Legal Document Updates in English (05/2021)

INTER-AGENCY IMPLEMENTATION OF
4 PROCEDURES FOR ENTERPRISE ESTABLISHMENT

On January 04, 2021, the Government issues the Decree No. 01/2021/ND-CP on enterprise registration.

Accordingly, from January 04, 2021, the inter-agency implementation of 4 procedures, including establishment registration of enterprises, branches and representative offices, declaration of employment, grant of numbers for social insurance participants, registration for use of invoices by enterprises shall be carried out.

Besides, the Decree also stipulates that in addition to pay directly fees and charges at the business registration section, enterprise registration applicants may transfer such fees and charges into the account of the business registration section or use the e-payment service. However,

such charges and fees shall not be refunded to enterprises if they are not granted enterprise registration certificates.

Electronic charge or fee payment may be made via the National Enterprise Registration Portal. However, this charge for use of the e-payment service shall not be included in the enterprise registration charge or fee, and charges for provision of enterprise registration information and announcement of enterprise registration contents. When there is an error while using the e-payment service, organizations and individuals that pay the charge or fee electronically shall contact the e-payment service provider for correction.

This Decree takes effect on January 04, 2021.

SCIENCE AND TECHNOLOGY ENTERPRISES ARE EXEMPTED FROM
ENTERPRISE INCOME TAX FOR 4 YEARS

The Ministry of Finance issues the Circular No. 03/2021/TT-BTC on guiding enterprise income tax exemption or reduction for science and technology enterprises specified in the Government’s Decree No. 13/2019/ND-CP of February 01, 2019, on science and technology enterprises on January 11, 2021.

Accordingly, science and technology enterprises are entitled to enterprise income tax exemption for 4 years and a 50% reduction of payable enterprise income tax amounts for the subsequent 9 years. The period of tax exemption or reduction for a science and technology enterprise shall be counted consecutively from the date the enterprise is granted a science and technology enterprise certificate. If no taxable income is generated in the first three years from the date the enterprise is granted a science and technology enterprise certificate, the tax exemption or reduction period shall be counted from the fourth year.

Besides, the Circular also prescribes that in a certain year of the enterprise income tax exemption or reduction period, if an enterprise fails to satisfy the condition requiring that turnover from products turned out from scientific and technological outcomes must account for at least 30% of the total turnover, it shall not be entitled to tax incentives in that year and that year shall be included in the enterprise’s incentive enjoyment period. If a science and technology enterprise has generated a taxable income but the production or business operation duration eligible for tax exemption or reduction in the first year is under 12 months, the enterprise may choose to enjoy tax exemption or reduction right in the first year or register for starting to enjoy tax exemption or reduction from the subsequent year.

This Circular takes effect on March 01, 2021.

TIME OF SUBMITTING DOCUMENTS CERTIFYING THE ORIGIN OF IMPORTS UNDER THE EVFTA

On January 25, 2021, the Ministry of Finance promulgates the Circular No. 07/2021/TT-BTC providing regulations on the time of submission of documents certifying the origin of imports under the Free Trade Agreement between the Socialist Republic of Vietnam and European Union (EVFTA).

Accordingly, customs declarants shall submit documents certifying the origin of imports at the time of performance of customs procedures as specified at Point a, Clause 1, Article 7 of the Circular No. 38/2018/TT-BTC dated April 20, 2018. In case where documents certifying the origin of imports are not yet available at the time of performance of customs procedures for application of special preferential import duty rates under the EVFTA, customs declarants

shall declare the late submission of documents certifying the origin of goods on the import customs declaration and be entitled to additionally declare and submit such documents within 2 years after registering import customs declarations.

In case where customs declarants submit documents certifying the origin after the prescribed validity period due to force majeure or other valid reasons beyond the control of the importers or other cases of late presentation, the Ministry of Finance shall consider and decide on the application of special preferential import duty rates under the EVFTA for specific cases.

This Circular takes effect on March 11, 2021.

TO LOCKDOWN CHI LINH CITY, HAI DUONG PROVINCE

The Prime Minister issues the Directive No. 05/CT-TTg on urgent measures to prevent and control COVID-19 pandemic on January 28, 2021.

Accordingly, the Prime Minister decides to put Chi Linh City, Hai Duong province under lockdown and strictly apply pandemic prevention and control measures. To carry out social distancing in the city for 21 days, from 12:00 on January 28, 2021. All operations of schools and entertainment establishments, public activities, social gathering and public passenger transportation activities from Chi Linh City to the outside shall be postponed, etc.

Besides, the Prime Minister also decides to suspend operation of the Van Don International Airport from 12:00 on January 28, 2021. At the same time, to request the Chairperson of Quang Ninh People's Committee to take measures of closing and suspending operations of facilities that do not meet safety requirements on pandemic prevention and control; direct to rapidly trace, zone off, put down the pandemic, carry out tests on wide-scale and apply concentrated isolation measure for cases of close contact within 21 days.

REGISTRATION, DEPOSITORY, CLEARING AND SETTLEMENT OF SECURITIES

The Circular No. 119/2020/TT-BTC on regulations for registration, depository, clearing and settlement of securities is issued by the Ministry of Finance on December 31, 2020.

Accordingly, depository members must open a securities depository account at the Vietnam Securities Depository and Clearing Corporation to carry out transactions for such member’s securities. Each member may only open one securities depository account at the Vietnam Securities Depository and Clearing Corporation and must not open depository account in other depository members.

Besides, an insurance enterprise, when making investments on the securities market, may open two separate securities depository accounts to separately manage investments from equity capital and from insurance

premiums. In case an insurance enterprise has a foreign investor owning more than 50% of the charter capital, depository securities on the securities depository account sourced from equity shall be governed by the law on foreign ownership in the securities market.

The Vietnam Securities Depository and Clearing Corporation shall conduct securities deregistration in the following cases: Debt instruments of the Government, government-guaranteed bonds, municipal bonds, corporation bonds, covered warrants are in maturity date; Certificates of investment fund, covered warrants subjected to cancellation of listing; Exchange-traded fund is dissolved; etc.

This Circular takes effect on February 15, 2021.

FROM FEBRUARY 15, TOTAL LIABILITIES OF A SECURITIES COMPANY
MUST NOT EXCEED 5 TIMES ITS EQUITY CAPITAL

On December 31, 2020, the Ministry of Finance issues the Circular No. 121/2020/TT-BTC providing regulations on operation of securities companies.

Accordingly, a securities company shall manage separately money amounts deposited for securities trading of each client and separate money of its clients from its own money. A securities company may not directly receive and pay cash for securities transactions of its clients but shall make payments for such transactions via commercial banks. Besides, a securities company may not receive authorization from clients to transfer money internally among accounts of such clients.

Concurrently, the Ministry of Finance also prescribes 6 cases where a securities company may neither underwrite issuance under firm commitment nor act as the principal underwriter:

Firstly, the securities company owns, merely by itself or together with its subsidiary companies or affiliated persons,

10% or more of the charter capital of the issuing institution, or holds control over the issuing institution, or has the right to appoint the Chief Executive Officer of the issuing institution.

Secondly, at least 30% of the charter capital of the securities company and at least 30% of the charter capital of the issuing institution are held by the same individual or institution, etc.

Noticeably, the total liabilities of a securities company must not exceed 5 times its equity capital (this ratio is 3 times as provided in the previous regulations). The value of total liabilities under this provision is exclusive of the following amounts: Deposits of clients for securities trading; Reward and welfare fund; Provision for job loss allowances; Provision for damage compensations for investors.

This Circular takes effect on February 15, 2021.

SHARES OF A PUBLIC COMPANY THAT HAVE NOT BEEN FULLY PAID FOR
SHALL NOT BE TRANSFERABLE

The Circular No. 116/2020/TT-BTC dated December 31, 2020 of the Ministry of Finance guides a number of articles on public company governance as prescribed in the Government’s Decree No. 155/2020/ND-CP dated December 31, 2020, on detailing and guiding the implementation of a number of articles of the Law on Securities.

In the charter of a joint-stock company, its shareholders shall be granted certificates of stocks in proportion to their number of shares and types of stocks. All shares shall be freely transferred except other regulations prescribed in charter of the public company and other law regulations. Transfer of listed stocks or stocks registered for trading in Stock Exchange shall comply with law on securities and securities market.

Shares that have not been fully paid for shall not be transferable and not be entitled to the relevant rights such as the right to receive the dividend, the right to receive issued stocks to increase equity capital from own capital, the right to buy new offered shares and other rights in accordance with law.

If the payment for buying stocks has not been paid up fully and on time by shareholders, the Board of Directors shall notify and have the right to require them to pay the rest and be liable in proportion to the total par value of shares registered to be purchased for financial obligations of the company arising due to such payment. The number of shares that are not paid for will be withdrawn.

The Circular takes effect on February 15, 2021.