REAL ESTATE PROJECTS M&A: SOME NOTES FOR BUYERS

Mr. Tran Thai BinhPartner 

LNT & Partners

The real estate market in Vietnam has seen a quite lot of growth in the last two years, with foreign investors returning, and many busy M&A transactions in real estate.  Some local developers have sought to transfer their incomplete projects in order to do internal re-structuring for better growth.

For foreign investors, investing in Vietnam is challenging, especially in real estate investment due to differences in the legal framework for land and real estate, as well as transaction practices and other factors.

Below are some notes for property project buyers (especially foreign buyers) to overcome challenges in acquiring real estate projects in Vietnam.

Deal Structure

Acquiring a real estate project may be done one of two ways: by a “project transfer deal” where the project is transferred to the buyer, or through a “share transfer deal” where the buyer would acquire the shares held by the sellers in the company that owns the real estate project. The Law on Real Estate Business now allows for a partial or whole of transfer of the real estate project. With regards to the “the project transfer deal”, under the applicable law, the transferor is required to complete their project infrastructure development as a condition precedent for transferring the project. The assessment of the completion of infrastructure development is a lengthy process and somewhat subjective. It may be time consuming to get the getting necessary approvals for a project transfer, and many business opportunities may pass by in the mean time.

Therefore, another way for the parties to get to the desired outcome is for the buyer to acquire all shares and/or equity held by the sellers in the company that owns the real estate project. The Law on Investment now sets out a clear legal framework to allow foreign buyers to acquire shares or equity in local companies. Accordingly, a foreign buyer may directly acquire shares or equity from the sellers. This approach is more favorable for acquisition in certain cases.

 Buyers often prefer to use a “project transfer deal” rather a “shares transfer deal”. However, things are not always as accessible in reality due to legal limitations and restrictions.

Due Diligence of the project company or the real estate project

Either way, a due diligence report, which is a process of checking and finding out any legal and financial issues of the project and project company (or the developer), is always essential. The due diligence process is designed to find out any legal or financial liabilities that the sellers may have with respect to the real estate project and/or of the developers. The process vets any risks in the business operation of the developer or with implementing the project, the possibility of licenses being revoked, as well as any other factors that mayimpact on the transaction.

As for legal liabilities, the buyer is required to review all approvals, permits or licenses for the project, for example: the issuance of the land use rights certificate, the suitability of the land use purpose for the development of the project, licenses and permits relating to the designs and construction of the project, the developer’s legal compliance in implementing the project and/or in corporate operations, and so on.

As for financial liabilities, the buyer needs to review the performance of all financial obligations to the Government and/or to third parties by the developer with respect to land use rights, rights of third parties in the land use rights and/or the company, encumbrances to the land use rights and/or the project and/or the company’s assets, current liabilities or debts by the developer, as well as undertakings and commitments by the developer, and so on.

real_estate

Illustrating image

Negotiations on the terms and conditions of the deal

Based on the findings from the due diligence report of the project and/or the project company, the buyer needs to define the conditions precedent for entering into or completing the transaction. Setting such conditions requires skill and tact in order to limit them to a reasonable but sufficient extent. This helps to avoid difficulties and controversies in negotiations that may become deal-breakers to the sellers feelings of distrust from the buyers.

Foreign buyers are usually familiar with using lengthy agreements that are tens or hundreds of pages long, but not with local sellers. Therefore, a lengthy agreement with unnecessary terms or clauses may lead to an end of the transaction due to long negotiations (which may sometimes be unnecessary), as well as concerns from the sellers. The agreement may use precedents from the common-law system. However, a simple copy of the terms and conditions of the transaction documents for deals in Vietnam is sometimes not only legally impractical, but can also cause difficulties to the parties when completing the deal.

Deal Closing

The buyers need to agree on a payment schedule that is proper for closing the deal. In practice, the seller usually requests the buyer to deposit an amount to secure the buyers’ performance of the deal. The buyer may have concerns on legal and financial liabilities arising from the deal due to inadequate awareness by the sellers. Therefore, a bank will be engaged as an agent to manage the deposit amounts. The parties may agree on the release of payment by the bank upon the seller’s fulfillment of certain conditions. Therefore, an agreement on payment must also be strict, and requires a local insight on the assessment of the closing to mitigate the buyers’ risks.

As for the “share transfer deal”, the buyer will want to hold a reasonable retention amount to cover obligations or financial liabilities of the enterprise or of the project, and the seller usually wants to receive all payments upon the transfer of the project to the buyer. In practice, it is not so easy for the parties to reach such an agreement.

When buyers are foreign investors, attention should also be paid to Vietnamese regulations and requirements on foreign exchange controls. Specifically, the buyer should require the project company to open a direct investment capital account through which the payments can be made. This will ensure the investor’s capital withdrawal at a later stage. Although it is the seller’s obligation, the buyers should request for documentation of the seller’s income tax fulfillment for filing and submitting to the authority later.

Completing the deal requires registration with the authority. As such, foreign investors must apply for approval from the competent authority for the transfer deal with respect to real estate projects, and will be granted M&A approval.

Regardless of the closing of the deal, some seller’s representations and warranties still live on. What if the buyers, after taking-over of the project, discover these representations and warranties are inaccurate or noncompliant? This issue should be foreseen by the buyers to ensure that security measurements (e.g. right to sell back or or claim for damages) are in place.

Other issues

It is necessary for the parties to agree on a legal regime to settle disputes or conflicts arising during the deal, and in case of failure, on the competent jurisdiction. According to Vietnamese commercial law, the parties may choose either the court or arbitration for settlement. In practice, the parties often prefer arbitration due to its simple and non-public procedures.  Arbitration awards are as binding and enforceable as a court decision, even though arbitration fees are higher than that of a court’s.

The buyer must pay attention to the handover of project documents as well as to the rights to control and run the company. Some buyers, after taking over the company, have faced difficulties in operating the company due to a lack of corporate documentation.

Sellers may also have promises to favor the buyers’ financial interest in the acquisition such as possible adjustment of the planning and construction criteria. However, in some cases, such adjustments are impossible due to the requirements of the master plan. Foreign investors therefore, should pay attention to these requirements.

 (VietnamLawInsight)

#Legal #Insight #RealEstate #Merge #Acquisition #Projects #Vietnam

5th Annual Asia-Pacific Law Leaders Forum

5th Annual Asia-Pacific Law Leaders Forum

03 – 04 March 2016, 9:15 – 15:20

Maxwell Chambers, Singapore

On 3 – 4 March 2016, the conference “5th Annual Asia-Pacific Law Leaders Forum” will be held in Maxwell Chambers, Singapore with participations of leading lawyers across the region. The conference promises lively debate about recent enforcement developments and ongoing challenges in the region, as well as informative presentations by senior government regulators and expert in-house and outside counsel.

Dr Nguyen Anh Tuan, Partner, head of Competition practice at LNT & Partners will speak at the conference in the “Discussion on competition law in practice in the ASEAN region from practitioners’ perspective” session.

For more information and registration, please visit the official website

Click here for conference’s agenda: Conference schedule 2016.

 Vietnam Law Insight

Civil Transactions under the new Civil Code 2015 – Vietnam Law Insight

On 24 November 2015, the National Assembly passed the new Civil Code 2015, a leading code governing all civil relations in the society, which will take effective and replace the current one on 1 January 2017.

The official text of the new Civil Code has not yet been announced and published. However, referring to the most updated draft which was submitted for adoption of the National Assembly, it finds that the new code has many significant and progressive amendments learning from shortcomings of the current one and from the practice. These amendments surely will significantly change the way contracting parties negotiate, agree and enter into agreements.

Among those amendments, there are some initial notable changes as follows:

  • Company charter may provide the term and scope of the representative authority a legal representative may have. Accordingly, companies may have a chance to limit the representative scope of their legal representative in their charter, which is not possible under the current prevailing laws. However, it will also increase the burden on contracting parties when entering into an agreement, because they must check other parties’ charters, or other evidence, to make sure that they are dealing with the right persons.
  • Civil transactions which are not in compliance with form, e.g. not notarized when it is required so, may NOT invalid if one party or both parties have implemented at least two thirds of their obligations under the relevant transaction. Though, identification of such “two thirds” may require further guidance from competent authorities.
  • Statute of limitations shall only be applied to a lawsuit upon request of a party(ies) if such request is given before the issuance of the first instance judgment. A party who may benefit from applying statute of limitations is also entitled to refuse such application.
  • The new code also entitles contracting parties to “new” security means for performance of obligations in contracts, in addition to the current ones, including (i) reserving ownership of assets until completion of payment, and (ii) putting a lien on assets in case of any violations. Actually, these means have been practically employed for a long time, but they are not legally recognized until the establishment of the new code.

There is still a long way before the new code comes into effect and brings its progressive changes to Vietnam practice. However, it is expected that the new Civil Code shall, together with other significant changes in various sectors of law, support the development of Vietnamese market and help to narrow down the gap between the effectiveness of Vietnamese legal frameworks and of other developing countries.

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 info@LNTpartners.com or our website http://www.LNTpartners.com.

Foreign Investment under Decree 118 detailing the Law on Investment

Law on investment 2014 has taken effect since 01 July 2015 with significant changes in the investment policies and procedures. Being struggle with a completely new platform, both investors and executive agencies were craving for a detailing decree, which has just been issued on 12 November 2015, after 4 months as of the effective date of the LOI. Decree 118/2015/ND-CP detailing and guiding a number of provisions of the Law on Investment (Decree 118), which is expected to facilitate the investment environment for foreign investors in Vietnam shall enter into effect on 27 December 2015.

The most striking feature of the Decree 118 is the simplification of investment procedure regarding the purchase of shares, capital, and contribution of capital. In particular, foreign investors are not required to obtain Investment Registration Certificate if the investment is conducted via purchase of share, capital, and contribution of capital. In this case, Decree 118 only obligates the economic organization whom foreign investor invested into to adjust the list of members, shareholders at the competent authority, except for the two following circumstances where the purchase of shares, capital, contribution of capital need to be registered by the investors: (i) the target company is operating in a conditional business line for foreign investors; and (ii) the investment result in a consequence that the foreign investor holds at least 51% of the economic organization’s charter capital.

In addition, regarding the obtainment procedure of Investment Registration Certificate and Enterprise Registration Certificate, Decree 118 provides a co-ordination mechanism for the investment registration authority and business registration authority. Under Article 24 Decree 118, foreign investors shall be able to submit both investment registration and business registration dossier to one agency – investment registration authority, who shall afterwards transfer the business registration dossier to the competent authority.  Moreover, the registration authorities are allowed to notify to the investors regarding the shortcomings of the whole dossier once only. The provision potentially prevents the practice that the investors have to amend the dossier over and over.

On the other hand, Decree 118 requires the Ministry of Planning and Investment to co-operate with other Ministries and agencies to publicize the conditional business lines applicable to foreign investors, along with its legal basis and details of the conditions on the national portal. A consolidated list of conditional business lines is estimated to bring convenience and efficiency to the foreign investors in making their investment decision.

To sum up, after 4 months waiting, issuance of the Decree 118 is tagged along with a considerable expectation in clarification of policies and procedures in foreign investment. Although it has not been effective, one cannot deny is that it would help to tidy up the mess left by the gap between the LOI 2005 and the LOI 2014.

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 info@LNTpartners.com or our website http://www.LNTpartners.com.

Regulations on Development of Supporting Industries – Vietnam Law Insight

Decree 111/2015/ND-CP guiding regulations on development of supporting industries

On 03 November 2015, the Government issued Decree No.111/2015/ND-CP on developing supporting industries and replaced Decision 12/2011/QD-TTg dated on 24 February 2011 on development policy of a number of supporting industries and Decision No. 1483/QD-TTg dated 26 August 2011 on promulgating the list of products of supporting industries prioritized for development.

Under Decree 111/2015/ND-CP which shall take effect on 01 January 2016, organizations and individual operating in supporting industries that are subject to the list of prioritized sectors under the Decree may be supported with financial funding as well as incentive policies from the State for their activities, i.e. research and development, application and transfer, human resources, international cooperation, market development.

 

Decree 111/2015/ND-CP stipulates general incentive policies for enterprises operating in supporting industry, including incentives on import-export tax, VAT, favorable interest rates for investment credits capital of the State. In additions, small and medium-sized enterprises producing supporting industrial shall be exempted or reduced land or water surface from rentals. The maximum loans at credit institutions for these enterprises can be up to 70% invested capital. To provide prompt supports, especially in local area, the development program of supporting industries and the supporting industry development center are also established under this Decree.

In the context of rapidly growing of Vietnamese economy, there should be more and practical support from the State to attract more investments into supporting industries thereby meeting the high development pace of Vietnam’s economy and industry. Decree 111/2015/ND-CP has made a significant improvement in providing a clearer and more complete legal framework for such development of supporting industries.

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 info@LNTpartners.com. Our website www.LNTpartners.com.

Simplify Requirements in Importing Used Machinery – Vietnam Law Insight

Enhancing the government’s regulation on importation of used machinery, equipment and production line (“used Machinery”), new provisions have been provided as follows:

Manifest clearly groups of imported used Machinery to be governed by Circular 23 which are Chapter 84 and 85 of Vietnamese List of Goods imported and exported provided for in Circular 103/2015/TT-BTC, whereas the precedent Circular 20/2014/TT-BKHCN (“Circular 20”) did not;

Expand governing scope to used accessories, component and replacement parts of used Machinery falling into the above-mentioned groups;

Change requirements for used Machinery to be imported which are more simple;

Used Machinery listed in Dossier of Investment Project which is issued Decision on Investment Policy or Certificate of Investment Registration can be imported regardless of requirements set out in the Circular;

List of Goods banned from import is to be publicized on official website of Ministry of Science and Technology (“MST”), whereas such list is combination of lists provided for in specialized legal documents;

List of Qualified Examination Organizations is to be publicized on official website of MST and foreign organizations can be listed by providing certain information to the Ministry, such information is less severe than these stipulated in Circular 20;

Importers can take used Machinery before completing customs clearance procedures in order to put the goods in preservation, whereas in the past, importers could not;

Comments/Impacts

Requirements and procedures for importing used Machinery is more transparent as such requirements, procedures are provided for in Circular 23 and publicized in website of MST. These helps enterprises import used Machinery easier albeit regulates more strictly import of used accessories, component and replacement parts.

For used Machinery listed in Dossier of Investment Project, they can be imported straightforwardly without further requirements. This provision make it more feasible especially for FDI enterprises since they all have to obtain Certificates of Investment Registration. By incorporating list of desire used Machinery into the Dossier, FDI enterprises can save more time.

Unlike Circular 20, foreign Qualified Examination Organizations nowadays have more chances to issue acceptable qualified test certificate if they are listed on website of MST. FDI enterprises can actively obtain a certificate at importing countries to save time in Vietnam.

Finally, used Machinery while waiting for a qualified test certificate can be put on preservation. Importers therefore could decrease expenses.

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 info@LNTpartners.com

Asian Competition Forum 11th Annual Conference – Vietnam Law Insight

Asian Competition Forum 11th Annual Conference – Due Process and Transparency in Competition Law in Asia

30 November 2015 – 01 December 2015, 9:00 am5:00 pm (Save to cal)

Due Process and Transparency in Competition Law in Asia

This year’s ACF conference will look closely at issues of due process and transparency across competition regimes, a topic of substantial interest worldwide.

The Hong Kong Competition Ordinance coming into effect shortly after the conference takes place and, in addition, the recent passing of the Philippine Competition Act naturally raises questions as to due process and transparency in competition regulation in the Asian region. Furthermore, the business sector has consistently raised its concerns as to regulatory transparency in competition law. We will explore these issues and more at this year’s conference with a range of distinguished speakers including legal practitioners, economic experts and competition academics.

This year ACF is delighted to announce that The Honourable Chief Justice Robert Shenton French of the High Court of Australia will be our keynote speaker, drawing on his longstanding expertise to provide us with insight into the role of courts in competition law.

Dr Nguyen Anh Tuan, Partner, head of Competition practice at LNT & Partners will speak at the conference in the “Transparency and Due Process in Selected ASEAN Countries” session with a presentation  on “Comments from a Practical Perspective: Towards Procedural Transparency and Fairness in Vietnam’s Competition Regime”.

For more information and registration, please visit the official website. 

Registration for Delegates

Click here for conference’s agenda: Conference schedule 2015

 Vietnam Law Insight

 

Vietnam CFO Forum 2015: “Financial Management Faces Current Currency Context”

HO CHI MINH CITY – International and Vietnamese financial professionals will gather in Ho Chi Minh City on November 24, 2015 to discuss financial management strategies as the threat of a currency war looms over the region.

The forum will be held on the theme of “FINANCIAL MANAGEMENT FACES CURRENT CURRENCY CONTEXT” and is hosted by Vietnam Financial Officers (VCFO) with the support of Japan Association for CFOs (JACFO), and the Association of Certified Accountants UK (ACCA).

The Vietnam CFO Forum 2015 will welcome 300 delegates, including Chief Financial Officers, Senior Financial Analysts who are members of VCFO, JACFO, ACCA and the International Association of Financial Executives Institutes (IAFEI). There will be experts from domestic and international financial institutions, Chairmen and Chief Executive Officers of top enterprises in Vietnam. The forum will be held at Sheraton Saigon, Ho Chi Minh City on November 24, 2015.

In 2015, global financial markets saw high volatility with monetary policy changes by the Federal Reserve and the devaluation of the Chinese Yuan added to fears of a third global Currency War. In this background, Vietnamese enterprises financed with a high proportion of foreign currency loans in the manufacturing and exporting industries without Financial Management Optimization Strategies can face substantial challenges and be driven to the verge of bankruptcy.

At the Vietnam CFO Forum 2015, local and international experts will share their experience and practices to help attendees gain a broad understanding of the underlying causes as well as potential solution to managing the fallout from the current economic environment, especially from a Currency War.

After all, the participants will be able to improve decision-making on management, investment, capital mobilization and risk controls, in moving towards sustainable enterprise development with sufficient financial power as Vietnam and the region poised on the threshold of greater international integration.

AGENDA

VIETNAM CFO FORUM 2015
FINANCIAL MANAGEMENT FACES CURRENT CURRENCY CONTEXT

Hosted by Vietnam CFO Club (VCFO), Japan Association for CFOs (JACFO) and Association of Chartered Certified Accountants (ACCA) Vietnam.

Date: November 24, 2015

Venue: Sheraton Hotel, 88 Dong Khoi Street, District 1, Ho Chi Minh City, Vietnam
Language:
English and Vietnamese (simultaneous interpretation available)

Invitation only: CFOs, Controllers, Treasurers, Financial Executives, CEO, Business Leaders

Program Content:

13:00          Registration & Welcome Coffee

13:30          Introduction: Guests of Honor and Agenda

13:35          Opening Speech                

Madam Conchita Manabat – Chairperson, the IAFEI Advisory Council

13:45          “Asia & Vietnam Economic Outlook 2016”

Mr. Nguyen Xuan Thanh – Director, Fulbright Economics Teaching Program

14:15          “Are You Prepared for Exchange Rate Fluctuation?”

Ms. Josephine Yei – CEO, Saigon Bank Berjaya Securities

14:30          “The Best Practice for Effective Management”

Mr. Tran Xuan Nam – CFO, Saigon Paper Corporation

14:50          Panel discussion 1

15:20          Coffee and Networking Break

15:40          “The CFO’s Role in Business Development Strategy”

Mr. Benjamin Pwee – Managing Director, E-Deo Asia

16:00          “Smart Finance Function in Today’s Complex World”

Mr. Joseph Alfred – Head of Policy and Technical, ACCA Singapore
16:20
          Panel discussion 2

16:50          Closing Speech

                     Mr. Nguyen Ngoc Bach – Director, Vietnam CFO Club

For further information on the Forum and registration, please contact:

Hotline: 08 3503 3250

Click HERE for registration 

Ms. Huynh Thi Ngoc Quynh
Mobile: 0120 312 1992
Email: quynh.huynh@cfo.vn


Sponsorship information: 

Mr. Nguyen Huu Thanh – Chief of Organizing Board
Mobile: 0918 413 420
Email: thanh.nguyen@cfo.vn


Address:
506 Nguyen Dinh Chieu Street, District 3, Hochiminh City, Vietnam
Hotline: 08 6290 3568
Fax: 08 6290 3563

Important Notes for Foreigners in Buying Residential Houses in Vietnam

Housing Law 2014 of Vietnam has created more favorable conditions for foreigners to own houses in Vietnam. However, buying a residential house in Vietnam is not actually an easy matter to foreigners given its legal complexity in real estate.   The following notes from Mr. Tran Thai Binh, a partner from LNT & Partners, may be useful to a foreign buyer who is thinking of possessing a residential house in Vietnam.

Firstly, the buyer must be qualified under the applicable laws. According to the Housing Law, the condition is now so relaxed that a foreigner who lawfully enters Vietnam can be eligible to own residential houses. As such, the buyer needs to prove that his entrance is permitted.

Secondly, it is advisable that the buyer should keep a track record for the money he brings to Vietnam for buying the house.  This would be better for the buyer in remitting the money back after selling the house later on.  For this purpose, he should open an account at a bank in Vietnam to which the money will be transferred and from which the payments for the house should be made. In case the money is his salary or income earned from working or doing business in Vietnam, he should keep document supporting for the money.

Thirdly, the buyer should get to know which property projects that he or she is permitted or not permitted to buy in order to avoid future risks.  Please note that foreign buyers are only permitted to buy houses from new housing development projects, not in existing residential quarters. This job is not difficult to foreign buyers if he or she consults with a reputable property agent such as Savills or Collier.

Fourthly, on contracting with the property developers, the foreign buyers should make sure that the property developers are qualified for signing housing sale and purchase agreements with the buyers.  In principle, the property developers are allowed to enter into housing sale and purchase agreements once (i) the housing project is properly approved; (ii) the foundation work of the house is completed, and (iii) the terms and conditions of the agreement for selling  a condo have been registered at Vietnam Competition Authority (under the Ministry of Trade and Industry).  An agreement may be void if failing to meet one of these conditions, and thus, the interests of the buyer may not be properly protected.

Fifthly, it should be noted with the implementation of a housing sale agreement with housing development projects since this may be not similar to the transaction practice in the buyer’s country.  For example, in Vietnam the housing developers usually do not give notice to the buyer of making the payments under the contract. It is the obligation of the buyer to follow the payment schedule as contracted. This ambiguity may lead to late payments by the buyers which may result in late payment penalty and/or early termination of contract by the seller (housing developer).  The buyers may get advice from lawyers to avoid these risks.

Sixthly, according to the Housing Law, foreigner housing owners have full rights as Vietnamese have over the house, such as the right to lease, donation or capital contribution, inheriting to others, etc. with their house. However, it should be noted that the foreign owner can exercise these rights only after he or she has obtained a “land use right certificate and/or property ownership” to the real estate. Therefore, in the respective contract, the obligation to apply for the certificate of ownership and/or the land use rights by the seller should be clearly stipulated. Also, when leasing the real estate, the foreigner owners must register the lease agreements with the local government (district-level administration committees), and properly declare his income tax for the earned rents. By complying these requirements, the foreign buyers’ incomes will be treated as legitimate income which can be remitted abroad. In addition, when renting or a house, it is also required that the owners must register temporary residence of the tenants with the relevant local authorities. Currently, it is still not clear how foreigners, as house-owners, carry out this registration procedure. Some foreigners are afraid that if they do not regularly live in Vietnam, how can this obligation be implemented? Actually, this difficult task may become easier if the foreign owners can engage a real estate management company to take care of these, and on behalf of the foreign owners, to perform the management and administrative procedures involved.

Seventhly, if the foreign owners no longer want to own the house, what can they do? Can they sell it to other foreigners or Vietnamese? Yes, they can according to the Housing Law.  However, currently there is no clear guidance from the State Bank of Vietnam that how the foreign owners can remit abroad the sale proceeds from selling the house.  However, my opinion is that if they can prove the money that they used to buy the house is of legal sources and relevant taxes have been fully paid, he or she is surely permitted to transfer their gains abroad.  Again, this should be consulted with a lawyer in real estate for getting through the procedure.

By Vietnam Law Insight

The article contributed by Mr. Tran Thai Binh, Head of Real Estate Practice Group of LNT & Partners with more than 15 years in real estate practice. Its contents do not constitute legal advice. For more information, please contact the  lawyers via email: binh.tran@LNTpartners.com. Thank you.

Satisfy Demand for Securities Investment by Foreign Investors

Content of the new Law

On 26 June 2015 the Government issued Decree No. 60/2015/ND-CP (“Decree 60”) amending and supplementing certain provisions of Decree No. 58/2012/ND-CP, on the detailing and guiding the implementation of selected provisions of this, and the Law on Securities, which is considered as good news to foreign investors, since the long-awaited provisions will allow for majority ownership and control of public companies by foreign investors.

In this Decree, the foreign ownership ratio is extended to the Vietnamese securities market. Currently, a foreign investor may purchase up to 49% of total shares of a public joint stock company (JSC) or a listed company.  Beginning on the 1st of September 2015, this general restriction will be removed and instead, the new restriction will be subject to the WTO commitments or other specific domestic laws (e.g., the 30% cap in the banking sector). If there is a specific restriction under domestic law that has yet to be specified, then the rule of thumb is 49%.

When there is no restriction under domestic law (e.g., for production companies, or distribution companies), then there is no limit for the foreign shareholding ratio. This rule also applies to equitized SOEs, with the aim of attracting more foreign investment in the privatization program.

As for securities companies (or investment banks), those who are eligible to establish 100% foreign owned securities companies are allowed to buy up to 100% equity of local securities companies. Those who are not eligible can acquire up to 51% total shares.

Decree 60 also lifts all restrictions to foreign investors to purchase bonds. With respect to share certificates or derivative products of stocks of JSCs, the restriction will be relaxed as mentioned above. For this purpose, open funds or securities funds that have foreign shareholding more than 51% equity will be deemed as foreign investors. Decree 60 also addresses many other functions of foreign investment in public companies, along with other key aspects related to securities investment for foreigners.

Implications for Foreign Investors

The Decree is expected to act as a catalyst for more foreign investment in the private and State-owned sectors in Vietnam. It is intended to add vitality to the Vietnam securities markets and an extra boost to the equitization of State enterprises, as part of a plan to upgrade Vietnam from “frontier” market classification to “emerging” market classification at MSCI. It is reported that the shares with strongest liquidity on the Vietnamese stock exchanges are shares of issuers for which the 49% foreign equity quota has been used up. As such, the Decree is expected to act as an impetus to further foreign investment in Vietnam’s capital markets, both in equity and in debt markets

The Decree takes effect on September 1, 2015, and replaces Prime Minister Decision No. 55/2009/QD-TTg (15 April 2009) on the ratio of foreign investor’s participating on the Viet Nam securities market.

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://LNTpartners.com

Corporate Income Tax Provides Boost High Tech Sector

Circular No.96/2015/TT-BTC dated 22 June 2015 guiding changes prescribed in Decree 12/2015/ND-CP and amending three circulars of corporate income tax (“CIT”) including 78/2014/TT-BTC, 119/2014/TT-BTC and 151/2014/TT-BTC.

 

Content of the new Law

This Circular provides considerable changes in CIT incentives, and tax deductible expenses which could bring more advantages to corporations in general and companies in the high technology sector.

The method to apply and extend CIT incentives is amended in order to be aligned with the new Law on Investment. Accordingly, new investment project stated in the list of industrial support products prioritized for development are subject to 15 years of 10% CIT rate, 4 years of CIT exemption and 9 years of CIT reduction, provided that such products support the sectors of either high technology as stated in the Law on Technology, or garment, textile footwear, information technology automobile production, and are not able to be produced in Vietnam as at 01 Januray 2015 or meet the EU quality standards if these products are domestically produced.

In addition, investment projects which were not, in general, entitled to any CIT incentives previously or located in areas where such are not encouraged in the past, will be allowed to apply for the  new and favourable CIT incentives regime in the remainder of phases from the tax year 2015.

The circular also modifies regulations of tax deductible expenses. Consequently, the caps on business trip per-diems are abolished; documents to prove expenses arising from renting individual’s assets is now simpler; certain expenses related to staff training are fully deductible for tax declaration; and the calculation method applied to non-deductible interests on debt corresponding to the portion of charter capital not yet contributed is regulated in detail.

Some other changes and supplements related to losses carried forward to the next year of real easte conveyance, tax-exempted income and dossier of CIT declaration and payment are prescribed in detail in this circular.

Implications for Business

From the aforementioned points, the circular is expected to support corporations in circumstances of new investment law. In order to assist companies in applying such circular, the Ministry of Finance issued dispatch 2512/TCT-CS to briefly summarize the new contents in this Circular.

The simpler application to calculate the CIT and the lifting of caps on trip expenses for tax are to bring a business-friendly environment for corporations when it comes to tax expense management. As a result, this is expected to lead to more active investment in Vietnam, and contribute to the country’s investment climate.

The Circular 96/2015/TT-BTC will come into effect from 6 August 2015.

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://LNTpartners.com

New Legal Framework to Streamline Licensing and Set up of Commercial Banks

The Content of the new Framework

On June 30th, 2015 the Government issued Circular No. 08/2015/TT-NHNN (Circular 08) in lieu of Circular No. 40/2011/TT-NHNN (Circular 40) for the issuance of licenses and the organization and operation of commercial banks, foreign bank’s branches, representative offices of foreign credit institutions, other foreign organizations that have banking activities (Commercial Banks)  in Vietnam.

This Circular 08 has formulated a full and basic legal framework on procedures for, and dossiers on amendments, supplementation regarding operation contents of Commercial Banks. Furthermore, the formality of proposal dossiers for operational licensing and new establishment license template of Commercial Banks are also regulated in such a new circular.

Besides the new licensing issuance procedure in Circular 40, Circular 08 is expected to add three more new licensing procedures for Commercial Banks, including license replacement issuance, supplementation issuance of operation content to present license and supplementation issuance of operation content associated with license replacement issuance. With respect to the principle of building licensing dossiers, the non-notarized counterpart of documents are duly accepted, provided that those are obtained along with original copy for reference; while the referring person shall sign for confirmation and shall be responsible for the documents’ accuracy. The new establishment license template has the operation content part specifically noting that all banking functions which Commercial Banks are entitled to conduct are in accordance with Law on Credit Institutions and others activities approved by the State Bank.

Business implications

With respect to changes in the State Bank’s licensing activities applied to Commercial Banks in Vietnam, the impact on business will specifically be in banking sector. Accordingly, all approval for changes in registration for the operation of credit institution shall be noted in the Operation License by license replacement issuance. In the event of an amendment or supplementation in the operational content without need for a replacement license, Commercial Banks shall still conduct the proposal procedure on supplementing operation content via the approval instruments of the State Bank. Approval for non-notarized documents in the application dossier shall benefit from a more prompt and efficiently implemented licensing procedure. The more detailed and obvious the licensing procedures is, the more conveniently credit institutions can implement their business.

Our Recommendation

In light of this, we would recommend that commercial banks, branches and representative offices of foreign banks should update their Operation License by implementing the license replacement issuance procedure. The above-mentioned action shall result in owning a kind of detailed and unique valid instrument as a basis of banking operation. With efforts to comply with such new provisions, Commercial Banks shall benefit from good, efficient performance that will positively develop their business.

The Circular No. 08/2015/TT-NHNN will come into effect on August 13th, 2015.

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://LNTpartners.com

South Korea – Vietnam: Bilateral Free Trade Agreement

South Korea and Vietnam have recently engaged in developing their political and economic ties; the zenith of which was reached with the signing of a bilateral Free Trade Agreement  (“FTA”) between the two countries on May 5th, 2015 in Hanoi.  The FTA is expected to bring exponential surges in the bilateral trade between the two countries, in which the Vietnamese government has agreed to remove tariffs on 89.9% of products imported from South Korea over a period of 15 years. Likewise, South Korea is planning to revoke tariffs on 95.4% of all products imported from Vietnam. The two partners are currently ratifying the agreement before it is due to take effect late this year.

The both countries anticipate further growth in the volume of bilateral trade, which has reached a record high of US$30 billion in 2014. Additionally, with the agreement in place, Vietnam foresees substantial inward investment growth from South Korea which stood at approximately US$5.8 billion in November 2014.

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://LNTpartners.com

Vietnam Opening the Doors for Portfolio Foreign Investment

Following the relaxation of the foreign investment procedure under the new Law on Investment (LOI) and the Law on Enterprise (LOE), the Government has now also relaxed the room for portfolio foreign investment as well as the equitization of state owned enterprise (SOEs).

Furthermore, the Decree provides for the equitization of state owned enterprises (SOEs), and this action is expected to attract more share acquisition in stock markets as well as private equity soon. Currently, a foreign investor may purchase up to 49% of total shares of public joint stock company (JSC) or a listed company.  From 1 September 2015, this general restriction will be removed under Decree 60/2015/NĐ-CP dated 26 June 2015 (Decree 60).

Click here to downloa Decree 60 – Open Doors for Portfolio Foreign Investment

Instead, the new restriction will be subject to the WTO commitments or other specific domestic law (e.g., the 30% cap in the banking sector). If there is a specific restriction under domestic law that has yet to be specified, then the rule of thumb is 49%.

When there is no restriction under domestic law (e.g., for production companies, or distribution companies), then there is no limit for the foreign shareholding ratio. This rule also applies to equitized SOEs, with the aim of attracting more foreign investment in the privatization program.

As for securities companies (or investment banking), those who are eligible to establish 100% foreign owned securities companies are allowed to buy up to 100% equity of local securities companies. Those who are not eligible can acquire up to 51% total shares.

Decree 60 also lifts all restrictions to foreign investors to invest in bonds. With respect to share certificates or derivative products of stocks of JSCs, the restriction will be relaxed as mentioned above. For this purpose, open funds or securities funds that have foreign shareholding more than 51% equity will be deemed as foreign investors.

In addition, Decree 60 addresses the following changes:

  1. Private placement of public companies
  2. Share swap of public companies
  3. Public offering of shares in public companies for swapping shares in non-public companies, or equity in limited liability companies
  4. Private placement filing at the State Securities Commission (SSC) for public companies
  5. Public offering process, use of escrow account for public offering proceeds
  6. Public offering of investment certificates or shares abroad
  7. Redeem shares
  8. Tender offers
  9. Sale of treasury shares
  10. Listing of merged or amalgamated companies
  11. Upcom transaction registration and listing
  12. Real estate capital valuation and contribution to real estate investment fund

While opening the door to, and creating more options for foreign portfolio investment, as along with the deregulation of various procedures at SSC are certainly attractive to foreign investors, it is unclear how other restrictions under different ministries, such as Ministry of Health, Ministry of Education, Ministry of Industry and Trade may impact on the intention of the Government to open up the market.

Note that Art 74.3 LOI allows for the “non-compliant” restriction of business to be valid until 1 July 2016, suggesting there could be some more grounds of clarification and explanation to come.

By Vietnam Law Insight (LNT & Partners)

For more information about this article, please contact the author: Dr. Le Net, LNT & Partners, at the email: Net.le@LNTpartners.com

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://LNTpartners.com

Midterm Vietnam Business Forum 2015

On June 9, the Vietnam Business Forum Consortium, in collaboration with the Ministry of Planning and Investment and the World Bank Group, held the Midterm Vietnam Business Forum 2015 in Hanoi with theme “Enhancing Enterprise Competitiveness for Global Integration” and the presence of Prime Minister H.E. Mr. NGUYEN TAN DUNG. This Forum was a valued opportunity for a structured dialogue between the Vietnamese Government, local and foreign businesses and the donor community to improve the business environment in Vietnam.

Beside sponsoring for the forum, LNT & Partners attended and raised insightful comments on the new Law on Investment and Law on Enterprise. The forum started with the Review of Business Climate by Chamber of Commerce from Vietnam, Korean, European, and American. On this midterm gathering, they focused on 3 main issues followed:

  1. The Issues of implementation of new Laws on Investments, Enterprises, Housing, Real Estate Business and Immigration on Trade, Tourism and Investment;
  2. Needs for positive growth on Banking and Capital Markets; and
  3. Infrastructure – Requirements for PPP implementations, port strengthening and power generation needs in Master Plan VII.

Please click the link to download the relevant documents from VBF:

Midterm VBF 2015 – VBF Co-Chair Speech

Midterm VBF 2015 – Short Report – ENG

Midterm VBF 2015 – Full Report – ENG

 Reported by: Vietnam Law Insight

Receiving Advance Payments from Home Buyers: Correct Interpretation and Clarification is Necessary

Law on Residential Housing stipulates that generally, developers shall not be entitled to receive any advance payments from home buyers who purchase residential houses to be developed in the future before the foundation work of the property is completed.

This provision has been interpreted by competent authroties that any amount received by developers from their home buyers prior to the completion of the foundation, shall be deemed illegal and such transactions may be invalid.

However, the business in practice is very various by nature, the developers, in some cases, expect to know how many purchases have committed to buy houses in their projects. Therefore, deposit agreement is a method to secure the housing purchase and sales contracts. The amounts received from such deposit agreements may be at the risk of being regarded as a violation of the aforementioned provision.

In reality, some developers who collected payments from their potential buyers in the form of a “deposit”, or “goodwill amount”, and etc were imposed with administrative sanctions.

Deposits or Advance Payments?

From a legal perspective, there are some aspects that need to be considered in relation to this issue as follows:

Pursuant to regulations stipulated in the Civil Code, a deposit agreement means an amount of money delivered by one party to another party as a security for its performance of the further steps of the contemplated transaction. In the mentioned case, the transaction between the developer and a home buyer is the execution of a housing purchase and sales contract. Therefore, the deposit agreement between developers and its potential buyers prior to the completion of the foundations contains the provision that potential buyers pay a deposit amount to secure their performance commitments. Such buyers shall enter into the housing purchase and sales contracts with the developers when the projects have met the required conditions; in case the buyers do not fulfill their commitments, they shall forfeit their deposits…In our opinion, such agreements is in compliance with the Civil Code regarding deposit agreements.

The Law on Residential Housing provides that developers shall not be entitled to receive an “advance payment” from the buyers prior to the completion of the foundation. This intended provision is justified in avoiding the possibility that developers do not have the sufficient financial capacity to complete the property projects, which may adversely affect the interests of buyers ultimately. This provision is intended for the protection of buyer’s interests, but how should it be interpreted correctly?

In our opinion, the fact that developers receive deposit amounts from their home buyers is not supposed that they have received “advance payment” because the two transactions are different in legal nature: one is the deposit transaction, while the other is the housing purchase transaction. Indeed, from an accounting perspective, deposit amounts cannot  be entered to the accounts as the payments from buyers, because the developers always have an obligation to return deposits (including deposit penalties as agreed) to buyers in the event of any breach of agreement by the developers. Therefore, up to this point, the developers and the potential buyers have still not conducted in house purchase transactions. If such advance payments are supposed to be payments according to housing purchase and sale contracts, such payments shall accounted as revenue of the developers.

A unified interpretation by authorities needed

Relevant competent authorities usually suppose that “receiving deposits” and “receiving advance payments” are the same, and consequently presuming that the developers have breached regulations if receiving deposit amounts, and the related transactions are likely to be canceled due to its invalidity.

The provision of Law on Residential Housing mentioned above for the purpose of protection for interests of buyers is essential and justified. However, the assurance required to enable developers (as businesses) to be advantageous in their doing business within the legal framework is also necessary.

Currently, Law on Residential Housing 2014 and Law on Real Estate Business 2014 provides quite sufficiently regulations in order to remove incapable developers. For example, Law on Real estate requires a developer’s performance of housing project must be guaranteed by a reputable bank.  And furthermore, the developers are entitled to receive advance payments from the buyers up to 50 % or 70% of the housing sale price, and etc. All of these regulations, in our view,  secure enough the interests of home buyers.

Therefore, the further expanded interpretation of competent authorities is neither consistent with the spirit of the Civil Code, nor necessary in practice. Furthermore, such interpretations may adversely affect trading transactions between parties.

It is necessary to have guidance, or a specific confirmation from the Ministry of Construction regarding the fact that developers can receive deposit amounts (prior to the completion of the foundation) is consistent with applicable laws, in order to remove the “hanging verdict” for developers due to different interpretations of the relevant authorities at the local level.

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 or visit the website: Http://LNTpartners.com

The article contributed by Mr. Tran Thai Binh, LNT & Partners. Its contents do not constitute legal advice. For more information, please contact lawyers via email: binh.tran@LNTpartners.com

Regulations of Construction Contracts

Decree 37/2015/ND-CP dated 22 April 2015 on detailed regulations of construction contracts (“Decree 37”)

The Government issued Decree 37/2015/ND-CP dated 22 April 2015 on detailed regulations of construction contract (“Decree 37”). Decree 37 replaces Decree 48/2010/ND-CP dated 7 May 2010 on contracts in construction activities (as amended by Decree 207/2013/ND-CP dated 11 December 2013). Decree 37 will take effect on 15 June 2015.

Under Decree 37, there are many substantial changes that have been stipulated, these key changes include:

  • Supplementing some types of contracts in accordance with the nature of these contracts, and the subsequent relationships between parties and the contracts. Accordingly, with respect to their nature, contracts for supplying human resources, work machinery and equipment have been added. Depending on the relationship of the parties to the contracts, Decree 37 stipulates that construction contracts with four main contracts including a main contract, sub-contract, fixed rate contract and foreign construction contract.
  • Stipulating clearly the principles of signing contracts. The most important principle is that at the time of signing, the contractors must meet conditions for practice and performance qualification, as prescribed in the Law on Construction. This principle is aimed at making sure that the contracts are suitable for providing construction services and to limit risks associated with the quality of building construction undertaken by disqualified contractors.
  • Amendments to the rate of advances for construction contracts as follows: With respect to the consultancy contract, rates are divided in two levels, namely 20% of the contract value for a contract valued up to VND 10 billion and 15% of the contract value for a contract valued over VND 10 billion (instead of 25% of the contract value for every contract as stipulated in the previous decree).
  • Decree 37 requires the employers under construction contracts to provide payment guarantee in order to protect the rights and interests of contractors. Accordingly, the employers are responsible for proving their capabilities to perform payment obligations under the signed contract via such forms as approved by the capital arrangement plan, bank or credit organization guarantee and credit supply contract, or loan agreement with financial institutions.

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 or visit the website: Http://LNTpartners.com

New Regulation on Automobile Transportation Activities

Circular 10/2015/TT-BGTVT dated 15 April 2015 regulating on the responsibilities and handling of violations relating to automobile transportation activities. (Click here for the full Circular in Vietnamese)

Circular 10/2015/TT-BGTVT dated 15 April 2015 on stipulating the responsibilities and penalties with regard to the abovementioned; (“Circular 10”) is in replacement of Circular 55/2013/TT-BGTVT dated 26 December 2013 (“Circular 55”) on the same matter and will take effect on 01 June 2015.

In addition to the 4 main applicable subjects stipulated under Circular 55 including directorate applicable to the roads of Vietnam which are transport services of provinces and centrally-affiliated cities; transport business unit by vehicles, business units of bus station, freight car stations and rest stops, it appears that the commodity owners, longshoreman and establishments providing journey monitoring services are also governed under the jurisdiction of Circular 10.  Some certain noticeable points of Circular 10 are mentioned as follows:

Obligations of organizations engaging in the passenger transport business

By providing the specific responsibilities of organizations engaging in the passenger transport business, this Circular 10 is expected to help established businesses understand clearly how they must comply according to their responding scope of services. Of note, Circular 10 provides and explains the responsibilities of organizations providing equipment for journey monitoring which includes the requirement on the development of data explorer software under QCVN 31:2014/BGTVT.

With respect to establishments that are engaging in the passenger transport business under contracts or transport for tourists, it is required that such organisations are responsible for (i) signing one transport contract for each correlative journey; (ii) registering for and notifying the municipal Department of Transport of terms and provisions of transport contracts in case of using automobiles with the capacity of more than 10 (ten) passengers for transportation. Furthermore, the duties of organisations having business activities in bus stations, freight automobile stations, and rest stops are also stipulated in detail in Article 10, and favour the rights and interests of passengers.

Various types of penalties for different violations

With the principle suggesting that the penalties under Circular 10 only apply when organisations and individuals violate the responsibilities of the organisation, the management of businesses in road transport by cars, and road transportation supporting services, would not be remedied from the warning notice of the first violation or violate for the second time within 1 year, it seems that Circular 10 creates the condition in which the organizations and individuals can deal with, and remedy,  their breaches by themselves first before having the provided penalties applied to them under the laws.

Determining the types of penalties that may be applied for the breached organizations and individuals under Circular 10 is very clear. More specifically, the highest punishment applied to the breaching organisations that are providing equipment for journey monitoring is revocation of organisations’ licenses for satisfying requirements for monitoring journey equipment on a permanent basis. The lawmakers also supplement this with further punishments for transport business establishments. In particular, apart from suspending their transport operation routes for up to 03 months, such establishments would be suspended from conducting any business for up to 03 months in case of violation of provisions stipulated in Article 22.5 of Circular 10.

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 or visit the website: Http://LNTpartners.com

The New Law on Organization of People’s Court

Effective from 1 June 2015, the new Law on Organization of People’s Court (LOPC) was adopted by Vietnam‘s National Assembly on November 24, 2014. By the time the law becomes effective, its implementing Decrees and/or Circulars will also be ready.

This law aims to provide a detailed explanation for the functions, duties and powers of the people’s court. This review highlights the important changes in the hierarchical structure, duties and power of the Supreme people’s court.

1. Modification in structure of people’s court

In the past, there have been three levels of people’s court: the people’s court of rural and urban districts; capital city courts and the people’s court of the provinces and centrally run cities; and the supreme people’s court. Under the new LOPC, the structure of people’s court is divided into four adjudicating levels (LOPC: Art. 3):

  • The Supreme people’s court;
  • Superior people’s court;
  • Court of provinces and centrally-run cities; and
  • Court of rural districts, urban districts, town, provincial, cities and the equivalent.

The new LOPC has introduced a superior people’s court into the structure, which further leads to reforms to the duties and powers of other people’s court.

2. Modification in powers and duties of the Supreme people’s court and the Superior people’s court

Under the new LOPC, the Supreme people’s court consists only of the Judicial council (from 13 to 17 members including the Chief Justice, Deputy Chief Justices and other judges), assisting apparatus and training institutions. By removing the specialized and appellate court from the structure of people’s court, it is clear that the Supreme people’s court will reduce its powers over appellate trials.

There are four significant powers that have been entrusted to the Supreme people’s court (Art 20 of the new LOPC):

  • To supervise the adjudicating work of other courts;.
  • To make overall assessment of the adjudicating practices of the other courts, ensuring the uniform application of law is enforced in the conduct of trials;
  • To manage people’s courts organizationally and ensure independence of the courts from one another; and
  • To submit to the National Assembly laws and resolutions; to submit to the National Assembly Standing Committee ordinances and resolutions in accordance with the law.

Reflecting on the allocated powers of the Supreme people’s court, the cassation and reopening trial decisions of its Judicial council are of the greatest significance and importance, and come into enforcement immediately.

Furthermore, as for the appearance of the new Superior people’s court, its duties will be as follows:

  • To conduct appellate trials of cases in which the first-instance judgments, or decisions of people’s courts of provinces or centrally run cities within their territorial jurisdiction which have not yet taken legal effect, are appealed or protested against in accordance with the procedural law.
  • To conduct the trial according to cassation or reopening procedure of cases in which judgments or decisions of people’s courts of provinces, centrally run cities, rural districts, urban districts, towns, provincial cities, or the equivalent authority within their territorial jurisdiction which have taken legal effect are protested against in accordance with the procedural law.

The Court of provinces and centrally-run cities no longer have the right to conduct a trial according to cassation or reopening of a case anymore, as those duties have now been allocated to the Superior people’s court. The remaining court does not change its duties.

  • Plan to apply the new LOPC

To implement the new LOPC, the National Assembly Standing Committee (NASC) issued Resolution No.81/2014/QH13 (Resolution No.81) on implementation of LOPC on November 24, 2014. Resolution No. 81 provided further clarification for adopting the new adjudicating levels as regulated in Resolution No.81.

Until the effective date of the new LOPC, the Chief Justice of the Supreme people’s court shall prepare the organization structure, personnel and other necessary conditions for the new adjudicating levels (Art 1.1 of Resolution No.81). The Judicial council of the Supreme people’s court has to transfer its duties and power to that which is newly established, in accordance with the new LOPC (Art 2.1 of Resolution No.81).

In the Meeting on May 14, 2015, NASC decided to establish three (03) main Supreme people’s courts (in Ha Noi, Da Nang and Ho Chi Minh City) based on the current appellate courts of the Supreme people’s court. This will ensure the adaptability related to the structural organization, facilities and personnel of the new Supreme people’s court established under the new LOPC.

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 or visit the website: Http://LNTpartners.com