Legal briefing February, 2016

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I. Circular No. 20/2015/TT-BTP giving details and providing guidelines for implementation of a number of articles of the Decree 23/2015/ND-CP dated 16 February 2015 issuing copies from masters registers, certification of true copies from originals, authentication of signatures and contracts (Circular 20)

Sector: Administrative

Effective date: 15 February 2016


Circular 20 has provided the guidelines for implementation of a number of articles on certification of true copies from originals, authentication of signatures, notarization of contracts, transactions, in particular:

Decree 23 has simplified the procedure on notarization of contracts. However, due to the unfamiliarity with new administrative procedures, some of local authorities themselves invent additional provisions or require additional documents in the notarization dossier. The Circular 20 has addressed this shortcoming: in receipt and settlement of the notarization requests, the notary is not allowed to invent any additional step, or request for more documents other than those stipulated in the Decree 23. Circular 20 also regulates that if the notary fails to settle the notarization requests within 15 hours and fails in producing results within one day or having to extend the settlement schedule under Article 21, 33, 37 of Decree 23, a clear appointment letter is required to be sent to the requester.

Besides the cumbersome in notarization, Decree 23 has not also detailed the template of testimonies on document of legacy inheritance, document of legacy refusal.  Consequently, the competent authorities were confused and even refused to authenticate. Therefore, Circular 20 has given details for this matter in Article 3.1 and issued a template attached with the Circular. In addition, Circular 20 also attached a sample of authentication testimony of signatures to ensure the consistency of application of the Circular.


Circular 20 expectedly settles the problems arising from implementation of Decree 23 such as the lack of templates and inconsistency of required dossier.

II. Circular No. 59/2015/TT-BLDTBXH detailing and guiding the implementation of some articles of the Law on Social Insurance on compulsory social insurance (Circular 59)

Sector: Insurance

Effective date: 15 February 2016


Circular 59 has various remarkable points as follows:

(i) Circular 59 supplements the provision on the payment of compulsory social insurance drawing from the monthly wage, allowances (from 1st January 2016 to 31th 2017), in which such allowances are the ones to offset the factors of working conditions, the complexity of work, activity conditions, level of labor attraction for which the agreed wage in labor contract is not calculated or incompletely calculated such as allowances of position, title, responsibility, heaviness, hazardousness, dangerousness, seniority, region, mobility, attraction and the like. Besides, the monthly wage paid for compulsory social insurance shall not include the other benefits and welfare, initiative bonus, meals between shifts, gasoline, telephone, travel, accommodation and child care allowances; assistance upon the death of employees’ relatives, the marriage of employees’ relatives, employees’ birthday, subsidy to the employees in difficult situation in case of work accident, occupational disease and other allowances and assistance recorded in separate items in the labor contract.

(ii) Circular 59 provides conditions to enjoy an one-time subsidy upon birth giving as follows: (a) In case only the father participates in the social insurance, the time of payment must be from full 06 months or more within the period of 12 months before birth giving; (b) For the husband of the mother requesting surrogacy, the social insurance payment must be from full 06 months or more within a period of 12 months to the time of child receipt.

(iii) Under Circular 59, when applying monthly pension, a rate of 2% of monthly pension shall be reduced for each year of retirement prior to the prescribed age, which is higher than the rate of 1% under Circular 03/2007//TT-BLDTBXH.

(iv) The rate of entitlement to enjoy one-time social insurance of the employees having the time of social insurance payment of less than 01 year is equal to 22% of the rates of monthly wage of social insurance payment; the maximum rate is equal to 02 months of the average monthly wage of social insurance payment.


Circular 59 has provided a means for realization of the Law on Social Insurance and Decree No. 115/2015/ND-CP. The Circular is expected to protect tens millions employees and financial resources of entities engaging in social insurance.

III. Circular No. 09/2015/TTLT-BCA-BYT-BTC guiding implementation of health care insurance applicable to employees, students, relations of solider of People’s Public Security of Vietnam (Circular 09)

Sector: Insurance

Effective date: 11 February 2016


Noticeably, Circular 09 details the scope of employees whose health insurance is contributed by the local Public Security and the employee themselves, and the ones whose health insurance is contributed by state budget. Accordingly, the relations of soldier, students of Public Security cultural school and foreign students who are granted scholarship at Public Security school shall enjoy the health insurance covered by the state budget.

Regarding the contribution responsibility in special cases, Circular 09 prescribes that within the time of sick leave from 14 days onward, in which the sick leave benefit is applicable, employees and their employers are not required to contribute into the health insurance while the health insurance benefit is still applicable.

Circular 09 provides that within the time of detention, in custody or temporarily suspended from their work before being investigated or judged guilty or not guilty of their offences, ratio applicable to health care insurance contribution shall be 4.5% of 50% of the monthly salary subject to social insurance contributions as stipulated by laws. The remaining contribution shall be contributed in case it is concluded that there is no violation accordingly.

Employees who are currently living and working abroad are not subject to health care insurance contribution within the period of being aboard. The period of being abroad shall be counted as uninterrupted in application of health care insurance contribution.


This Circular has come into effect from 11 February 2016. However, the provisions on contribution level, contribution liability, and contribution method in respect of health insurance have been effective since 1 January 2015.

IV. Decree No. 11/2016/ND-CP providing guidelines for implementation of Labor Code on foreigners working in Vietnam (Decree 11)

Sector: Labor

Effective date: 1 April 2016


The scope of foreigners who are exempted from work permit is extended to include experts, individuals being the chief executive officials or those holding management positions or technicians who work in Vietnam for less than 30 days per period and the total accumulated working day in Vietnam is no more than 90 days per year. Further, method for determination of an expert, a chief executive official and management positions is also detailed in this Decree.

Confirmation of demand for use of foreign employees by Chairman of provincial people’s committee is not required in particular cases, noticeably for foreign employees with abovementioned working period in Vietnam.


With respect to the application for obtaining work permit, in case a foreigner has been residing in Vietnam, only criminal record issued by competent authority in Vietnam is required. However, there is still no further clarification for applying this provision, i.e. how to determine that a foreigner has been residing in Vietnam. In addition, processing time for the issuance of work permit is shortened from 10 to 7 working days from full submission.


Decree 11 simplifies the process of work permit and facilitates favorable conditions for foreigners working in Vietnam.

V. Circular No. 36/2015/TT-NHNN on restructuring of credit institutions (Circular 36)

Sector: Banking and Finance

Effective date: 1 March 2016


Inheriting positive points of Circular 04 and being amended, supplemented to qualify requirements on restructuring of bank system and sustainable development of credit institutions system, Circular 36 has the following notable points:

  • The Circular 36 applies to credit institutions being commercial banks and finance companies only.
  • In addition to merger and consolidation, conversion of legal form of credit institutions is also be governed as one of restructuring form. Accordingly,
  • a commercial bank or finance company may convert from a limited liability company into a shareholding company, or vice versa; and a commercial bank or finance company may convert from a single member LLC into a multiple member LLC, or vice versa.
  • In case of conversion, the credit institution must have a conversion plan approved by its competent body and satisfy other requirements in accordance with laws.

It is strictly prohibited to disperse assets in any form.


Circular 36 is expected, by supplementing regulations regarding conversion of legal form of credit institution and improving regulations regarding merge and consolidation of credit institution, to create a bank system fully complying with current market principles.

By Vietnam Law Insight

Disclaimer: This Briefing is for information purposes only. Its contents do not constitute legal advice and should not be regarded as detailed advice in individual cases. For more information, please contact us at

Salary Budget of Enterprises shall be Significantly Increased from 01 January, 2015

The new Law on Social Insurance No. 58/2014/QH13 issued on 20 November 2014 (the “LoSI”) shall take effect from 01 January 2016. There are three key items of the LoSI which are delayed until 01 January 2018 as follows: (i) social insurance (the “SI”) shall be applicable to labor contract having term from 1 month and less than 3 months (i.e. short term or seasonal labor contract); (ii) the SI shall be applicable to foreign employees working in Vietnam with work permit or practicing licenses issued by competent authorities in Vietnam; and (iii) the monthly salary on which social insurance premiums are based will be the salary plus salary-based allowance and other amounts as prescribed in the laws on labor.

The LoSI proposes the new policies on formula of calculation of payable social insurance. Accordingly, since 01 January 2016, for employees who pay social insurance premiums according to the employer-decided salary regime, their monthly salary on which social insurance premiums are based has been their salary plus salary-based allowance as prescribed in the laws on labor.

In reality, we understand that most of enterprises in Vietnam are paying social insurance premiums according to the base salary which is significantly lower than the actual salary paid to employees (i.e. base salary and salary-based allowance).

In light of this, upon taking force of the LoSI, it is likely that salary budget of enterprises shall be significantly increased. In order to avoid such negative implication imposed by the LoSI, a number of methods are being reviewed and considered by employers such as (i) separation of the labor contract into (1) labor contract and (2) seasonal labor contract and/or service contract or (ii) increase of regular bonus and decrease of salary. However, it is suggested that each of the aforementioned methods still has disadvantages which may lead to violation of the laws on labor and other unwelcome implications.

By Vietnam Law Insight (LNT & Partners)

Disclaimer: This Briefing is for information purposes only. Its contents do not constitute legal advice and should not be regarded as detailed advice in individual cases. For more information, please contact the author Thuy Nguyen at ( or visit the website:Http://

New Laws on Investment and Enterprise Come Into Effect from Midnight

As you now all know, the new Law on Enterprise (LOE) and Law on Investment (LOI) will take effect from 0.00AM tomorrow, 1 July 2015 promising to bring many positive changes to Vietnam business environment. 

What enterprises and investors are all now waiting for are the Decrees implementing the LOE and LOI, which have not been issued yet.

While the final draft of the decrees are now being circulated, and the vacatio legis by law would be 45 days after promulgation by the Government, the Ministry of Planning of Investment (MPI) sent and urgent Official Letter No. 4211/BKHĐT-ĐKKD dated 26 June 2015 (OL 4211) on business registration, implementing LOE (please click here to download).

Another Official Letter implementing the LOI are expected to be circulated anytime from now until Midnight (we have been informed that this Official Letter No 4326/BKHĐT-ĐTNN dated 30 June 2015 implementing LOI was issued, and will provide you with updates in the next legal alert).

Under OL4211, notable changes are as follows:

  1. Application of ERC for current foreign invested enterprise (FIE): for enterprises operating under an Investment Certificate (IC) or an Investment License (IL), when amending  the IC or IL, they will apply for the Enterprise Registration Certificate (ERC). The ERC dossier will be similar to the dossier for applying a new ERC, attached with the current IC or IL.
  1. Simplified ERC registration process: Art 24 LOE only requires applicants to file, among others, scope of business, and not the HS Code or CPC to the registration request or establishing an enterprise, be it a limited liability company (LLC) or a joint stock company (JSC). The form under Art 24 LOE is now being drafted by the local department of planning and investment (DPI) and to be released soon.  The CPC will be filled in by the DPI, and there is still a risk that the CPC/HS Code filled by the DPI are not matched by the CPC/HS Code of products to be imported by the enterprise. However, the enterprise’s application will no longer be rejected because the CPC/HS Code is not found or unfit.   Please note that with respect to FIEs, the filing of HS Code and CPC would still be required under form MĐ-6 of Circular 08/2013/TT-BCT dated 22 April 2013 of (Circular 08) of Ministry of Industry and Trade (MOIT).  This requirement is still valid until 1 July 2016, at the latest (LOI, Art 74.3).
  1. Place of business to be notified, not registered: the notice shall be sent within 10 days to the local DPI from the date of the decision to open a new place of business. This regulation does not affect requirements to have specific license for each type of business (e.g. a supermarket license, warehouse license, school license etc).
  1. A change of the scope of business, a JSC private placement, and entry of foreign shareholders to be notified, not registered: these changes are notified at the local DPI, who will then reconfirm within 3 working days from receipt of notice. The DPI reserves the right to reject the notice if the conditions for foreign investors’ entry under WTO assessments or other local laws are not met (for “conditional projects”). Therefore it is advisable that the scope of business of an enterprise must be “clean” from conditions, before a notice of foreign shareholders are sent. After foreign shareholders have been duly notified, the enterprise may change its scope of business. This change may still be subject to scrutiny, but the conditions will be strictly by law (e.g., percentage of foreign shareholding) rather by the authorities’ discretion.
  1. Enterprises can make more than one seals by notice. The new seals will be published on the National Business Registration Portal (NBRP).
  1. Liquidation process to be simplified: the enterprise’s liquidation shall be made within 6 months from the passing of the resolution for its liquidation. Within that 6 months, the tax authority should confirm the enterprise’s fulfillment of tax obligations. Unless the tax authority send a notice of objection, the liquidation process will complete within that time period and the enterprise will be deleted from the NBRP.


Some issues are still unclear under OL4211:

  1. Whether enterprises operating under an IC or IL must surrender its original IC or IL when receiving the ERC, and if so, what would be their new Investment Registration Certificate (IRC) under the new LOI, and what would be the In Principle Approval (IPA), should an IPA be required under the new LOI.
  1. Must a foreign shareholder have a “project” when it acquires shares (i.e., indirect investment) in a local company? It is likely that it is not required, but we might need to confirm this by an official letter implementing the LOI (ad hoc regulation pending Decrees implementing LOI).
  2. What is the real difference between “registration” and “notice” if DPI may have the right to send a negative opinion on a notice filed?

For more information about this article, please contact the author: Dr. Le Net at the email:

By Vietnam Law Insight (LNT & Partners)

Disclaimer: This Briefing is for information purposes only. Its contents do not constitute legal advice and should not be regarded as detailed advice in individual cases. For more information, please contact us or visit the website: Http://

Insuring the insurance market gets in order

On February 15, 2012, new regulations on insurance sector business activities came into effect under Decree No.123/2011/ND-CP (“Decree 123”) detailing the Law on Amendments to the Law on Insurance Business being effective from July 2011.

It is our opinion the modifications brought forth by the regulation will result in significant changes to the Vietnamese insurance market.

The Law on the Insurance Business promulgated in 2000 (“the Law on Insurance Business”) only stipulates two types of insurance specialties – non-life insurance and life insurance. In general, insurance enterprises (which can be collectively referred to as “insurers” or “insurance providers”) were not allowed to concurrently provide both types of insurance under the law. As a result, health insurance products were tacitly brought under the scope of non-life insurers, leaving life insurance providers without the option of tapping into this potential market.

More recently, the Law on Amendments to the Law on Insurance Business of 2011 separated the non-life insurance and health insurance specialities, allowing Decree 123 to officially open the health insurance sector to life insurance providers. As a result, after February15, three types of insurance providers will be permitted to operate in the country – (i) life insurance providers, (ii) non-life insurance providers and (iii) health insurance providers.

With considerable diversity among insurers, policyholders will have more to choose from among health insurance products. In the current market, policyholders may maintain concerns with their insurance policy, particularly lifetime or long-term policies, as the fate of their insurance premiums or payments may be unclear if their provider goes bankrupt or loses its capacity to pay on insurance claims. Under Decree 123, policyholders can have peace of mind with the establishment of a Protection Fund for the Insured (or, more accurately, a Protection Fund for policyholders).

The fund, which is financed by insurers and Vietnamese branches of foreign non-life insurers, requires applicable businesses to provide an annual amount to the fund. The amount will be promulgated by the Ministry of Finance (MoF) and may not exceed 0.3 per cent of revenue from annual premiums.

These annual payments will be collected until the size of the fund reaches a certain percentage of the total assets of insurance providers in the country (specifically, 5 per cent with regard to non-life insurers and branches of non-life insurers and three percent with regard to life insurers). It may be of note that the fund will be managed by the Vietnam Insurance Association and paid out under the direction and supervision of the MoF. The question remains as to how such a large sum will be effectively managed by both the association and the MoF. As a result, this requirement may also be considered an additional responsibility, which insurance providers in Vietnam will have to bear.

Cross-border insurance services

Beyond opening the health insurance market in Vietnam, Decree 123 also allows for the provision of cross-border insurance and insurance brokerage services in Vietnam (i.e. the direct provision of services from other countries into Vietnam without an established commercial presence in the country).

The legality of this insurance service has been unclear since Vietnam joined the World Trade Organization (WTO), as under Section 7A of Vietnam’s Service Commitments, the Vietnamese government committed not to limit the provision of cross-border insurance services. At the same time, applicable legal documents failed to set forth specific regulations on cross-border services, leaving insurance providers confused as to how to implement the WTO Commitments.

This ambiguity was resolved, however, with the issuance of Decree 123, which will allow for the seamless application of previous requirements. That being said, the decree sets forth an array of limitations on cross-border services among providers and policyholders. Specifically, insurance providers must fulfill a number of conditions before offering crossborder services in Vietnam.

Foreign providers may only offer cross-border insurance services through an insurance brokerage legally established and operational in Vietnam. Foreign insurance brokerages specialising in cross-border insurance services can only work on behalf of insurance providers or branches of foreign non-life insurance providers legally established and operational in Vietnam.

The scope of purchasers of cross-border insurance products is also limited.

Only foreigners working in Vietnam or enterprises established in Vietnam with at least 49 per cent foreign capital may utilise cross-border insurance services. Further, life insurance and health insurance products are not included among the insurance products, which may be offered through such cross-border services.

A new operational model – branches of foreign non-life insurance providers

Under the decree, foreign non-life insurers are offered an additional option to establish operations in Vietnam, as branches may be established for insurance companies that are not yet present in Vietnam. The conditions for such operations remain relatively strict, covering requirements for foreign non-life insurers looking to establish a branch in Vietnam with the aim of opening the market to reliable insurance providers.

Regardless of the severity of the requirements, branch establishment procedures may be considered relatively uncomplicated, as investors are not required to complete an in-principle approval stage, which can be fraught with difficulties for investors interested in obtaining a provider license in Vietnam.

The only limitation to this form of business is that operating branches of foreign providers may not establish sub-branches in Vietnam. However, established branches are permitted to engage in most of the operational matters provided to insurance providers, with lower statutory capital requirements (branches must have a statutory capital of VND200 billion, where non-life insurers must maintain statutory capital of VND300 billion).

On the basis of administrative procedures and capital requirements, establishing a branch in Vietnam under Decree 123 may be a preferred option for foreign insurance providers strongly considering investment in Vietnam.

Continuing on from Decree 123, we will continue to update readers on new regulations issued under the MoF to implement the Decree.

By Vietnam Law Insight, LNT & Partners.

Disclaimer: This Briefing is for information purposes only. Its contents do not constitute legal advice and should not be regarded as detailed advice in individual cases. For more information, please contact us or visit the website: Http://