Enterprises | Organization that has its own name, assets, office,... is established or registered for an ebstabilishment in accordance with the law to do with business |
Business =/= Commerce | Business is a systematic process, Commerce activities that might by seperated or not |
Business name (1) | Vietnames name, Foreign Name, Abbreviated Name |
Business name (2) | Involving proper name + the type of enterprises |
Vietnamese name | Proper name must be in Vietnamese alphabet, F,J,Z,W and number and symbols |
Foreign name | Vietnamese name translated into a Latin foreign language or the usual Vietnamese name --> must be latin language, must have the same meaning |
Abbreviated name | Abrreviated its own Vietnamese name or Foreign name |
Prohited acts in naming enterprises | 3 things:
(1) Identical or confusingly similar name to other registered enterprises
(2) Name of state authority, or public goverment related enterprises
(3) Against the country's history, culture and ethical values (subjective) |
Confusingly similar names (1) | (1) Vietnamese name (both proper and type name) is pronounced the same as that of a registered enterprise (so no changing in the format is allowed)
(2) The abbreviated name is identical to that of a registered enterprise
(3) The foreign-language is identical to that of a registered enterprise
(*) Identical proper name to that of a registered enterprise |
Confusingly similar names (2) - only for simmilar company types | (4) The proper name is different only by an ordinal number, a cardinal number, a letter in the alphabet or F,J,Z,W next to OR spaced after the proper name
(5) Different only by the symbol &, va, ., , .+, - and _
(6) The word "tan" or "moi" next to or spaced before or after
(7) The expressions "miền đông", "miền tây", "miền trung", "miền nam" "miền bắc" |
Limited liabity company | |
LLC Mem | - Two or more >=2 --> two to 50 2 <= <=50
- One-member LLC will be only 1 member, two and up is multi-member LLC
- Mem are liable for the debts and other property obligations of the enterprises to the extent of the amount of capital contributed to the enterprise --> limited liability |
What happens when one member die | - His or her heir under a will or at law will be the member of the company |
Limited liabity | You give in 500 mil as capital contribution --> If the company faces solvency/ is in debted up tp 1 billion --> you dont have to pay anything more, just lose your already contributed 500mil |
Ability to issue securities | LLC is not permited to issue shares (art46) --> will only able to issue shares if convert to JSC
LLC is permited to issue bonds |
LLC Legal entity | Multiple member LLC has legal entity = is a legal person since the date of issuance of its ERC ( Enterprise Registration Certificate) |
Legal entity | - An organization created by the law
- Assets must be seperated (LLC's assets is not its owner's assets) --> sole proprietorship is not granted legal entity status
- You can sue the LLC/ You can not sue the sole proprietorship, but you can sue its owner
-A branch is not considered as a legal entity --> assets not seperated from HQ |
Capital contribution | Assets contributed must be money (vietnam or foreign), land uses right, gold, IP rights, tech, tech know-how and other assets that CAN BE VALUED |
LLC - capital contribution | - The charter capital (vốn điều lệ) when registering establishment (only when registering is happening) = the toal value of capital contribution from the members, recorded in the charter
- Members must contribute in full and in the type of assets as undetaken when registering the establishment of the enterprise --> within 90 DAYS from the date of issuance of the ERC
- If want to change the type of assets (from cash to bonds ex) must be agree by more than 50% of the OTHER members |
Failing to contribute | - If one member fails to contribute in full the amount in the registering, the company must change its charter capital WITHIN 30 DAYS from the last day required of the normal
- Responsible for the financial obligations of the company in proportion to the capital contribution MADE WHEN REGISTERING ( the amount that you can not pay) --> Ex: Company is registered for 500mil, debt for 1 billion, you promised (in the register) to contribute 350mil, but now you only contributed 200 mill (within 90 days of operations) --> You are liable (loosing) all of 350 mil. BUT if the company made profit, lets say 800 mil in profit, you will be receiving only proportion to the amount you contributed (200mil/500mill --> x*800 mil) |
LLC dealing with unpaid capital | - After 90 days, if:
- Not pay anything (fail to contribute capital) --> automatically cease to be a member of the company > OUT
- Not pay the full amount > have the right corresponding to the amount paid
- The amount not yet paid will be offer for sales with a resolution or decisions by Member councils |
Proof of capital contribution | A capital contribution certificate |
Two types of company | Human-oriented company (LLC, Partnership,..) & Capital-oriented (JSC) |
Restrictions on transfer of contributed capital | Because human-oriented is LLC, so the transfering of contributed capital can change the member --> should not happen easily |
Transfer of capital contribution | A member has the right to assign a part OR ALL of its CPCT:
(1) Must be offered to the other members in the company first + must be in proportion to their CPCT proportion.
Ex: You want to sell 500 mil to A: 300mil, B: 700mil, C: 200mil --> CPCT of others = 300 + 700 +200 = 1B2
A would be offered = 300/1B2* 500
(2) If the other members do not purchase or not purchase in full within 30 days since the date of offer |
Changing of CPCT assignment to one-member LLC | If the assignment turns the company into a one-member LLC, must regsiter the changes to its enterprise registration within 15 DAYS of the completion of the assignment |
What happens when a mem of LLC uses its capital contribution to pay the debt | If A has 500 mil in the companyl, A then uses this 500 mil to pay the debt to C
+ C can become a member upon the approval of the MC
+ C can sell it to either the member of the company or some non-member |
What happens when a mem of LLC want to gift its CPCT | The recipient shall be the member when:
- The recipient is an heir at law or in the will --> automatically the member
- If not above, then will need agreement by the Members' Council |
Redemption of CPCT | The company buys back its entire CPCT --> You will no longer be a member of the company
+ Happens only when:
- voted against a resolution or decision made by MC on THREE ISSURES:
+ changing in the members or the MC rights and contribution in the charter of the company
+ Re org of the company (changing strcuture)
+ Cases specifically stipulated in the charter |
Redemption conditions | - Must be made within 15days of the final resolution, made in writing
- the price of the CPCT redeemed must be at market price, at price determined before hand in the charter or at price agreed btw two parties
- When company is unable, can transfer to other members or non members |
compare redemption and transfering CPCT | |
Adjustment to the CPCT - Increase | Increase when:
(1) Increasing the contributed capital of the members (members put more money in)
(2) Receiving additional CPCT by NEW members
In case (1) The amount contributed in will be in proportion to the old ratio of CPCT |
Adjustment to the CPCT - Decrease | Decrease when:
(1) Returning part of contributed capital if the company has been operating for at least 2 years
(2) redeems portion of capital contribution
(3) fails to pay charter capital in full within 90 DAYS |
Management structure of LLC | Must include:
(1) Members' Council
(2) Director (General director)
Optional: Controlling board
- For company that is state owned ( the state has more than 50% of the charter capital and/or voting shares ) Compulsory
- If the company has more than 11 members --> controlling board is complusory, if not then optional |
Must have | a Members' Council, A chairman of that MC, and a director or a general director
Must have at least ONE legal representative being the postion of chairman of MC or director or general director --> if nothing is said in the charter, the chairman is automatically the legal rep |
Why we need to have legal rep | to exercise rights and perform obligations
to represent the enterprise as the person lodging for resolution of a civil matter |
Legal representative | - LLCs and Share holdings companies may have more than one legal representative (Not all kind such as sole proprietorship or partnership)
- Legal rep must ensure at least one person is RESIDING in vietnam (not necessarily VN citizen) --> if the last person in vietnam wants to exit the country --> use the attorney to exercise the rights and perform the obligations
- The court has the right to appoint the legal rep, in LLC the chairman of the MC is the legal rep if not stipulated otherwise in the charter |
Members' Council | - The amount of meeting should be determined by the charter, but at least once a year
- If the value of a loan, an agreement or an contract is more than 50% of the total assets value of the company, the MC will be responsible for approval |
The resolution and decision of MC | - The decision must be made by voting in writing or other forms
- If not stipulated in the charter, the voting will be passed if:
+ Agreed by the attending members that own 65% or more of the CPCT
+ Must be agreed by the attending members that own 75% of the CPCT for decisions that involves SALES OF ASSETS value at more than 50% of the company total assets, changes to the charter or re-organization |
Shark tank and 36% | By owning 36%, the rest can only own up to 64% --> the deciding rights is indirectly belonging to you |
Chairman of MC | - Must be elected by MC, may be concurrentlt act as the director or general director of the company
- Can sign on the behalf of MC
- The term of the Chairman is stipulated in the charter, NOT EXCEEDING FIVE YEARS, maybe re-elected for an infinite amount --. you still can be the chairman forever. |
Director/ General director | - The director manage the day to day operations, the director can sign contracts in the name of the company
- To be the director or the general director:
+ Have the professional qualifications and experience in business management
+ For SOE: must not have a family relationship with any manager of the company, --> no relation
+ Managers are |
Controlling board | - One to 5 inspectors. Not over 5 years term, maybe reelected infinite amount of times |
Sole proprietorship vs One-member LLC | - One member LLC can be owned by an individual or an organization --> while sole proprietorship can only be owned by individuals |
One-member LLC | |
| Institutional owners = Owned by organizations
+ Need members council because the organzation can have multiple legal rep --> member council to consolidate the resolution
+ owned by an org, they may be able to appoint many member representing the company, if more than one then would need the Mem Council
+ Controlling board complusory for SOE |
Joint Stock Company | |
Definition | - The charter capital is divided into equal portions called shares
- Min num of shareholders is 3, can be both org or individuals. --> another name for JSC is anonymous company
- Profit is called dividend/ Capital is shares
- Limited liability --> liable for the debts and other property obligations to the extent of the amount of capital contributed to the enterprises |
Issuing securities | - Have the ability to issue shares, bonds and other types of securities of the company |
Classes of shares | (1) Ordinary shares: owner of ordinary shares are called ordinary shareholder (mandatory to have)
(2) Preference share: Dividend preference shares, Redeemable preference shares, Voting preference shares, others,.. |
Transfer of shares - Exceptions | Voting preference shares: can not be transfer --> has more voting power (signifies more votes than other shares)
- Ordinary shares of founding shareholders within THREE YEARS of ERC registration
+ Founding shareholders: hold at least ONE ordinary shares + signed the list of founding shareholders --> within three years from ERC free transferred between founding fathers, and required approval from General meeting of shareholders for transfering to other people
** Founders can have more shares after the registration, and these shares will not be subjected to the clause above
** Other shares are freely transferred |
Types of shares | - Ordinary shares : mandatory
- Preference shares: voting preference shares, divident preference shares, redeemable preference shares.. .. : optional to have |
Ordinary shares | - Owner: individual/organization
- voting = 1 ordinary share = 1 vote
- freely transferred |
Preference shares - voting preference | VPS = N vote (N is determined by the company charter)
Owner of VPS: can only be founding shareholders or organization authorized by goverment
- founding shareholders: valid for the first 3 years since ERC, after that convert to ordinary shares
- orgs: unlimited (or control in the charter of the company) after expiry turn into ordinary shares
The founders can change the N in the charter company, so it might beunfair to other shares holders --> while the gov org might have better ? intention, ensuring good control ==> main goal: protecting the state |
Preference shares - dividend preference shares | - Paid interest at a rate higher than an ordinary shares or annual fixed rate
- no rights to vote, cant attend gms, cant nominate candidate to the BOM, controlling boards ==> no control over the company, just act as an investor
- when bankrupt --> will receive remaining asset after paying back the debt and redeemable preference shares |
Preference shares - redeemable preference shares | - Shall be redeemed by the company in the future or at the demand of the shares owners |
JSC Management structure | 2 models:
Model 1: General meeting of SH --> controlling board + board of management (controlling board control both the BOM and Director/ General Director)
Model 2: General meeting of SH --> Board of Management --> Director. General director
In model 1: The controlling board is not mandatory if 2 conditions are satisfied 1. the quantity of shareholders is less than 11, and the organization owning the shares (institutional shareholders) are holding less then 50% of the company
Model 2: Do not need a controlling board but: 205 of the BOM must be independent members + An internal auditing committee is required in the BOM |
Independent members of BOM | - Not currently working for or have worked for any of the companies realting to this company
- Not receiving salary from the company
- Not have spouse, natural OR ADOPTIVE parents, child, adopted child or sibling is currently a major shareholder of the comapny, or the manager (manager = director or general director only, not vice director)
- Not directly or indirectly owning at leat one percent of total voting shares in the company
- Not a member of the BOM or CB for at least the last 5 years |
General meeting of SH | - Is the highest decision-making body in the company
- is all shareholders WHO HAVE THE RIGHTS TO VOTE (not divend preference shares and redeemeable prefernce shares) |
Conditions to pass resolutions | - 65% applicable for some significant changes in the company (changes in shares and num of shares, lines of biz, org, investment more than 35% value, dissolution)
- 50% applicable for others |
BOM | - Managing the company
- Number of people in BOM: nore than 3 and less than 11 (= is okay) |
Member of BOM | - Have professional expertise and experience in business management or lines of biz that comps do
- can concurrently be the BOM of another company
- does not have to be a shareholder of the company
- SOE: not a family relationship with the director or general director or manager or manager-apppointable people
- Terms: 5 years term without limit for reelction |
Rights of obligations - of BOM | - Approve contracts valued at thirty five or more percent of the total assets values
- Reorgan and dissolution if necessary
- Resolution of the BOM shall be passed when when it is agreed by the majority of members in attendance -TIE VOTE: in favor of the vote of the chairman |
Director or General Director | - Appoint by BOM, term shall not exceed five years, unlimted terms
- Does not need professional qualication (not for private JSC)
+ Public and SOE JSC: not have family relationship, relationship with rep of State capital contribution. must need professional require and experience |
Partnership | - must be at least 2 co-owners conducting biz under one common name (min =2 for general partners (unlimited liability))
- Un LLC liable for the company to the extent of their asset --> no seperation of assets
- Legal entity since ERC
- CAN NOT ISSUE ANY TYPES OF SECURITIES |
General partners | Manadatory to have at least 2, must be individual (due to unlimited liability)
- Not allowed to act as an owner of a private enterprise/ another partnership as UnLLC only when agreed
- Not allow to transfer capital without agreements |
Responsibility of General Partners | - within 2 years since termination of general liability positions, the shall still remain liable for assets prior to termination |
Legal rep | Only general partners are legal representative of the partnership
** chairperson/director: the rep for partnership with state agencies, defendant or lawsuit |
Limited partners | Optional to have, can be both Individual or Org, unlimited number (0 to infinite), limited liability |
Name of Partnership | show all the names of the co-owners (the names of general partners) --> human-oriented |
Sole proprietorship | - owned by individuals, liable for all activities of the enterprises to the extent of his or her assets
- one individual may only establish one private enterprise (can not be head of biz household or general partner of partnerships)
- can not contribute capital or buy shares |
Private person legal person | PE is not a legal person --> The PE company (the sole proprietorship) can not establish another comp --> but the sole proprietor/owner of the PE can |
Branch of companies | A branch of a company must be in the same line of biz as the enterprise |
The owner can establish | The owner of the sole proprietorship can establish another comp (just not PE, can be JSC, LLC) --> can hire someone else as the head of the business household (director or general director) |
Who can establish an enterprise | |
International Characteristic of the contract | International sales of goods contract: sales of goods contract + internationality
- Parties:
- Object:
- Payment currency:
- Governing law and dispute settlement body |
Parties | - Parties who place of business are in different states (determine by place of biz, not nationality of parties or contract)
** in case the parties have many places of biz (the main place is called the principal place of biz) --> Art 10 CISG: the place of biz will be the one the has the closest relationship with the contract |
Case: two chinese directors of two vietnamese company signed the contract still not the international contract because place emphasis on the nationality of the subject matter ( the companies) not the representatitves |
Object | - Goods must be deliver across borders (both physical country;s border and custom's border) [ Through export processing zone or commercial industrial zone] |
Payment currency | |
Governing law and dispute settlement body | - Governing law: can be CISG, international, domestic law or international trade practices
- Dispute settlement body:
* Domestic: court and arbitration (all domesitcs)
* International: Court and arbitration (sellers or buyers court) |
Legal frameworks | International goods usually is governed by international treaties |
CISG direct application | CISG is directly or automatically applicable when the parties have their places of business in different contracting states (contracting states means the conventionee parties) |
rules of private international law | rules of conflicting law, choose between one of the two conflicting laws. |
Exclusion of CISG | May exclude the application of this convention, derogate from or vary the effect of.
(1) CISG allows the parties to agree to exclusion at the time or after the conclusion of the contract |
Types of exclusion | Ex-ante exclusion: excluding at the time of contract conclusion
Ex-post exclusion: excluding after the conclusion of the contract (the arbitration court/ prior to the court decisions) |
Express ( Explicit ) vs Implicit exclusion | - |
Implicit exclusion of CISG | It can be quite difficult to determine whether that is the implicit or explitcit exclusion ==> base on the intention of the party |
Intention of the parties | - The statements in the contract can be interpreted using the art 8 CISG.
(1) Interpret base on the common intentions between the parties > if the parties have different intentions > (2) using the reasoning of another reasonable person's interpretation --> probably settle by the court ==> (3) when consider the reasonable interpretation here, other conditions/ factors must be considered such as negotiations, subsequent conducts, usages, practices established by the parties |
Implicit exclusion (1) | If between two parties, the contract/ the legal activities after choose to use VN's law > does this constitue an implicit exclusions >
- When vn rectify CISG > the law of CISG is interconnected with the law of VN > when you choose to use VN's law (which means this can be domestics or international treaties as well) > it may be not clear > not an implicit exclusion
Prevailing view: the CISG will not be excluded
** The proof of intent to exclude the CISG must be examined on a cases by case basis
** CISG applicable, then |
Case law | The intention of Vietnam company only, can not based on the unilateral intention of the seller only (must find the intention of both buyer and seller)
==> reasonable person
==> in this case the reasonable person might be unclear on the applicable choice
==> the implicit exclusion is quite unclear
==> if no exclusion or only intent to exclude from one party
==> CISG is still applied |
Implicit exclusions (4) | Incoterms are not exclusion of the CISG, as Incoterms are transportation terms |
How to clearly state the law govern and the exclusion of CISG | -The contract and its conditions shall:
+ Not be governed by CISG
+ Governed by the Law on Commerce Vietnam
==> Both needs to be mentioned in order to be fully specific in the intention of exclusion |
CISG is not applicable to all kind of goods | |
Domestic law | Clearly state the note governed by CISG, state the law governed (for ex VN law) |
How can the domestics law is applicable | - Agreed in the contract at the time concluded
- After the contract is concluded (hard to make agreement at this point)
- Referred by the applicable international treaties --> Art 7 clause 2 > gap-filling mechanism > fill in the gap when the CISG may not cover the issue in the contract --> the issues are not expressly governed by the CISG --> (1) base on the general principles (2) base on the applicable law by virtue of private international law --> use the law of the foreign |
Restriction on choosing foreign law | There are restriction when it comes to the sales and purchase of real estate |
No past practices in not providing the Incoterms | - Xét theo past practices trước, nếu không có thì theo court và arbitration
- Apply the Incoterms upto the court and arbitration to decide |
How to clearly state the law govern and the exclusion of CISG | -The contract and its conditions shall:
+ Not be governed by CISG
+ Governed by the Law on Commerce Vietnam
==> Both needs to be mentioned in order to be fully specific in the intention of exclusion |
When using Foreign law is forbidden (in Vietnam) | - Art 670:
+ Foreign law that is inconsistent with fundemental principles of Vietnam Law
+ Impossible to determine the content of the foreign law
- Art 683.4: Applicable for immoveable goods (ex: real estate)
+ Choosing the law of where the immovable goods is currently place |
International Trade Practices | Will be use when :
+ Agreed by both parties
+ Referred by the applicable law
+ Where applicable law can ot settle the dispute, international trade practices may apply ==> trade practices specific to the industry that we would need to know
** Incoterms:
- not necessary, not price clauses but have influence on price
- if incoterms are not clearly defined, based on past contracts (maybe other times we used some specific thing ) |