New highlights of the law on enterprise 2020 – Part 1

PART 1: CHANGES IN GENERAL PROVISIONS

Law on Enterprise 2020, which officially takes effect from January 1, 2021, has promptly amended and supplemented new terms and regulations to make enterprise laws more suitable for the current and actual practice, simultaneously removed shortcomings and inadequacies in the previous law, created a favorable and flexible investment and business environment following the global trend.

In order to support enterprises update information in a timely and accurate manner in accordance with new regulations of the law, PL and Partners will provide information about changes in Law on Enterprise 2020.

PL and Partners would like to provide readers with new points in the general provisions of the Law on Enterprise 2020 through the following article.

1. SUPPLEMENTATIONS AND AMENDMENTS TO SOME DEFINITIONS

1.1. Supplementing the definition of “relatives”

Clause 22, Article 4 of the Law on Enterprise 2020 adds the definition of “relatives“.

Accordingly, people such as spouses, parents, siblings, etc. will be collectively called relatives.

This is a completely new definition compared to the Law on Enterprise 2014. This change helps to streamline words, and sentences in regulations.

For example:

Previously, the Law on Enterprise 2014 did not define relatives. Therefore, regulations which are regarding relatives must be listed in a wordy way:

“the spouse, biological father, adoptive father, biological mother, adoptive mother, biological children, adopted children, biological brother, biological sister, biological younger brother;…”

Currently, the Law on Enterprise 2020 allows us to briefly write “relatives“.

1.2. Supplementing the definition of “related person”

The Law on Enterprise 2020 adds the Controller and all Legal Representatives to the list of related person.

1.3. Redefining the concept of state-owned enterprises

Law on Enterprise 2014 Law on Enterprise 2020
Clause 8, Article 4 stipulated that State-owned enterprises are enterprises in which the State holds 100% of charter capital. An enterprise of which more than 50% charter capital or voting shares is held by the State.

In fact, the definition of State-owned enterprises has been expanded more than before and these can be managed in the form of a limited liability company or a joint stock company.

2. ADJUSTMENT ON THE RIGHTS AND OBLIGATIONS OF SOCIAL ENTERPRISES

Law on Enterprise 2014 Law on Enterprise 2020

The rate of profit that must be retained annually for re-investment of social enterprises was 51% of total profit.

=> Without specifying whether it is prior or subsequent to tax.

The rate of profit that must be retained annually for re-investment of social enterprises is 51% of the annual profit after tax.

 

3. ABOLITION OF REPORTING CHANGES IN INFORMATION OF THE  ENTERPRISE’S EXECUTIVE

Law on Enterprise 2014 Law on Enterprise 2020
An enterprise must report to the Business Registration Authority the changes in information of its executive. This provision is abolished.

4. AMENDMENTS TO LEGAL REPRESENTATIVE

The Law on Enterprise 2020 has made some adjustments to cases in which the appointing of legal representatives is prohibited.

First, changing the phrase “being sentenced to prison” to “serving an imprisonment sentence“.

The reason is, if people are sentenced to prison, they can suspend the sentence and do not have to serve an imprisonment sentence.

In addition, the Law on Enterprise 2020 also supplements several cases:

  • Facing criminal prosecution;
  • Serving an administrative sanction in a correctional institution or rehabilitation center;
  • Having difficulty in controlling his/her behaviors;
  • Being banned by the Court from holding certain positions, practicing certain professions, or doing certain jobs.

PL and Partners Law Firm has introduced to you some new points in the General provisions of the Law on Enterprise 2020.

We do hope that the above information will help you have a better understanding of this law.

See more: New highlights of the law on enterprise 2020 – Part 2

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