On 17th June 2020, the National Assembly of the Socialist Republic of Vietnam adopted the Law on Enterprise No. 59/2020/QH14 (“New LOE”), which will come into effect from 1 January 2021. The New LOE will replace the current Law on Enterprise No. 68/2014/QH13 dated 26 November 2014 (“Current LOE”). This insight provides a brief summary of the key changes to be brought in by the New LOE.
Single-member LLC (SLLC)
The New LOE removes the requirement for a SLLC to have an inspector if the SLLC is owned by an organisation, unless the SLLC is a state-owned enterprise.
The New LOE also requires that at least one legal representative of a SLLC owned by an organisation must be the chairman of the members’ council, the company chairman or the director/general director; and if the charter of the SLLC does not have any other relevant provision, the chairman of the members’ council or the company chairman will be the legal representative of the company.
Voting in the members’ council (MC)
It should be noted that under the Current LOE, passing a MC’s resolution in a SLLC is determined based on the number of attending members. However, taking into the consideration that the owner of the SLLC may want to assign more voting power to certain MC members, the New LOE will allow a resolution to be passed depending on the number of votes that the MC members are assigned by the owner.
In this regard, the resolution of the MC in a SLLC is passed if:
• it is approved by more than 50% of the attending members OR approved by those attending members who hold more than 50% of the votes;
• in terms of resolution on charter amendment, re-organisation of the company, partial OR whole assignment of the charter capital, it is approved by at least 75% of the attending members OR approved by those attending members who hold 75% of the votes or more.
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