Page 247 - CRC_One Report 2021_EN

Business Overview and Performance Corporate Governance Financial Statements Enclosure

Decree 231 states that organizations may use The aforementioned laws as well as regulations issued
management and control system (“Control System 231”) under them allowed foreigners to invest in Vietnam with
that is appropriate for the prevention of legal offences some exceptions. For example, foreign investments
to disclaim liabilities related to the decree. Although were prohibited in projects that might cause damages
the law does not make Control System 231 mandatory, or threaten national security, public morality or public
organizations should use such system to avoid liabilities. health; broadcasting business; transportation business;
For example, if its top executive commits a crime, educational or training operations; hospitals or clinics.
the organization may not be held liable for the crime Legal stipulations of Vietnam had to comply with
if it can prove that: international conventions that Vietnam had agreed to.
In such context, foreign investments in Vietnam had
(1) The organization has prepared and implemented increased after Vietnam became a member of
Control System 231 prior to the crime; the World Trade Organization (WTO) and had to honor
its obligations under the WTO especially the Schedule
(2) The organization has assigned an independent of Specific Commitments in Services.
internal unit to supervise Control System 231;
Nearly one decade after the issuance of the aforementioned
(3) The person committing the crime has deceived laws on enterprises and investments, it became evident
Control System 231; and that a legal reform must happen to update Vietnamese
regulations on enterprises and investments for the purpose
(4) The internal unit in charge has correctly controlled of creating transparent and balanced environment.
and supervised Control System 231. In response to such need, the National Assembly of
Vietnam passed the Law on Enterprises No. 68/2014/QH13)
The organization needs to monitor the implementation of (“2014 Enterprise Law”) and the Law on Investment
Control System 231 on a continued as is to uphold No. 67/2014/QH13 on 26 November 2014 (“2014 Investment
its efficiency and also to ensure that its members have Law”) to replace the old laws from 1 July 2015 onward.
constantly complied with the system. Although these new laws are unable to deliver tangible
changes, they reflect Vietnam’s efforts to ease foreign
C. Vietnam investors’ burdens through the following amendments:

1. Laws on Enterprises and Investments 1.1 Connected Transactions

In 1999, Vietnam passed the Law on Enterprises for While the 2014 Enterprise Law gives a broad definition
the first time to create a modern legal system for of connected persons, it does not govern all types of
the establishments and operations of private enterprises. their transactions. Only contracts/transactions between
This law has made a major change-enabling the Joint Stock Company (“JSC”) or Limited Liability
the registration of a company instead of requiring Company (“LLC”) and some of its connected persons are
a company to seek a license that was granted on under the 2014 Enterprise Law. In JSC cases, connected
authorities’ judgments. On 29 November 2005, persons mean (1) any shareholder holding more than
the National Assembly of the Socialist Republic of 10 per cent of the JSC’s already-issued shares, his/her
Vietnam (“National Assembly of Vietnam”) cleared authorized person, and persons related to such person;
the new Law on Enterprises (with amendments made (2) Members of the JSC Board of Directors/committees,
through Law No. 38/2009/QH12 on 19 June 2009). managing director, chief executive officers, and persons
It also passed Law on Investment with aim to streamline related to them; (3) A business owned by Members of
bureaucratic procedures and promote equal treatments the JSC Board of Directors/committees/Audit Committee,
towards Vietnamese and foreign businesses. managing director, or manager or having such persons
as its shareholders; and (4) A business jointly or
separately owned by persons related to Members of
the JSC Board of Directors/committees/Audit Committee,
managing director, or manager or having such persons

Annual Report 2021 (Form 56-1 One-Report) 247