Highlights of Draft Law with Amendments, Supplements to The Law on Investment and the Law on Enterprises

30
April
2019

To facilitate and simplify matters in relation to business environment and investment procedures, the draft law with amendments, supplements to the Law on Investment and the Law on Enterprises is expected to be proposed to the National Assembly for its consideration in the year of 2019.  If this draft law is passed by the National Assembly, then it is expected to be effective from 1 July 2020.  Highlights of this draft law are as follows:

No.Law on Investment 2014Draft law
1.M&A Approval
M&A approval must be obtained by foreign investors before contributing capital, purchasing shares or part of capital contribution in an economic organisation operating in conditional business investment industries applicable to foreign investors.

M&A approval must be obtained by foreign investors before contributing capital, purchasing shares or part of capital contribution in an economic organisation operating in conditional business investment industries applicable to foreign investors if such contribution or purchase causes an increase of the ownership ratio of foreign investors.

Further, M&A approval must also be obtained by foreign investors before contributing capital, purchasing shares or part of capital contribution in an economic organisation using the land area on island and commune, ward, township, boundary, coastal area or other areas affecting defence and security.

2.Security for project performance
The investor must provide an escrow deposit as security for performance of the project for land that is allocated, leased out or granted permits by the State for conversion of the land use purpose.An escrow deposit or a bank guarantee must be provided by the investor as security for performance of the project for land that is allocated, leased out or granted permits by the State for conversion of the land use purpose.
3.Principles for application of investment incentives
Investment incentives are applied to certain projects and entities.Application of investment incentives with respect to a project or entity must be implemented on the basis of the project implementation result of the investor.  Further, if the investment project satisfies conditions for enjoying different investment incentive rates, then the highest investment incentive rate will be applied.
4.Special investment incentives
The National Assembly shall decide on whether to apply any special investment incentives in cases where it is necessary to encourage development of an especially important industry or a special economic – administrative unit.The Prime Minister shall decide on whether to apply a special investment incentive rate which is not higher than 150% of the highest rate prescribed by the law to encourage development of an especially important industry, area or project.
5.Periodical reporting regime
Investors and economic organisations engaged in investment projects are required to report to the competent authorities of the status of implementation of the investment project on a monthly, quarterly and annual basis.The requirement of monthly reports is abolished.

If you have any questions or require further information, please contact Phuc Nguyen, Quynh Lien Nguyen or Loan Danh of ZICOlaw (Vietnam) Ltd.


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