyen, LS. Nguyen Van Tu)