Corporate law focuses on State-owned enterprises

The draft amendment to the 2005 Vietnam Law on Enterprises focuses on the practices of State-owned enterprises (SOEs) together with the rights, obligations of ownership and managerial process.

The draft reflects the growing pressure to restructure this driver of the economy. According to the new chapter proposed by the Ministry of Planning and Investment (MPI), the amended law would identify the roles and missions of all SOEs and also each SOE in particular.

The proposal legalises principles to secure and develop State capital in commercial operations.

In terms of ownership rights and obligation implementation, the draft proposes to separate the practice of ownership rights from other practices.

Every enterprise must have a representative body which takes responsibility before the Government and the National Assembly for State ownership practices in the enterprises. However, the body would not directly issue administrative orders or interrupt the enterprise's commercial operations.

The draft also regulates disclosure of periodic reports and requested information from SOEs.

Moreover, the Law on Enterprises 2005 has a lot of inadequacies, especially in business line registration and business establishment registration that confuse the administrative and practical processes, said Mai Dinh Manh, general secretary of the Vietnam Electro-technical Industry Association (Velina).

Nguyen Dinh Cung, acting director of the Central Institute for Economic Management (CIEM), cited by Securities Investment, said that in the draft to amend the Law on Enterprises, enterprises would not have to register business activities in the Business Register Certificate.

Under the current law, enterprises must register business activities and would be violating the Law on Enterprises if they carry out business activities not mentioned in the Business Register Certificate.

Experts said that enterprise registration is a formality required to start an enterprise. But how the enterprise operates or invests is the part of the process of developing that idea.

"The change would help implement a principle mentioned in the Constitution, that is, people are allowed to do business which the law does not ban," said Cung.

The draft also makes clear about the business registration procedure and certificates for conditional business status.

When entrepreneurs want to set up a business in any field, they will apply for the Business Register Certificate at a competent business registration agency. Afterward, if their businesses are assigned conditional business status, they must satisfy the requirements of specialised management agencies.