Vietnam Amends Law on Enterprises
Jul. 17 – In a move widely regarded as a welcoming message from the National Assembly to foreign investors, the Vietnamese government recently passed an amendment to Article 170 of the Law on Enterprises.
Prior to the amendment – which was passed on June 20, 2013 – all foreign-invested enterprises (FIEs) that were established in Vietnam before July 1, 2006, had been given a two-year time limit to voluntarily re-register their enterprises (i.e., any time before July 1, 2008). If the FIEs chose not to re-register their enterprise, then they would not be able allowed to extend their business operations term or amend their business scope.
The new amendment further extends the re-registration time period for FIEs that previously chose to not re-register, giving them the opportunity to extend their business operations.
The amendment also gives enterprises the option to not re-register. However, if an enterprise chooses to not re-register, then it is bound to manage its business activities based on its original investment certificate and business charter and may not extend its business operations term. It will be allowed to amend its business scope however.
The amended law will take effect starting August 1, 2013. The new post-amendment re-registration deadline is now February 2, 2014, with registration terms valid for a period of five years.
The Vietnamese National Assembly has estimated that the amendment to the law will save up to 3,000 foreign companies from shutting down. Statistics also show that, as of June 2013, as many as 2,916 out of a total 6,000 foreign enterprises have not yet re-registered.
Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam as well as liaison offices in Italy and the United States.
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