LAW ON ENTERPRISES

(No. 13/1999/QH10 on the 12 of June, 1999)

In order to contribute to promoting the internal resources for the cause of national industrialization and modernization; to accelerate the economic reforms, to ensure freedom and equality in business of enterprises of all economic sectors before law; to protect the lawful rights and interests of investors; to enhance the effectiveness of State management over business activities;

Pursuant to the 1992 Constitution of the Socialist Republic of Vietnam;

This Law prescribes limited liability companies, joint-stock companies, partnerships and private enterprises.

Chapter I

GENERAL PROVISIONS

Article 1.- Governing scope

1. This Law prescribes the establishment, management organization and operation of enterprises of various types: limited liability companies, joint-stock companies, partnerships and private enterprises.

2. State-owned enterprises and enterprises of political organizations or socio-political organizations, upon being converted into limited liability companies or joint-stock companies, shall be subject to this Law. The Government shall stipulate the rules and procedures for such conversion.

Article 2.- Application of the Law on Enterprises and relevant laws

The establishment, management organization and operation of enterprises on the Vietnamese territory shall comply with this Law and other relevant legislation.

Where a difference exists on the same issue between this Law and a specialised law, the provisions of the specialised law shall apply.

Article 3.- Interpretation of terms

In this Law, the following terms shall be construed as follows:

1. "Enterprise" means an economic organization having its own name, assets and a fixed transaction office, and having business registration as prescribed by law in order to conduct business operations.

2. "Business" means the conduct of one, several or all of the stages of the investment process, from production to sale of products or provision of services on the market for profits.

3. "Regular dossiers" means the dossiers comprising all the papers as required by this Law, having complete and true contents as required by law.

4. "Capital contribution" means the transfer of assets into a company so as to become the owner or a joint owner of the company. Assets used for capital contribution may be in Vietnamese currency, freely convertible foreign currency, gold, value of land use rights, value of intellectual property, technology, technical know-hows, or other assets recorded in the Charter of the company as being contributed by the members to form the capital of the company.

5. "Contributed capital share" means the ratio of capital contributed by the owner or the joint owners of the company to the charter capital.

6. "Charter capital" means the amount of capital contributed by all members and stated in the Charter of the company.

7. "Legal capital" means the minimum amount of capital required by law for the establishment of an enterprise.

8. "Voting capital" means the amount of capital contribution entitling the owner to vote on matters decided by the Members’ Council or the General Assembly of Shareholders.

9. "Dividend" means the amount paid from the profits of the company for each share annually.

10. "Founding member" means a person involved in approving the first Charter of the company. "Founding shareholder" means a founding member of a joint-stock company.

11. "Partnership member" means a partner who is liable for the obligations of the company with all his/her assets.

12. "Manager of an enterprise" means the owner of a private enterprise, the partner of a partnership, a member of the Members’ Council, chairman of a company, a member of the Board of Management, Director (General Director) and other key managerial positions as stated in the Charter in case of a limited liability company or a joint-stock company.

13. "Reorganization of an enterprise" means the division, separation, merger, consolidation and conversion of an enterprise.

14. "Related person" means persons related to each other in the following cases:

a/ Parent enterprise and subsidiary enterprises;

b/ An enterprise and a person or a group of persons being able to control its decision making process and operations through the management bodies of the enterprise;

c/ An enterprise and its manager;

d/ A group of persons who agree to hold together the shares of intributed capital, shares or interests in a company or to control the decision-making process of the company;

e/ Husband, wife, father, adoptive father, mother, adoptive mother, children, adopted children, siblings of the manager of an enterprise, member of a company, shareholder holding a controlling share.

Article 4.- The State’s guarantees for enterprises and their owners

1. The State recognizes the long-term existence and the development of types of enterprise provided for in this Law, ensures the equality of enterprises before law, and recognizes the lawful profit-making nature of business activities.

2. The State recognizes and protects the ownership over assets, investment capital, income and other lawful rights and interests of enterprises and their owners.

3. The lawful assets and investment capital of enterprises and their owners shall not be nationalized or expropriated by administrative measures.

Where it is really necessary for the reason of national defense or security and in the national interest, the State decides to acquire or requisition the assets of an enterprise, the owner or joint owners of the enterprise shall be paid or compensated at the market price determined at the time of the decision of acquisition or requisition and will be given favorable conditions to invest and conduct business in the appropriate field or area.

Article 5.- Vietnamese Communist Party organizations, Trade Unions and other socio-political organizations in enterprises

Vietnamese Communist Party organizations in enterprises shall operate in accordance with the Constitution, the laws and the regulations of the Vietnamese Communist Party.

Trade union organizations and other socio-political organizations in enterprises shall operate in accordance with the Constitution and the laws.

Article 6.- Lines of business

1. As prescribed by law, an enterprise may autonomously register and conduct lines of business other than those stipulated in Clauses 2, 3 and 4 of this Article.

2. Lines of business detrimental to national defense, security, social order and safety, historical, cultural and ethical traditions, Vietnamese fine customs and traditions and the people’s health are prohibited. The Government shall publish the list of prohibited lines of business.

3. Where a law, an ordinance or a decree prescribes conditions for the conduct of a line of business, an enterprise may only conduct such line of business if it satisfies all the prescribed conditions.

4. Where a law, an ordinance or a decree requires an amount of legal capital or a practicing certificate for a line of business, an enterprise may only register such line of business if it has sufficient capital or a practicing certificate as required by law.

Article 7.- Rights of an enterprise

As prescribed by law, an enterprise operating under this Law shall have the rights to:

1. Possess, use and dispose of its assets;

2. Take initiative in selecting lines of business and areas for investment, the form of investment including joint venture with or capital contribution to other enterprises as well as in expanding the scope and lines of business;

3. Take initiative in seeking markets and customers and signing contracts;

4. Select the form and way of mobilizing capital;

5. Conduct import and export business;

6. Recruit, employ and use labor in accordance with business requirements;

7. Conduct business autonomously, apply modern and scientific management methods in order to raise the efficiency and competitiveness;

8. Refuse and report any demand by any individual, body or organization for supply of any resources not prescribed by law, except for voluntary contributions for public-interest or humanitarian purposes;

9. Other rights as provided for by law.

Article 8.- Obligations of an enterprise

An enterprise operating under this Law shall have the obligations to:

1. Conduct business strictly in accordance with the registered lines of business;

2. Open accounting books, make entries in accounting books, invoices, vouchers and prepare financial statements truly and accurately;

3. Register, declare and pay taxes and perform other financial obligations as provided for by law;

4. Ensure the goods quality in accordance with the registered standards;

5. Declare and periodically report fully and accurately the information regarding the enterprise and its financial stituation with the business registration body; promptly correct the information with the business registration body upon detection of inaccurate, incomplete or falsified declaration or report of information;

6. Give priority to the employment of domestic labor, to ensure rights and interests of laborers as prescribed by the labor legislation; respect the rights of trade union organizations in accordance with the trade unions legislation;

7. Comply with law provisions on national defense, security, social order and safety, protection of natural resources and the environment, protection of historical and cultural relics and places of interests;

8. Fulfill other obligations as prescribed by law.

Chapter II

ESTABLISHMENT AND BUSINESS REGISTRATION

Article 9.- The right to establish and manage enterprises

Organizations and individuals have the right to establish and manage enterprises, except for the following cases:

1. State bodies and units of people’s armed forces using State assets and public funds to establish enterprises to make profits for their own bodies and units;

2. State officials and employees as prescribed by the legislation on State officials and employees;

3. Officers, non-commissioned officers, career servicemen, national defense workers in bodies or units of the People’s Army; officers, career non-commissioned officers in bodies or units of the People’s Police;

4. Management personnel, professional management personnel in the State enterprises, except for those appointed to be representatives to manage the State’s share of contributed capital in other enterprises;

5. Minors; adults whose capacity for civil acts is restricted or lost;

6. Persons being examined for penal liability or in the process of serving imprisonment sentences or having their practicing right revoked by a Court for having committed smuggling, producing fake goods, trading in fake goods, conducting illegal business, tax evasion, deceiving clients and other offences as provided for by law;

7. The owner of a private enterprise, the partners of a partnership, the Director (General Director), chairman and members of the Board of Management or the Members’ Council of an enterprise which has been declared bankrupt may not establish an enterprise, may not act as manager of an enterprise for one to three years from the date of declaration of bankruptcy of the enterprise, except for the cases stipulated in the Law on Business Bankruptcy;

8. Foreign organizations and individuals not having permanent residence in Vietnam.

Article 10.- The right to contribute capital

1. Organizations and individuals may contribute capital into limited liability companies, joint-stock companies and partnerships except for the following cases:

a/ State bodies and units of people’s armed forces using State assets and public funds to contribute capital into enterprises to make profits for their own bodies and units;

b/ Subjects not entitled to contribute capital into enterprises as prescribed by the legislation on State officials and employees.

2. Foreign organizations, foreign individuals not having permanent residence in Vietnam and overseas Vietnamese may contribute capital into limited liability companies, joint-stock companies, partnerships in accordance with the Law on Domestic Investment Promotion.

Article 11.- Contracts to be signed prior to business registration

1. A founding member or a representative authorised by the group of founding members may sign contracts for the purpose of the establishment of the enterprise;

2. Where the enterprise is established, the enterprise will assume the rights and obligations arising from the signed contracts referred to in Clause 1 of this Article;

3. Where the enterprise is not established, the person who signed the contracts under Clause 1 of this Article shall be solely or jointly liable for the performance of such contracts.

Article 12.- Procedures for establishment of an enterprise and registration of business

1. The founder of an enterprise must prepare and submit all the business registration dossiers as prescribed by this Law to the business registration body under the People’s Committee of the province or centrally-run city where the enterprise is headquartered and will be responsible for the accuracy and truthfulness of the business registration dossiers.

2. The business registration body is not entitled to request the founder of an enterprise to submit additional documents other than those prescribed by this Law for each type of enterprise. The business registration body shall be responsible for only the regularity of the business registration dossiers.

3. The business registration body shall have to register the business within fifteen days from the date of receipt of the dossiers; where the business registration certificate is refused, the founder of the enterprise must be notified thereof in writing. The notice must clearly state the reasons and the amendments or supplements required.

Article 13.- Business registration dossiers

A business registration dossier shall comprise:

1. The application for business registration;

2. The charter in case of companies;

3. The list of members in case of a limited liability company, the list of partnership members in case of a partnership, the list of founding shareholders in case of a joint-stock company;

4. For enterprises conducting lines of business which require legal capital, the certification of capital by the competent body or organization as prescribed by law is additionally required.

Article 14.- Contents of the application for business registration

1. An application for business registration must contain the following principal contents:

a/ Name of the enterprise;

b/ Address of the head office of the enterprise;

c/ Objectives and lines of business;

d/ Charter capital in case of a company, or initial investment capital of the owner of the enterprise in case of a private enterprise;

e/ The share of capital contributed by each member in case of a limited liability company or a partnership; the number of shares subscribed for by the founding shareholders, types of shares, face value of shares and the total number of shares of each type to be offered in case of a joint-stock company;

f) Full names, signatures, permanent address(es) of the owner(s) of the enterprise in case of a private enterprise; of the legal representative in case of a limited liability company or a joint-stock company; of all partners in case of a partnership.

2. An application for business registration shall be made in a standard form prescribed by the business registration body.

Article 15.- Contents of the Charter of a company

The Charter of a company must contain the following principal contents:

1. Names and addresses of the head office, branch, representative office (if any);

2. Objectives and lines of business;

3. Charter capital;

4. Full names and addresses of all partners in case of a partnership; names, addresses of members in case of a limited liability company; names and addresses of founding shareholders in case of a joint-stock company;

5. The contributed capital share and its value of each member in case of a limited liability company or a partnership; the number of shares subscribed for by founding shareholders, face value of shares and the total number of shares of each type to be offered for sale, in case of a joint-stock company;

6. Rights and obligations of members in case of a limited liability company or a partnership; of shareholders in case of a joint-stock company;

7. Management and organizational structure;

8. Legal representative in case of a limited liability company or a joint-stock company;

9. Procedures for approving decisions of the company; principles for resolution of internal disputes;

10. Circumstances where a member may request the company to redeem his/her contributed capial share in a limited liability company or shares in a joint-stock company;

11. Assorted funds and the limits of each fund to be set up in the company; principles for distribution of profits, payment of dividends and loss bearing in the business;

12. Cases of dissolution, the order of dissolution and the procedures for liquidation of the assets of the company;

13. Procedures for amending or supplementing the Charter of the company;

14. Signatures of all partners in case of a partnership; of the legal representative or all members in case of a limited liability company; of the legal representative or all founding shareholders in case of a joint-stock company.

Other contents of the Charter of the company shall be agreed upon by the members or shareholders but may not contradict the provisions of law.

Article 16.- List of members of a limited liability company, partnership, list of founding shareholders of a joint-stock company.

The list of members of a limited liability company, partnership, the list of founding shareholders of a joint-stock company must contain the following principal details:

1. Names and addresses of members in case of a limited liability company or a partnership; of founding shareholders in case of a joint-stock company;

2. Share of contributed capital and its value, type of assets, quantity, residual value of each type of asset contributed as capital, time schedule for capital contribution in case of a limited liability company or a partnership; the number of shares, type of shares, type of assets, quantity of assets, residual value of each asset contributed into the share capital, time schedule for contribution to the share capital in case of a joint-stock company;

3. Full names and signatures of the legal representative or all the members, founding shareholders, in case of a limited liability company or a joint-stock company; of all the partners in case of a partnership.

Article 17.- Conditions for granting of business registration certificate and the time of business commencement.

1. An enterprise shall be granted a business registration certificate if it satisfies all the following conditions:

a/ Its line of business is not prohibited;

b/ The name of the enterprise complies with the provisions of Clause 1, Article 24 of this Law;

c/ Having regular business registration dossiers as prescribed by law;

d/ Paying fully business registration fee as prescribed.

2. An enterprise may commence its business from the date of issue of the business registration certificate. For lines of business subject to conditions, an enterprise may only conduct business from the date it is granted the business registration certificate by the competent State body or when it satisfies all the prescribed conditions.

Article 18.- Content of a business registration certificate

A business registration certificate must contain the following principal details:

1. Names and addresses of the head office of the enterprise, branch or representative office (if any);

2. Objectives and lines of business;

3. Charter capital, in case of a limited liability company, joint-stock company or a partnership; initial investment capital, in case of a private enterprise; legal capital, in case of an enterprise conducting a line of business which requires legal capital;

4. Full names and permanent address of the legal representative of the enterprise;

5. Names and addresses of members, in case of a limited liability company; of founding shareholders, in case of a joint-stock company; full names and permanent residence addresses of partners, in case of a partnership.

Article 19.- Alterations of business registration

1. When any changes are made to the names, addresses of the head office, branch, representative office (if any), objectives and line of business, charter capital, investment capital of the owner of the enterprise, change of the manager, legal representative of the enterprise and other matters included in the business registration dossiers, the enterprise must register with the business registration body no later than 15 days before effecting the changes.

2. In case where any change is made to the content of the business registration certificate, the enterprise will be granted a new business registration certificate; in case of other changes, the enterprise will be granted a certificate of business registration alteration.

Article 20.- Providing information on business registration

1. Within seven days from the date of issuance of the business registration certificate or the certificate of business registration alteration, the business registration body must send a copy of such certificate to the tax office, statistics office, the economic or technical administrative body at the same level, the People’s Committee of the rural or urban district, township or provincial city where the enterprise is headquartered.

2. Organizations and individuals may request the business registration body to provide information on business registration, to grant a copy of business registration certificate, certificate of business registration alteration or a business registration extract and shall have to pay fees as prescribed by law.

3. The business registration body shall have to provide fully and promptly the information on business registration required by organizations and individuals, as provided for in Clause 2 of this Article.

Article 21.- Publication of business registration

1. Within thirty days from the date it is granted the business registration certificate, the enterprise must publish on a local newspaper or a central daily for three consecutive issues the following principal contents:

a/ Name of the enterprise;

b/ Addresses of the head office of the enterprise, branch, representative office (if any);

c/ Objectives and lines of business;

d/ Charter capital, in case of a limited liability company, a joint-stock company or a partnership; initial investment capital, in case of a private enterprise;

e/ Names and addresses of the owner, all founding members;

f/ Full name and permanent residence address of the legal representative of the enterprise;

g/ The place of business registration.

2. When any change is made to the business registration, the enterprise shall have to make public such change as prescribed in clause 1 of this Article.

Article 22.- Transfer of ownership of assets

1. After being granted the business registration certificate, persons who undertake to contribute capital into a limited liability company, a joint-stock company or a partnership shall have to transfer the ownership of the assets contributed as capital to the company according to the following regulations:

a/ For registered assets or the value of the land use right, the person contributing capital shall have to carry out the procedures for the transfer of the ownership over such assets or the value of the land use right to the company at the competent State body.

The transfer of ownership of assets contributed as capital is not liable to registration fee;

b/ For assets the ownership over which is not registered, the capital contribution is made by the transfer and receipt of assets, as evidenced by minutes.

The minutes of such transfer and receipt must contain the following principal details: name and head office address of the company; name and address of the person making the capital contribution; type of asset and number of units of asset contributed as capital; the total value of assets contributed as capital and the percentage of the total value of such assets in the charter capital of the company; the date of transfer and receipt; signature of the person making the capital contribution and the legal representative of the company;

c/ Shares or capital contributions in the form of assets other than Vietnamese currency, freely convertible foreign currency or gold will be deemed contributed when the legal ownership over the assets contributed as capital is transferred to the company.

2. Assets used for the business of private enterprises shall not have to go through the procedures for transferring the asset ownership to the enterprises.

Article 23.- Valuation of assets contributed as capital

1. Assets contributed as capital which are not Vietnamese currency, freely convertible currency or gold must be valued.

2. For assets contributed as capital to the enterprise upon its establishment, all the founding members shall be the valuers of such assets. The value of assets contributed as capital must be approved on the principle of consensus.

3. In the course of operation, the Board of Management of a joint-stock company, the Members’ Council of a limited liability company or all the partners of a partnership shall be the valuers of assets contributed as capital.

4. People valuing assets referred to in Clauses 2 and 3 of this Article must be responsible for the truthfulness and accuracy of the value of assets contributed as capital. Where an asset contributed as capital is valued higher than its actual value at the time of contribution, the contributor and the valuers of such assets shall have to make contributions to ensure the full amount as valued; if damage is caused to any other person, they must be jointly liable for compensation.

Where a person having related rights, obligations or interests proves that an asset contributed as capital was not valued at its actual value at the time of contribution, such person may request the business registration body to force the valuer to revalue the asset or to appoint a valuation organization to revalue the asset contributed as capital.

Article 24.- Name, head-office and seal of the enterprise

1. The name of an enterprise must:

a/ not be identical or cause confusion with the name of another enterprise which has registered its business;

b/ not contravene the nation’s historical traditions, culture, ethics and fine customs;

c/ be inscribed in Vietnamese and in addition may be inscribed in one or more foreign languages in smaller letters;

d/ Apart from the provisions stated in Points (a), (b) and (c) of this Clause, the type of enterprise must be clearly inscribed: for a limited liability company, the phrase "trach nhiem huu han" (limited liability) is abbreviated as "TNHH" (Ltd.); for a shareholding company, the term "co phan" (joint-stock ) is abbreviated as "Cp"; for a partnership, the term "hop danh" (partnership) is abbreviated as "HD"; for a private enterprise, the word "tu nhan" (private) is abbreviated as "TN".

2. The head office of an enterprise must be located on the Vietnamese territory; must have a definite address including the house number, street (or alley) name or the name of the village, commune, ward, township; district, provincial town; province or centrally-run city; telephone and fax numbers (if any).

3. An enterprise shall have its own seal as prescribed by the Government.

Article 25.- Representative offices and branches of an enterprise

1. A representative office is a dependent unit of the enterprise, having the task of representing under authorization the interests of the enterprise and protecting such interests. The operations of a representative office must be in line with the operations of the enterprise.

2. A branch is a dependent unit of the enterprise, having the task of performing the entire or part of the function of the enterprise, including the function of an authorized representative. The line of business of the branch must be in accordance with the line of business of the enterprise.

3. An enterprise may set up branches and representative offices at home and abroad. The order and procedures for setting up branches and representative offices shall be stipulated by the Government.

Chapter III

LIMITED LIABILITY COMPANIES

Section I. LIMITED LIABILITY COMPANIES WITH TWO MEMBERS OR MORE

Article 26.- Limited liability companies

1. A limited liability company is an enterprise, in which:

a/ A member is liable for the debts and other property obligations of the enterprise within the amount of capital he/she/it has undertaken to contribute to the enterprise;

b/ The share of contributed capital of each member may only be assigned in accordance with Article 32 of this Law;

c/ A member may be an organization or an individual; the number of members shall not exceed fifty.

2. A limited liability company shall not be entitled to issue shares.

3. A limited liability company has the legal person status as from the date it is granted the business registration certificate.

Article 27.- Capital contribution and granting of capital contribution certificates

1. Members shall have to contribute capital fully and on time as committed. Where a member fails to contribute it fully and on time as committed, the amount of capital not yet contributed shall be considered a debt that member owes the company; such member shall have to compensate for any damage arising from such failure to contribute capital fully and on time as committed.

The legal representative of the company must notify the business registration body in writing of the case referred to in Paragraph 1 of this Clause within thirty days from the date the contribution was due. If no written notice is delivered to the business registration body after this time limit, the member who has not fully contributed capital and the legal representative of the company must be jointly liable to the company for the amount of capital not yet contributed and any damage arising from the failure to contribute capital fully and on time as committed.

2. Upon the full payment of capital contribution, the member shall be granted a capital contribution certificate by the company. A capital contribution certificate must contain the following principal details:

a/ Name, head-office of the company;

b/ The serial number and the date of issue of the business registration certificate;

c/ Charter capital of the company;

d/ Names and addresses of the members;

e/ The members’ contributed capital shares and their values;

f/ The serial number and the date of issue of capital contribution certificate;

g/ Signature of the legal representative of the company.

3. Where a capital contribution certificate is lost, torn, burnt or otherwise destroyed, the member will be granted by the company a new capital contribution certificate and must pay fee as stipulated by the company.

Article 28.- Register of members

1. A company must forthwith set a register of members after business registration. A register of members must contain the following principal contents:

a/ Name and head-office of the company;

b/ Names, addresses and signatures of members or their legal representatives;

c/ Value of contributed capital at the time of contribution and the contributed capital share of each member; the time of capital contribution; the types of asset contributed as capital, quantity, value of each type of asset contributed as capital;

d/ Serial number and the date of issuance of capital contribution certificate of each member.

2. The register of members shall be kept at the head office of the company or elsewhere provided that written notice thereof is given to the business registration body and all the members.

Article 29.- Rights of a member

1. A member of a limited liability company has the right to:

a/ Be distributed with profits after the company has paid taxes and fulfilled other financial obligations as provided for by law in proportion to his/her/its share of contributed capital in the company;

b/ Attend meetings of the Members’ Council, discuss, make recommendations and vote on matters within the authority of the Members’ Council;

c/ Have the number of votes in proportion to his/her/its share of contributed capital;

d/ Have access to the register of members, books of account, annual financial reports, other documents of the company and receive extracts or copies of these documents;

e/ Be distributed with the residual value of assets of the company in proportion to his/her/its share of contributed capital in the company upon dissolution or bankruptcy of the company;

f/ Be given priority in making additional capital contributions to the company when it increases its charter capital; be entitled to assign partly or wholly his/her/its share of contributed capital;

g/ Initiate a lawsuit against the Director (General Director) when the Director (General Director) fails to properly perform his/her obligations and cause damage to the interest of such member;

h) Other rights stipulated in this Law and the Charter of the company.

2. A member or a group of members holding more than 35% of the charter capital or a smaller percentage as stipulated in the Charter of the company shall have the right to request that a meeting of the Members’ Council be convened to deal with issues within its authority.

Article 30.- Obligations of members

1. To contribute in full and on time the amount of capital as committed and to be liable for the debts and other property obligations of the company within the amount of capital he/she/it undertakes to contribute to the company.

2. To abide by the Charter of the company.

3. To observe decisions of the Members’ Council.

4. To fulfill other obligations stipulated in this Law and the Charter of the company.

Article 31.- Redemption of shares of contributed capital

1. A member may demand the company to redeem his/her/its share of contributed capital if such member votes against or objects in writing to a decision of the Members’ Council on the following issues:

a/ Amendment and/or supplement to the provisions of the Charter of the company relating to the rights and obligations of members, and rights and duties of the Members’ Council;

b/ Reorganization of the company;

c/ Other cases stipulated in the Charter of the company.

The demand for redemption of share of contributed capital must be made in writing and sent to the company within fifteen days from the date the decision is adopted on the issues stipulated in Points a, b and c of this Clause.

2. When a member makes a demand as stipulated in Clause 1 of this Article and no agreement can be reached on the price, the company shall have to redeem the contributed capital share of such member at the market price or at the price calculated according to the principles prescribed in the Charter of the company within fifteen days from the date of receipt of such demand.

Payment shall be made only if after the full payment for such redeemed share of contributed capital , the company is still able to pay all debts and fulfill other property obligations.

Article 32.- Assignment of contributed capital shares

Members of limited liability companies may assign a part or the whole of their shares of contributed capital to other persons according to the following regulations:

1. A member wishing to assign a part or whole of his/her/its share of contributed capital shall offer to sell such share of equity to all other members in proportion to their shares of equity in the company on the same terms;

2. Assignment to non members is permitted only if the other members of the company do not buy or do not buy out.

Article 33.- Dealing with shares of contributed capital in other cases

1. Where a member being an individual who is dead or who is declared dead by the court, his/her heir may become a member of the company, if so approved by the Members’ Council.

2. Where a member’s capacity for civil acts is restricted or lost, the rights and obligations of such member in the company shall be exercised by his/her guardian, if the latter is approved by the Members’ Council.

3. Where an heir referred to in Clause 1 of this Article is not approved by the Members’ Council or does not wish to become a member, where the guardian of a member referred to in Clause 2 of this Article is not approved by the Members’ Council, or where a member being an organization is dissolved or bankrupt, the contributed capital share of such member shall be redeemed by the company in accordance with Article 31 of this Law or be assigned in accordance with Article 32 of this Law.

4. Where a member being an individual dies without heir or where his/her heir refuses to accept the inheritance or is deprived of his/her right to inherit, the company shall have to pay the value of such share contributed capital to the State budget.

Article 34.- Organizational and managerial structure of the company

A limited liability company with two members or more shall have a Members’ Council, Chairman of the Members’ Council and a Director (General Director). A limited liability company with more than eleven members must also have a Control Board. The powers, obligations and working regulations of the Control Board and the head of the Control Board shall be stipulated in the Charter of the company.

Article 35.- Members’ Councils

1. The Members’ Council comprises all members and is the highest decision-making body of the company. Where a member is an organization, such member shall appoint its representative to be on the Members’ Council. The Members’ Council shall meet at least once a year.

2. The Members’ Council shall have the following rights and duties:

a/ To decide orientation for the development of the company;

b/ To decide the increase or decrease of the charter capital, as well as the timing and method of mobilizing additional capital;

c/ To decide the form of investment and investment projects having a value larger than 50% of the total value of assets recorded in the accounting books of the company or a smaller percentage as stipulated in the Charter of the company;

d/ To approve contracts for loans or for sale of assets having a value equal to or larger than 50% of the value of assets recorded in the accounting books of the company or a smaller percentage as stipulated in the Charter of the company;

e/ To elect, remove or dismiss the Chairman of the Members’ Council; to make decisions on the appointment, removal or dismissal of the Director (General Director), chief accountant and other important managers stipulated in the Charter of the company;

f/ To make decisions on salary and other benefits for the Director (General Director), chief accountant and other important managers stipulated in the Charter of the company;

g/ To approve annual financial reports, plans for use and distribution of profits or plans for dealing with losses of the company;

h/ To decide the organizational and managerial structure of the company;

i/ To decide the setting up of branches and representative offices;

j/ To make amendments or supplements to the Charter of the company;

k/ To decide reorganization of the company;

l/ To decide dissolution of the company;

m/ Other rights and duties stipulated in this Law and in the Charter of the company.

Article 36.- Chairman of the Members’ Council

1. The Members’ Council shall elect a member to be its Chairman. The Chairman of the Members’ Council may concurrently work as the Director (General Director) of the company.

2. The Chairman of the Members’ Council shall have the following rights and duties:

a/ To prepare working programs and plans of the Members’ Council;

b/ To prepare agendas, contents and documents for meetings of the Members’ Council or for consulting members;

c/ To convene and preside over meetings of the Members’ Council or to consult members;

d/ To supervise the implementation of decisions of the Members’ Council;

e/ To sign decisions of the Members’ Council on behalf of the Members’ Council;

f/ Other rights and duties prescribed in this Law and the Charter of the company.

3. The term of the Chairman of the Members’ Council shall not exceed three years. The Chairman of the Members’ Council may be re-elected.

4. Where the Charter of the company provides that the Chairman of the Members’ Council is the legal representative, such provision shall be clearly stated in all transaction documents.

Article 37.- Convening meetings of the Members’ Council

1. A meeting of the Members’ Council may be convened at any time at the request of the Chairman of the Members’ Council or of a member or a group of members stipulated in Clause 2 of Article 29 of this Law.

2. The agenda and documents for a meeting must be sent to members of the company prior to the opening day of the meeting. Such prior period shall be stipulated in the Charter of the company.

Article 38.- Conditions and procedures for conducting meetings of the Members’ Council

1. A meeting of the Members’ Council shall be conducted when the attending members represent at least 65% of the charter capital. The specific percentage shall be stipulated in the Charter of the company.

2. Where a meeting does not take place because the condition stipulated in Clause 1 of this Article is not satisfied, the meeting may be convened for the second time within fifteen days from the date the first meeting was intended to be opened. A meeting of the Members’ Council which is convened for the second time shall be conducted when the attending members represent at least 50% of the charter capital. The specific percentage shall be stipulated in the Charter of the company.

3. Where a meeting which has been convened for the second time does not take place because the condition stipulated in Clause 2 of this Article is not satisfied, it may be convened for the third time within ten days from the date the second-time meeting was intended to be opened. In this case, the meeting of the Members’ Council shall be conducted regardless of the number of attending members.

4. A member may authorize another member in writing to attend a meeting of the Members’ Council. The procedures for conducting meetings of the Members’ Council and the voting method shall be stipulated by the Charter of the company.

Article 39.- Decisions of the Members’ Council

1. The Members’ Council shall make decisions within its authority by way of voting at meetings or obtaining written opinions.

2. A decision of the Members’ Council shall be passed at a meeting when:

a/ It is approved by the number of votes representing at least 51% of the capital of the attending members. The specific percentage shall be stipulated in the Charter of the company;

b/ With regard to decisions to sell assets having a value equal to or larger than 50% of the total value of assets recorded in the accounting books of the company or a smaller percentage as stipulated in the Charter of the company, to make amendments and supplements to the Charter of the company and/or to reorganize or dissolve the company, they must be approved by the number of votes representing at least 75% of the capital of the attending members. The specific percentage shall be stipulated in the Charter of the company.

3. A decision of the Members’ Council shall be passed by way of obtaining written opinions if it is approved by members representing at least 65% of the charter capital. The specific percentage shall be stipulated in the Charter of the company.

Article 40.- Minutes of meetings of the Members’ Council

1. All meetings of the Members’ Council shall be recorded in the book of minutes of the company.

2. Minutes of each meeting of the Members’ Council shall be completed and approved prior to the closing of the meeting. The minutes must include the following principal contents:

a/ Time and venue of the meeting;

b/ Total number of attending members and the percentage of charter capital they represent;

c/ Agenda;

d/ Summary of statements made at the meeting;

e/ Matters voted upon, results of voting on each matter and decisions passed;

f/ Full name and signature of the Chairman of the Members’ Council or of the person authorized by the Chairman of the Members’ Council to preside over the meeting.

Article 41.- Director (General Director)

1. The Director (General Director) of the company is the person who manages the day-to-day business operation of the company, and who is answerable to the Members’ Council for the exercise of his/her rights and performance of his/her obligations. Where the Charter of the company does not provide for the Chairman of the Members’ Council to be the legal representative, the Director (General Director) shall be the legal representative of the company.

2. The Director (General Director) shall have the following rights:

a/ To organize the implementation of decisions of the Members’ Council;

b/ To decide all matters relating to the day-to-day business operation of the company;

c/ To organize the implementation of the business plans and investment plans of the company;

d/ To issue the regulations on internal management of the company;

e/ To appoint, remove or dismiss management personnel in the company except for those under the competence of the Members’ Council;

f/ To sign contracts in the name of the company, except for those under the competence of the Chairman of the Members’ Council;

g/ To make recommendations regarding the organizational structure of the company;

h/ To submit the final annual financial report to the Members’ Council;

i/ To recommend the plan for use of profits or for dealing with losses in business;

k/ To recruit employees;

l/ Other rights stipulated in the Charter of the company and in the labor contract which the Director (General Director) enters into with the company and in accordance with the decision of the Members’ Council.

3. The Director (General Director) shall have the following obligations:

a/ To exercise his/her delegated rights and perform his/her assigned duties honestly and diligently in the lawful interests of the company;

b/ Not to abuse his/her position and power nor to use assets of the company for personal benefits of his/her own or of other persons; not to disclose secrets of the company except where approved by the Members’ Council;

c/ When the company fails to pay fully all debts and other property obligations which are due and payable, to inform all members and creditors of the company of the financial situation of the company; not to increase salary or to pay bonuses to employees of the company, including managers; to be personally liable for any damage caused to creditors due to failure to perform the obligation stipulated in this Point; and to recommend measures to overcome the financial difficulties of the company;

d/ To perform other obligations stipulated by law and the Charter of the company.

Article 42.- Contracts which must be approved by the Members’ Council

1. All members of a company must be informed of all economic, labor and civil contracts between the company and any of its member, Director (General Director) or any of their related persons no later than fifteen days prior to signing of such contracts.

2. Where a member discovers a sign of personal gains in any contract, he/she may request the Members’ Council to consider and make a decision. In this case, the contract may only be signed after a decision has been made by the Members’ Council. If the contract is signed without prior approval of the Members’ Council, such contract shall be void and be null and dealt with according to law. Persons causing damage to the company must compensate for such damage and return to the company any benefits gained from the performance of such contract.

Article 43.- Increase and reduction of the charter capital

1. By decisions of the Members’ Council, the company may increase its charter capital by way of:

a/ Increasing the contributed capital of members;

b/ Increasing the charter capital relative to the increased value of assets of the company;

c/ Receiving contributed capital from new members.

2. In case of increase of contributed capital of members, the additionally contributed capital shall be divided to each member in proportion to his/her contributed capital share in the charter capital of the company. If a member does not contribute additional capital, such share of capital shall be divided amongst other members in proportion to their respective shares of contributed capital.

3. By decisions of the Members’ Council, the company may reduce its charter capital by way of:

a/ Returning part of the contributed capital to members in proportion to their respective shares of capital in the charter capital of the company;

b/ Reducing the charter capital relative to the reduced value of assets of the company;

The company may only reduce its charter capital in accordance with the provisions in Point a of this Clause if, following such return of contributed capital to the members, the company is still able to pay all debts and other property obligations.

Article 44.- Conditions for distribution of profits

A limited liability company may only distribute profits to its members when it earns profits from its business, has fulfilled its tax and other financial obligations in accordance with the provisions of law, and right after such distribution of profits, the company is still able to pay all due debts and other property obligations.

Article 45.- Recovery of returned shares of contributed capital or distributed profits

Where part of the contributed capital is returned because the charter capital is reduced not in accordance with Clause 3, Article 43 of this Law, or where profits are distributed to members not in accordance with Article 44 of this Law, all members must return to the company the amount of money or other assets they received or shall be jointly liable for a debt equal to the reduced amount of capital or the distributed amount of profits in proportion to their shares of contributed capital.

Section II. ONE-MEMBER LIMITED LIABILITY COMPANIES

Article 46.- One-member limited liability companies

1. A one-member limited liability company is an enterprise owned by one organization (hereinafter referred to as company owner); the owner shall be liable for all debts and other property obligations of the enterprise within the amount of the charter capital of the enterprise.

2. The company owner may assign whole or part of the charter capital of the company to other organizations and/or individuals.

3. One-member limited liability companies shall not be entitled to issue shares.

4. One-member limited liability companies shall have the legal person status from the date they are granted the business registration certificate.

Article 47.- Rights and obligations of a company owner

1. A company owner shall have the following rights:

a/ To decide the contents, amendments and/or supplements to the Charter of the company;

b/ To decide the organizational and managerial structure of the company, to appoint, remove or dismiss management personnel of the company as stipulated in Article 49 of this Law;

c/ To decide adjustments of the charter capital of the company;

d/ To decide investment projects having the value equal to or larger than 50% of the total value of the assets recorded in the accounting books of the company;

e/ To decide sale of assets having the value equal to or larger than 50% of the total value of the assets recorded in the accounting books of the company;

f/ To organize supervision, monitoring and assessment of the business operation of the company;

g/ To make decisions on the use of profits;

h/ To decide the reorganization of the company;

i/ Other rights stipulated in this Law and in the Charter of the company.

2. A company owner shall have the following obligations:

a/ To contribute capital in full and on time as registered;

b/ To comply with the Charter of the company;

c/ To comply with the law provisions on contracts regarding any purchase, sale, borrowing, lending, lease or rent between the company and the owner;

d/ To perform other obligations as prescribed by law.

Article 48.- Restrictions on rights of the company owner

1. The company owner may not directly withdraw a part or the whole of capital already contributed to the company.

2. The company owner may only withdraw capital by way of assigning a part or whole of the capital to other organizations or individuals.

3. The company owner may not withdraw profits of the company when the latter has not fully paid all due debts and other property obligations.

Article 49.- Organizational and managerial structure of the company

1. Depending on the scale and line of business, the organizational and managerial structure of a one-member limited liability company shall comprise the Board of Management and the Director (General Director), or the Chairman of the company and the Director (General Director).

2. Rights and obligations of the Board of Management or the Chairman of the company and of the Director (General Director) of a one-member limited liability company shall be stipulated in the Charter of the company based on this Law and other relevant provisions of law.

Article 50.- Increase and reduction of the charter capital

One-member limited liability companies may increase or reduce their charter capital by way of:

1. Increasing or reducing the capital contributed by the company owner;

2. Adjusting the charter capital corresponding to the value of assets of the company.

Chapter IV

JOINT-STOCK COMPANIES

Article 51.- Joint-stock companies

1. A joint-stock company is an enterprise in which:

a/ The charter capital is divided into equal portions called shares;

b/ Shareholders are liable for the debts and other property obligations of the enterprise within the amount of capital contributed to the enterprise;

c/ Shareholders may freely assign their shares to other persons, except for cases stipulated in Clause 3, Article 55 and Clause 1, Article 58, of this Law.

d/ Shareholders may be organizations or individuals; the minimum number of shareholders is three and there is no restriction on the maximum number.

2. Joint-stock companies may issue securities to the public in accordance with the legislation on securities.

3. Joint-stock companies have the legal person status from the date they are granted the business registration certificates.

Article 52.- Types of shares

1. Joint-stock companies must have ordinary shares. Owners of ordinary shares are called ordinary shareholders.

2. Joint-stock companies may have preference shares. Owners of preference shares are called preference shareholders.

Preference shares shall include the following types:

a/ Voting preference shares;

b/ Dividend preference shares;

c/ Redeemable preference shares;

d/ Other preference shares stipulated in the Charter of the company.

3. Only organizations authorized by the Government and founding shareholders may hold voting preference shares. The voting preference of founding shareholders are valid only for three years from the date the company is granted the business registration certificate. After that period, the voting preference shares of founding shareholders shall be converted into ordinary shares.

4. Persons who are entitled to purchase dividend preference shares, redeemable preference shares and other preference shares shall be stipulated in the Charter of the company or decided by the General Assembly of Shareholders.

5. Each share of the same type gives its holder the same rights, obligations and interests.

6. Ordinary shares may not be converted into preference shares. Preference shares may be converted into ordinary shares by decisions of the General Assembly of Shareholders.

Article 53.- Rights of ordinary shareholders

1. Ordinary shareholders have the right to:

a/ Attend and vote on all matters which fall under the jurisdiction of the General Assembly of Shareholders; each ordinary share carries one vote;

b/ Receive dividends at the rate decided by the General Assembly of Shareholders;

c/ Be given priority in subscribing for new shares offered for sale in proportion to the number of ordinary shares each shareholder holds in the company;

d/ Upon dissolution of the company, receive a part of the remaining assets in proportion to the number of shares held in the company after the company has paid its creditors and shareholders of other types.

e/ Other rights stipulated in this Law and the Charter of the company.

2. A shareholder or a group of shareholders holding more than 10% of the ordinary shares for a continuous period of six months or more, or holding a smaller percentage as stipulated in the Charter of the company, shall have the right to:

a/ Nominate candidates to the Board of Management and the Control Board (if any);

b/ Request the convention of a meeting of the General Assembly of Shareholders;

c/ Have access to and receive a copy or extract of the list of shareholders entitled to attend meetings of the General Assembly of Shareholders;

d/ Other rights stipulated in this Law and the Charter of the company.

Article 54.- Obligations of ordinary shareholders

1. To pay in full for the shares subscribed for and be liable for debts and other property obligations of the company within the amount of capital contributed to the company.

2. To abide by the Charter and the internal management rules of the company.

3. To observe decisions of the General Assembly of Shareholders and the Board of Management.

4. To perform other obligations as stipulated in this Law and the Charter of the company.

Article 55.- Voting preference shares and rights of voting preference shareholders

1. A voting preference share is a share which carries more votes than an ordinary share. The number of votes per voting preference share shall be stipulated in the Charter of the company.

2. Voting preference shareholders shall have the right to:

a/ Vote on matters which fall under the jurisdiction of the General Assembly of Shareholders with the number of votes in accordance with Clause 1 of this Article;

b/ Other rights as ordinary shareholders, except for case prescribed in Clause 3 of this Article.

3. Voting preference shareholders may not assign such shares to other persons.

Article 56.- Dividend preference shares and rights of dividend preference shareholders

1. A dividend preference share is a share for which dividend is paid at a rate higher than that paid on an ordinary share, or at an annual fixed rate. Annually paid dividends include fixed dividends and bonus dividends. Fixed dividends do not depend on the outcome of the business of the company. The specific rate of fixed dividends and method for determination of bonus dividends shall be stated in the certificate of dividend preference shares.

2. Dividend preference shareholders shall have the right to:

a/ Receive dividends at the rates prescribed in Clause 1 of this Article;

b/ Upon dissolution of the company, receive a part of the remaining assets in proportion to the number of shares held in the company after the company has fully paid its creditors and redeemable preference shareholders;

c/ Other rights as ordinary shareholders, except for cases prescribed in Clause 3 of this Article.

3. Dividend preference shareholders shall not have the right to vote, the right to attend meetings of the General Assembly of Shareholders, nor the right to nominate candidates to the Board of Management and the Control Board.

Article 57.- Redeemable preference shares and rights of redeemable preference shareholders

1. A redeemable preference share is a share which shall be redeemed by the company at any time at the request of its owner, or in accordance with the conditions stated in the redeemable preference share certificate.

2. Redeemable preference shareholders shall have other rights as ordinary shareholders, except for case prescribed in Clause 3 of this Article.

3. Redeemable preference shareholders shall not have the right to vote, the right to attend meetings of the General Assembly of Shareholders, nor the right to nominate candidates to the Board of Management and the Control Board.

Article 58.- Ordinary shares of founding shareholders

1. Within the first three years from the date the company is granted the business registration certificate, its founding shareholders must together hold at least 20% of the number of ordinary shares which may be offered for sale; ordinary shares of the founding shareholders may be assigned to persons not being shareholders if so approved by the General Assembly of Shareholders. Shareholders intending to assign shares may not vote on the assignment of such shares.

2. After the period of three years stipulated in Clause 1 of this Article, all restrictions upon ordinary shares of founding shareholders shall lose effect.

Article 59.- Share certificates

Certificates issued by a joint-stock company or book entries certifying the ownership of one or a number of shares of such company are called share certificates. Share certificates may or may not indicate names.

A share certificate must contain the following principal contents:

1. Name and head-office of the company;

2. Serial number and date of issuance of the business registration certificate;

3. Number and types of shares;

4. Par value of each share and the total par value of the shares inscribed on the share certificate;

5. Name of shareholder with regard to the share certificate which indicates the name;

6. Summary of the procedures for share assignment;

7. Specimen signature of the legal representative and seal of the company;

8. Registration number in the register of shareholders of the company and the date of issuance of the share certificate;

9. Preference share certificates shall also include other details as stipulated in Articles 55, 56 and 57 of this Law.

Article 60.- Register of shareholders

1. A joint-stock company shall establish and keep a register of shareholders from the date it is granted the business registration certificate. The register of shareholders may be in the form of a document or an electronic file, or both.

A register of shareholder must contain the following principal contents:

a/ Name and head-office of the company;

b/ Total number of shares to be offered for sale, types of shares to be offered for sale and number of shares of each type to be offered for sale;

c/ Total number of shares of each type already sold and the value of equity capital already contributed;

d/ Names of shareholders, address, number of shares of each type of each shareholder and date of share registration.

2. The register of shareholders shall be kept at the office of the company or other places, provided that the business registration body and all shareholders are informed thereof in writing

Article 61.- Sale offer and assignment of shares

1. The Board of Management shall decide the price at which shares are offered for sale. The price at which shares are offered for sale shall not be lower than the market price at the time of sale offer, except for the following cases:

a/ Initial offering of shares after the business registration;

b/ Shares offered for sale to all shareholders in proportion to the number of their existing shares in the company;

c/ Shares offered for sale to brokers or underwriters. In this case, the offered selling price of shares shall not be lower than the market price minus (-) the commission for brokers or underwriters. The commission shall be determined in percentage of the value of shares at the time of sale offer.

2. Shares are considered to have been sold or assigned when the details stipulated in Point d, Clause 1, Article 60 of this Law are correctly and fully recorded in the register of shareholders; from such point of time, the purchaser or assignee of shares becomes a shareholder of the company.

3. After the shares subscribed for are fully paid for, the company shall issue share certificates at the request of the shareholders. Where a share certificate is lost, torn, burnt or otherwise destroyed, the shareholder must immediately inform the company thereof and may request the company to issue a new share certificate then have to pay a fee stipulated by the company.

A company may sell shares without share certificates. In this case, the information about a shareholder stipulated in Point d, Clause 1, Article 60 of this Law recorded in the register of shareholders shall be sufficient to evidence the ownership of shares of such shareholder in the company.

4. The procedures for offering shares for sale shall comply with the legislation on securities.

Article 62.- Issue of bonds

1. A joint-stock company may issue bonds, convertible bonds and other types of bonds as prescribed by law and the Charter of the company.

2. The Board of Management shall decide the type of bonds, total value of bonds and timing of issuance.

Article 63.- Purchase of shares and bonds

Shares and bonds of joint-stock companies may be purchased in Vietnamese dong, freely convertible foreign currency(ies), gold, value of land use right, value of intellectual property, technology, technical know-how, or other assets stipulated in the Charter of the company, and shall be fully paid in one installment.

Article 64.- Redemption of shares upon demand by shareholders

1. A shareholder voting against a decision on reorganization of the company or on changes to the rights and obligations of shareholders stipulated in the Charter of the company may request the company to redeem his/her shares. Such request must be made in writing, clearly stating the name and address of the shareholder, the number of shares of each type, the intended selling price, and the reason for demanding redemption by the company. Such demand must be sent to the company within ten days from the date the General Assembly of Shareholders passes the decision on the matters referred to in this Clause.

2. The company must redeem shares at the request of shareholders as stipulated in Clause 1 of this Article at the market price or the price determined on the principle stipulated in the Charter of the company within a time-limit of ninety days from the date of receipt of the request. Where no agreement is reached on the price, the parties may request the arbitration or the court to settle matters according to provisions of law.

Article 65.- Redemption of shares by decisions of the company

A company may redeem not more than 30% of the total number of ordinary shares sold, and part or all of shares of other types sold according to the following regulations:

1. The redemption of more than 10% of the total number of shares of each type already sold shall be decided by the General Assembly of Shareholders. In other cases, redemption of shares shall be decided by the Board of Management.

2. The Board of Management shall decide the price for redemption of shares. The price for redemption of ordinary shares shall not be higher than the market price at the time of redemption, except for cases prescribed in Clause 3 of this Article. In respect of shares of other types, the price for redemption shall not be lower than the market price, unless otherwise provided for in the Charter of the company or agreed upon by the company and the relevant shareholders.

3. The company may redeem shares of each shareholder in proportion to the number of shares he/she/it holds in the company. In this case, the decision to redeem shares of the company shall be notified to all shareholders within thirty days from the date such decision is passed. The notice shall include the name and address of the company, total number of shares and types of shares to be redeemed, price for redemption or principle for determination of the price for redemption, procedures and time limit for payment, and procedures and time limit for shareholders to offer their shares for sale to the company. Shareholders must send an offer to sell their shares to the company within thirty days from the date of notice.

Article 66.- Conditions for payment and dealing with redeemed shares

1. A company may only pay shareholders for redeemed shares in accordance with Articles 64 and 65 of this Law if right after such redeemed shares are paid for, the company is still able to pay all its debts and other property obligations.

2. All shares redeemed in accordance with Articles 64 and 65 of this Law shall be considered shares not yet sold among the shares which may be offered for sale.

3. After the redeemed shares are fully paid for, if the total value of assets recorded in the accounting books of the company is reduced by more than 10%, the company must notify all creditors thereof within fifteen days from the date the redeemed shares are fully paid for.

Article 67.- Payment of dividends

1. A joint-stock company may only pay dividends to its shareholders when it earns profits from its business and has fulfilled its tax and other financial obligations in accordance with law, and when, after the payment of such dividends, the company is still able to pay all its due debts and other property obligations.

2. The Board of Management shall prepare a list of shareholders to be paid dividends and determine the rate of dividend paid for each share, the time-limit and mode of payment no later than thirty days prior to each payment of dividends. The notice on payment of dividends shall be sent to all shareholders no later than fifteen days prior to the actual payment of dividends. The notice shall specify the name of the company, name and address of the shareholder, the number of shares of each type held by such shareholder, the dividend rate for each share and the total dividends such shareholder is paid, and the time and method of dividend payment.

3. Where shares are assigned during the period between the completion of the list of shareholders and the time of payment of dividends, the share assignor shall receive dividends from the company.

Article 68.- Recovery of payments for redeemed shares or dividends

Where a payment for redeemed shares is made in contravention of Clause 1, Article 66 of this Law or where dividends are paid in contravention of Clause 1, Article 67 of this Law, all shareholders shall have to return to the company the money or other assets they have received; where a shareholder cannot return them to the company, such shareholder and members of the Board of Management shall be jointly liable for the debts of the company.

Article 69.- Organizational and managerial structure of joint-stock companies

Joint-stock companies must have the General Assembly of Shareholders, the Board of Management and the Director (General Director); joint-stock companies with more than eleven shareholders must also have the Control Board.

Article 70.- The General Assembly of Share-holders

1. The General Assembly of Shareholders shall comprise all shareholders who may vote and shall be the highest decision-making body of a joint-stock company.

2. The General Meeting of Shareholders shall have the following rights and duties:

a/ To decide the types of shares and total number of shares of each type to be offered for sale; to decide the rate of annual dividend for each type of shares;

b/ To elect, remove or dismiss members of the Board of Management and members of the Control Board;

c/ To consider and handle breaches committed by the Board of Management and the Control Board which cause damage to the company and its shareholders;

d/ To decide the reorganization and dissolution of the company;

e/ To decide the amendments and supplements to the Charter of the company, except for adjusting the charter capital as a result of sale of new shares within the number of shares which may be offered for sale as stated in the Charter of the company;

f/ To approve annual financial reports;

g/ To adopt the orientation for the development of the company, to decide the sale of assets having value equal to or larger than 50% of the total value of assets recorded in the accounting books of the company;

h/ To decide the redemption of more than 10% of the total number of already sold shares of each type;

i/ Other rights and duties stipulated in this Law and the Charter of the company.

Article 71.- Competence to convene meetings of the General Assembly of Shareholders

1. The General Assembly of Shareholders shall meet at least once a year.

2. The General Assembly of Shareholders shall be convened:

a/ By a decision of the Board of Management;

b/ At the request of a shareholder or a group of shareholders as provided for in Clause 2, Article 53 of this Law or of the Control Board in cases where the Board of Management seriously breaches the obligations of managers stipulated in Article 86 of this Law, or where the Board of Management passes a decision ultra vires, or other cases stipulated in the Charter of the company.

3. The Board of Management must convene a meeting of the General Assembly of Shareholders within thirty days from the date of receipt of the request stipulated in Point b, Clause 2 of this Article.

Where the Board of Management fails to do so, the Control Board shall replace the Board of Management in convening the meeting of the General Assembly of Shareholders in accordance with this Law.

Where the Control Board fails to convene the meeting, the requesting shareholder or group of shareholders stipulated in Point b, Clause 2 of this Article may replace the Board of Management and the Control Board in convening the meeting of the General Assembly of Shareholders in accordance with this Law.

All expenses for convening and conducting a General Assembly of Shareholders shall be made up for by the company.

4. The convenor shall have to prepare a list of shareholders entitled to attend meetings of the General Assembly of Shareholders, provide information and settle complaints relating to the list of shareholders, prepare the agenda and contents of the meeting, prepare documents, determine the time and venue of the meeting, and send an invitation to the meeting to each shareholder entitled to attend the meeting in accordance with this Law.

Article 72.- List of shareholders entitled to attend meetings of the General Assembly of Shareholders

1. The list of shareholders entitled to attend meeting of the General Assembly of Shareholders shall be prepared based on the register of shareholders of the company. The list of shareholders entitled to attend meeting of the General Assembly of Shareholders shall be prepared when a decision to convene a meeting is made, and must be completed no later than ten days before the opening date of the General Assembly of Shareholders’ meeting.

2. The list of shareholders entitled to attend meetings of the General Assembly of Shareholders shall specify the full name and permanent addresses, for individuals; and the names and offices, for organizations; and the number of shares of each type of each shareholder.

3. Every shareholder may be provided with the information relating to himself/herself stated in the list of shareholders entitled to attend meetings of the General Assembly of Shareholders.

4. The shareholder or group of shareholders stipulated in Clause 2, Article 53 of this Law shall have access to the list of shareholders entitled to attend meetings of the General Assembly of Shareholders.

5. A shareholder may demand correction of wrong information or supplement necessary information on himself/herself in the list of shareholders entitled to attend meetings of the General Assembly of Shareholders.

Article 73.- Agenda and contents of the General Meeting of Shareholders’ meeting

1. The convenor of a meeting of the General Assembly of Shareholders must prepare the agenda and contents of the meeting.

2. The shareholder or group of shareholders stipulated in Clause 2, Article 53 of this Law may recommend matters to be included in the agenda of meeting of the General Assembly of Shareholders. The recommendation must be made in writing and be sent to the company no later than three days before the date of opening. The recommendation must specify the name of shareholder, the number of shares of each type of the shareholder and the matters recommended for inclusion in the meeting agenda.

3. The convenor of a meeting of the General Assembly of Shareholders may only refuse the recommendation stipulated in Clause 2 of this Article in one of the following cases:

a/ The recommendation is not sent on time, is insufficient, or is of an irrelevant matter;

b/ The recommended issue does not fall under the jurisdiction of the General Assembly of Shareholders;

c/ Other cases stipulated in the Charter of the company.

Article 74.- Invitation to meetings of the General Assembly of Shareholders

1. The convenor of a meeting of the General Assembly of Shareholders shall send a written invitation to all shareholders entitled to attend the meeting no later than seven days before the date of opening.

2. Enclosed with the invitation shall be the agenda and discussion documents as the basis for passing decisions.

Article 75.- Right to attend meetings of the General Assembly of Shareholders

1. Shareholders may attend meetings of the General Assembly of Shareholders in person or authorize other persons in writing to do so.

2. Where shares are assigned during the period between the date of completion of the list of shareholders and the opening date of a meeting of the General Assembly of Shareholders, the share assignee shall be entitled to attend meeting of the General Assembly of Shareholders in place of the assignor in respect of the assigned shares.

Article 76.- Conditions and procedures for conducting meetings of the General Assembly of Shareholders

1. A meeting of the General Assembly of Shareholders shall be conducted when the number of attending shareholders represents at least 51% of the voting shares. The specific percentage shall be stipulated by the Charter of the company.

2. Where the first meeting cannot be held as the condition prescribed in Clause 1, this Article, is not met, the meeting may be convened for the second time within thirty days from the planned opening date of the first meeting. A General Assembly of Shareholders’ meeting which is convened for the second time shall be conducted when the number of attending shareholders represents at least 30% of the voting shares. The specific percentage shall be stipulated by the Charter of the company.

3. Where a meeting convened for the second time cannot take place as the condition prescribed in Clause 2, this Article is not met, it may be convened for the third time within twenty days from the planned opening date of the second meeting. In this case, the General Assembly of Shareholders shall meet, regardless of the number of attending shareholders.

4. Only the General Assembly of Shareholders may make changes to the meeting’s agenda sent together with the invitation as provided for in Clause 2, Article 74 of this Law.

5. The procedures for conducting meetings of the General Assembly of Shareholders and the form of voting shall be stipulated in the Charter of the company.

Article 77.- Approving decisions of the General Assembly of Shareholders

1. The General Assembly of Shareholders shall approve decisions which fall under its jurisdiction by way of voting at meetings or obtaining written opinions.

2. A decision of the General Assembly of Shareholders shall be passed at a meeting when:

a/ It is approved by a number of shareholders representing at least 51% of the total voting shares of all attending shareholders. The specific percentage shall be stipulated in the Charter of the company.

b/ For decisions on types of shares and number of shares of each type to be offered for sale; on amendments and supplements to the Charter of the company; on reorganization or dissolution of the company; on sale of more than 50% of the total value of assets recorded in the accounting books of the company, they must be approved by a number of shareholders representing at least 65% of the total voting shares of all attending shareholders. The specific percentage shall be stipulated in the Charter of the company.

3. Where a decision is passed by obtaining written opinions, a decision of the General Assembly of Shareholders shall be passed when it is approved by a number of shareholders representing at least 51% of the total voting shares. The specific percentage shall be stipulated in the Charter of the company.

4. Decisions of the General Assembly of Shareholders shall be notified to shareholders entitled to attend meetings of the General Assembly of Shareholders within fifteen days from the date of their approval.

Article 78.- Minutes of the General Assembly of Shareholders’ meetings

1. Meetings of the General Assembly of Shareholders shall be recorded in the minutes book of the company. A minutes must contain the following principal contents:

a/ Time and venue of the General Assembly of Shareholders’ meeting;

b/ Agenda;

c/ Chairman and secretary;

d/ Summary of opinions stated at the meeting of the General Assembly of Shareholders;

e/ Issues discussed and voted on at the meeting of the General Assembly of Shareholders; the number of votes in favor, number of votes against and number of votes in abstention; and issues already approved;

f/ Total number of votes of attending shareholders;

g/ Total number of votes for each issue voted on;

h/ Full names and signatures of the Chairman and secretary.

2. The minutes of a meeting of the General Assembly of Shareholders shall be completed and approved before the closing of the meeting.

Article 79.- Request for cancellation of decisions of the General Assembly of Shareholders

Within ninety days from the date a decision is approved, shareholders, Board of Management’s members, the Director (General Director) and the Control Board may demand that a court consider and cancel a decision of the General Assembly of Shareholders in the following cases:

1. The procedures for convening a meeting of the General Assembly of Shareholders fail to comply with this Law and the Charter of the company;

2. The content of the decision breaches the provisions of law or the Charter of the company.

Article 80.- The Board of Management

1. The Board of Management is the body managing the company, and shall have full authority to make decisions in the name of the company on all issues relating to the objectives and benefits of the company, except for issues which fall under the jurisdiction of the General Assembly of Shareholders.

2. The Board of Management shall have the following rights and duties:

a/ To decide the development strategies of the company;

b/ To recommend the types of shares and total number of shares of each type to be offered for sale;

c/ To decide the sale offer of new shares within the number of shares of each type which may be offered; to make decisions on mobilizing additional fund in other forms;

d/ To make decisions on investment plans;

e/ To decide solutions to market expansion, marketing and technology; to approve contracts for purchase, sale, borrowing, lending and other contracts having the value equal to or larger than 50% of the total value of assets recorded in the accounting book of the company or a smaller percentage stipulated in the Charter of the company;

f/ To appoint, dismiss or remove the Director (General Director) and other key managers of the company; to make decisions on the salaries and other benefits of such managers;

g/ To decide the organizational structure as well as internal management rules of the company, to decide the establishment of subsidiary companies, establishment of branches and/or representative offices, and the capital contribution to or purchase of shares from other enterprises;

h/ To submit annual final financial reports to the General Assembly of Shareholders;

i/ To recommend the dividend rates to be paid, to decide the time limit and procedures for payment of dividends or for dealing with losses incurred in the business operation;

k/ To decide the price offered for sale of shares and bonds of the company; to value assets contributed as capital which are neither Vietnamese currency, freely convertible foreign currency, nor gold;

l/ To approve the agendas and documents of meetings of the General Assembly of Shareholders; to convene the General Assembly of Shareholders’ meetings or to carry out the procedures for obtaining comments for approval of decisions of the General Assembly of Shareholders;

m/ To decide the redemption of not more than 10% of the number of shares of each type which have been sold;

n/ To recommend reorganization or dissolution of the company;

o/ Other rights and duties prescribed in this Law and the Charter of the company.

3. The Board of Management shall approve decisions by way of voting at meetings, obtaining written comments or otherwise as stipulated in the Charter of the company. Each member of the Board of Management shall have one vote.

4. The Board of Management shall be composed of not more than eleven members. The term, qualifications and specific number of members of the Board of Management shall be stipulated in the Charter of the company.

Article 81.- Chairman of the Board of Management

1. The Board of Management shall elect the Chairman of the Board of Management from its members. The Chairman of the Board of Management may act concurrently as the Director (General Director) of the company unless otherwise provided for by the Charter of the company.

2. The Chairman of the Board of Management shall have the following rights and duties:

a/ To prepare working plans and programs of the Board of Management;

b/ To prepare programs, agendas and documents for the Board of Management’s meetings; to convene and preside over meetings of the Board of Management;

c/ To organize the approval of the Board of Management’s decisions in other manners;

d/ To monitor the implementation of the decisions of the Board of Management;

e/ To preside over meetings of the General Assembly of Shareholders;

f/ Other rights and duties prescribed in this Law and the Charter of the company.

3. Where the Chairman of the Board of Management is absent or has lost the capacity to perform his assigned tasks, a member authorized by the Chairman of the Board of Management shall exercise the rights and perform the duties of the Chairman of the Board of Management. Where no one is authorized, the remaining members shall select one among them to temporarily hold the position of the Chairman of the Board of Management.

Article 82.- Meetings of the Board of Management

1. The Chairman of the Board of Management may convene meetings of the Board of Management:

a/ At least once every quarter, and may convene extraordinary meetings when necessary;

b/ At the request of the Control Board or other persons as prescribed in the Charter of the company.

2. A Board of Management meeting shall be conducted when it is attended by two thirds or more of the total members. A decision of the Board of Management is passed when it is approved by the majority of the attending members. In case of a tied vote, the final decision shall be in favor of the side with the vote of the Chairman of the Board of Management.

3. The procedures for convening and conducting a Board meeting shall be stipulated in the Charter or the internal management rules of the company.

4. The Board of Management’s meetings shall be fully recorded in the minutes book. The Chairman and the secretary shall be jointly responsible for the accuracy and truthfulness of minutes of Board meetings.

Article 83.- The Board of Management members’ right to be provided with information

1. Members of the Board of Management may request the Director (General Director), Deputy Director (Deputy General Director) and managers of other units in the company to provide information and documents on the financial situation and business operation of the company and of units in the company.

2. Managers who are so requested must provide all information and documents promptly and accurately as requested by members of the Board of Management.

Article 84.- Dismissal, removal and addition of members of the Board of Management

1. A member of the Board of Management shall be removed in the following cases where:

a/ His/her capacity for civil act is lost or restricted;

b/ He/she resigns;

c/ Other cases defined in the Charter of the company.

2. Members of the Board of Management shall be dismissed by decisions of the General Assembly of Shareholders.

3. Where the number of Board members is reduced to less than one third of the number stipulated in the Charter of the company, the Board of Management shall convene a meeting of the General Assembly of Shareholders within sixty days to elect additional Board members.

In other cases, the next meeting of the General Assembly of Shareholders shall elect new Board members to replace Board members who have been removed or dismissed.

Article 85.- Director (General Director) of the company

1. The Board of Management shall appoint one of its members or another person to be the Director (General Director). The Chairman of the Board of Management may concurrently act as the Director (General Director) of the company. Where the Charter of the company does not provide that the Chairman of the Board of Management is the legal representative, the Director (General Director) shall be the legal representative of the company.

Director (General Director) manages the day-to-day operation of the company and is answerable to the Board of Management for the exercise of his/her delegated powers and the performance of his/her assigned tasks.

2. Director (General Director) shall have the following powers and duties:

a/ To decide all issues relating to the day to day operation of the company;

b/ To organize the implementation of decisions of the Board of Management;

c/ To organize the materialization of business plans and investment plans of the company;

d/ To propose plans on the organizational structure and internal management rules of the company;

e/ To appoint, remove or dismiss management personnel in the company except for those appointed, removed or dismissed by the Board of Management;

f/ To make decisions on salary and allowances (if any) for employees of the company, including managers who may be appointed by the Director (General Director);

g/ Other powers and duties as prescribed by law, the Charter of the company and decisions of the Board of Management.

Article 86.- Obligations of managers of the company

The Board of Management, the Director (General Director) and other managers shall, within their responsibilities and powers, have the following obligations:

1. To exercise their delegated powers and perform their assigned tasks honestly and diligently in the interest of the company and of shareholders of the company;

2. Not to abuse their positions and powers or to use assets of the company for personal benefits of their own or of other persons; not to give away assets of the company to others; not to disclose secrets of the company, except where approved by the Board of Management;

3. When the company fails to pay all its due debts and other property obligations:

a/ To inform all creditors of the financial situation of the company;

b/ Not to increase salary or to pay any bonus to employees of the company, including managers;

c/ To be personally liable for any damage caused to creditors due to the failure to perform the obligations prescribed in Points a and b of this Clause;

d/ To propose measures to overcome the financial difficulties of the company;

4. Other obligations as stipulated by law and the Charter of the company.

Article 87.- Contracts which must be approved by the General Assembly of Shareholders or the Board of Management

1. Economic and civil contracts between the company and members of the Board of Management, the Director (General Director), members of the Control Board, shareholders holding more than 10% of the voting shares or their related persons may only be signed according to the following regulations:

a/ Contracts having a value larger than 20% of the total value of assets recorded in the accounting books of the company must be approved by the General Assembly of Shareholders prior to their signing. Shareholders who sign such contracts or have related persons signing such contracts shall not be entitled to vote;

b/ Contracts having a value equal to 20% or less of the total value of assets recorded in the accounting books of the company must be approved by the Board of Management prior to their signing. Board members who sign such contracts or have related persons signing such contracts shall not be entitled to vote;

2. Where any contract referred to in Clause 1 of this Article is signed without prior approval of the General Assembly of Shareholders or the Board of Management, such contract shall be null and void and dealt with according to law. Persons causing damage to the company shall have to make compensation therefor.

Article 88.- Rights and duties of the Control Board

1. A joint-stock company having more than eleven shareholders must have a Control Board composed of three to five members, of whom at least one member must be professionalized in accountancy. The Control Board shall elect one of its members to be the Head; and the Head of the Control Board must be a shareholder. The rights and duties of the Head of the Control Board shall be stipulated in the Charter of the company.

2. The Control Board shall have the following rights and duties:

a/ To inspect the reasonability and legality in the management and administration of business activities, in books of accounts and financial reports;

b/ To evaluate annual financial reports of the company; to check every specific issue relating to the management and administration of the activities of the company when it deems necessary or under a decision of the General Assembly of Shareholders or as requested by a shareholder or a group of shareholders as stipulated in Clause 2, Article 53 of this Law;

c/ To inform the Board of Management regularly of the results of the operations; to consult the Board of Management prior to submission of reports, conclusions and recommendations to the General Assembly of Shareholders;

d/ To report to the General Assembly of Shareholders on the accuracy, truthfulness and legality of the manner in which vouchers, books of account, financial reports and other reports of the company are kept and made; and on the honesty and legality in the management and administration of business operation of the company;

e/ To recommend changes and/or improvements of the organizational structure, the management and administration of business operation of the company;

f/ Other rights and duties as prescribed by this Law and the Charter of the company.

The inspection stipulated in Points a and b of this Clause may not obstruct the routine activities of the Board of Management and shall not interrupt the administration of day-to-day business operation of the company.

Article 89.- Provision of information to the Control Board

The Board of Management and its members, Director (General Director) and other managers shall have to provide promptly and fully information and documents on the business operation of the company at the request of the Control Board, except otherwise decided by the General Assembly of Shareholders.

The Control Board and its members must not disclose secrets of the company.

Article 90.- People who must not act as members of the Control Board

1. Members of the Board of Management, Director (General Director), related persons of members the Board of Management and of Director (General Director), chief accountant of the company.

2. Persons who are being examined for penal liability, are serving imprisonment sentences, or who have their practicing right revoked by a court for having committed offences of smuggling, producing fake goods, trading in fake goods, conducting illegal business, tax evasion, deceiving customers and other offences as prescribed by law.

Article 91.- Other issues related to the Control Board

The term of the Control Board and the working regulations and remuneration for its members shall be stipulated by the Charter of the company or decided by the General Assembly of Shareholders.

The Control Board shall be accountable to the General Assembly of Shareholders for breaches in the course of performing its duty, which cause damage to the company.

Article 92.- Auditing requirements

For joint-stock companies which must be audited as required by law, their annual financial reports must be verified by independent auditing organizations prior to submission to their the General Assembly of Shareholders for consideration and approval.

Article 93.- Disclosure of information on joint-stock companies.

1. Within ninety days after the end of a fiscal year, a joint-stock company must submit its annual financial report approved by the General Assembly of Shareholders to the tax office and the business registration body.

2. The summary of annual financial report must be sent to all shareholders.

3. All organizations and individuals may, subject to payment of fees, see or copy annual financial reports of joint-stock companies at the business registration office.

Article 94.- File-keeping regime of joint-stock companies

1. Joint-stock companies shall have to keep the following documents:

a/ Charter of the company; amendments and supplements to the Charter of the company; internal management rules of the company; and register of shareholders;

b/ Business registration certificate; certificate of business registration alteration; certificate of industrial property rights; certificate of registration of product quality;

c/ Documents and papers certifying the ownership of assets of the company;

d/ Minutes of meetings of the General Assembly of Shareholders and the Board of Management; decisions already approved;

e/ Prospectus for issuance of securities;

f/ Reports of the Control Board, conclusions of inspection bodies, conclusions of independent auditing organizations;

g/ Books of accounts, accounting vouchers, annual financial reports;

h/ Other documents as prescribed by law.

2. Joint-stock companies must keep the documents referred to in Clause 1 of this Article at their head-offices or elsewhere, provided that the shareholders and the business registration body are informed thereof. The documents shall be kept for a duration as prescribed by law.

Chapter V

PARTNERSHIPS

Article 95.- Partnership

1. A partnership is an enterprise in which:

a/ There must be at least two partnership members; besides such members, there may be capital-contributing members;

b/ The partnership members must be individuals who have professional qualifications and credibility, and shall be liable for the obligations of the partnership with all their assets;

c/ Capital-contributing members shall only be liable for the debts of the partnership within the amount of capital they have contributed to the company;

2. Partnerships shall not be entitled to issue any type of securities.

Article 96.- Rights and obligations of members

1. The partnership members may manage the partnership; conduct business activities in the name of the partnership; and shall be jointly liable for the obligations of the partnership.

2. The capital-contributing members shall be entitled to the distribution of profits according to the ratio stipulated in the Charter of the partnership; shall not be entitled to take part in the management of the partnership or to conduct business activities in the name of the partnership.

3. Members of a partnership shall have other rights and obligations as prescribed by law and the Charter of the partnership.

Article 97.- Management of partnerships

1. The organizational and managerial structure of a partnership shall be agreed upon by partnership members in the Charter of the partnership.

2. The partnership members shall have equal right in deciding issues related to the management of the partnership.

Article 98.- Specific provisions on the establishment, organization, management and operation of partnerships

Based on this Law and other relevant provisions of law, the Government shall specify the establishment, organization, management and operation of partnerships.

Chapter VI

PRIVATE ENTERPRISES

Article 99.- Private enterprises

A private enterprise is an enterprise owned by one individual who shall be liable for all activities of the enterprise with all his/her assets.

Article 100.- Investment capital of enterprise owners

1. The investment capital of the owner of a private enterprise shall be declared by himself/herself. The owner of a private enterprise shall have to declare accurately the total investment capital, clearly stating the amounts of capital in Vietnamese dong, in freely convertible foreign currency, in gold or in other assets; for the amount of capital in other assets, the types of asset, quantity and residual value of each type of assets must be clearly stated.

2. All the capital and assets, including borrowed capital and leased assets, used for the business operations of an enterprise shall be recorded fully in its books of accounts and financial statements.

3. In the course of operation, the owner of a private enterprise may increase or reduce his/her capital invested in the business operation of the enterprise. The increase or reduction of the investment capital of the enterprise owner must be recorded fully in the books of account. The owner of a private enterprise may only reduce the investment capital below the registered amount of investment capital after declaring it with the business registration body.

Article 101.- Management of enterprises

1. The owner of a private enterprise has the full power to decide all business activities of the enterprise; and the full power to decide the use of profits after payment of taxes and performance of other financial obligations as stipulated by law.

The owner of a private enterprise may himself or employ other persons to manage and administer the business operations. Where another person is employed as the Director managing the enterprise, the private enterprise owner must declare such with the business registration body and shall still be responsible for all business activities of the enterprise.

2. The owner of a private enterprise shall be the plaintiff, defendant, or person having related rights, obligations and interests in arbitration or court proceedings in disputes relating to the enterprise.

3. The owner of a private enterprise shall be the legal representative of the enterprise.

Article 102.- Lease of enterprises

The owner of a private enterprise may lease his/her whole enterprise provided that a written report and a notarized copy of the lease contract must be submitted to the business registration body and the tax office. During the leasing term, the owner of the private enterprise is still responsible before law in his/her capacity as the owner of the enterprise. The rights and responsibilities of the owner and the lessee with respect to the business activities of the enterprise shall be provided for in the lease contract.

Article 103.- Sale of private enterprises

1. The owner of a private enterprise may sell his/her enterprise to other persons. No later than fifteen days before the date of transfer of the enterprise to the purchaser, the owner of the enterprise shall have to send to the business registration body a written notice. Such notice shall specify the name and head office of the enterprise; the name and address of the purchaser; the total amount of outstanding debts of the enterprise; the name and address of, the amount of the debt and the time of repaying the debt to, each creditor; labor contracts and any other contracts which have been signed but not yet fully performed, and the ways of dealing with such contracts.

2. After the enterprise is sold, the owner of the private enterprise shall still be liable for all debts and other property obligations which have not yet been fulfilled by the enterprise, except where otherwise agreed by the purchaser, the seller and creditors of the enterprise.

3. The purchaser and seller of an enterprise must comply with the provisions of the legislation on labor.

4. The purchaser of an enterprise must re-register the business in accordance with the provisions of this Law.

Article 104.- Suspension of operation

The owner of a private enterprise may suspend the business operation of the enterprise but shall have to notify the business registration body and the tax office of the suspension duration no later than fifteen days before the business operation of the enterprise is suspended. During the suspension of operation, the owner of the enterprise shall have to fully pay the outstanding tax amount and still be liable to creditors and responsible for performing contracts signed with customers and laborers, except otherwise agreed by the owner of the enterprise, the customers and the laborers.

Chapter VII

REORGANIZATION, DISSOLUTION AND BANKRUPTCY OF ENTERPRISES

Article 105.- Division of enterprises

1. Limited liability companies and joint-stock companies may be divided into a number of companies of the same type.

2. The procedures for division of a limited liability company or a joint-stock company are as follows:

a/ The Members’ Council, the owner of the company or the General Assembly of Shareholders of the to be-divided company shall approve a decision to divide the company in accordance with the provisions of this Law and the Charter of the company. The decision on division of a company shall contain the following principal details: the current name and office of the company; the number of companies to be established; the principles and procedures for division of assets of the company; the plan for employment of laborers; the time limit and procedures for transfer of shares of equity, shares and bonds of the divided company to the newly-established companies; the principles for dealing with the obligations of the divided company; and the time limit for effecting the division of the company. The decision on division of the company shall be sent to all creditors and notified to the laborers within fifteen days from the date it is approved;

b/ Members, owners or shareholders of newly-established companies shall approve the Charter, elect or appoint the Chairmen of their respective Members’ Councils, Chairmen of the companies, the Boards of Management, Directors (General Directors); and register business in accordance with this Law. In this case, the business registration dossiers shall include the decision on division of the company as prescribed in Point a of this Clause.

3. After the new companies have registered their business, the divided company ceases to exist. The new companies shall be jointly liable for the outstanding debts, labor contracts and other property obligations of the divided company.

Article 106.- Separation of enterprises

1. A limited liability company or a joint-stock company may be separated by transferring part of the assets of the existing company (hereinafter referred to as the separated company) to establish one or more new companies of the same type (hereinafter referred to as the separating company); transferring a part of the rights and obligations of the separated company to the separating company(ies) without terminating the existence of the separated company.

2. The procedures for separation of limited liability company or a joint-stock company are stipulated as follows:

a/ The Members’ Council, the owner or the General Assembly of Shareholders of the separated company shall approve a decision to separate the company in accordance with the provisions of this Law and the Charter of the company. The decision on separation of the company shall contain the following principal contents: the name and office of the separated company; the number of separating companies to be set up; the plan for employment of laborers; the value of assets, rights and obligations to be transferred from the separated company to the separating company(ies); and the time limit for effecting the separation of the company. The decision on separation of the company shall be sent to all creditors and notified to the laborers within fifteen days from the date it is approved;

b/ Members, owners or shareholders of the separating company(ies) shall approve the Charter, elect or appoint the Chairman of the Members’ Council, Chairman of the company, the Board of Management, Director (General Director); and register business in accordance with this Law. In this case, the business registration dossier shall include the decision on separation of the company as prescribe in Point a of this Clause.

3. After the business registration, the separated company and the separating company(ies) shall be jointly liable for the outstanding debts, labor contracts and other property obligations of the separated company.

Article 107.- Consolidation of enterprises

1. Two or more companies of the same type (hereinafter referred to as consolidating companies) may be consolidated into a new company (hereinafter referred to as the consolidated company) by way of transferring all lawful assets, rights, obligations and interests to the consolidated company and at the same time, terminating the existence of the consolidating companies.

2. The procedures for consolidation of companies are stipulated as follows:

a/ Consolidating companies shall prepare a consolidation contract. The consolidation contract shall contain the following principal contents: the names and offices of the consolidating companies; the name and office of the consolidated company; the consolidation procedures and terms; the plan for employment of laborers; the time limit, procedures and conditions for conversion of assets; for conversion of shares of equity, shares and bonds of the consolidating companies into those of the consolidated company; the time limit for effecting the consolidation, and the draft Charter of the consolidated company;

b/ Members, owners or shareholders of the consolidating companies shall approve the consolidation contract, the Charter of the consolidated company, elect or appoint the Chairman of the Members’ Council, Chairman of the company, the Board of Management, the Director (General Director) of the consolidated company; and register the business of the consolidated company in accordance with this Law. In this case, the business registration dossier shall include the consolidation contract. The consolidation contract shall be sent to all creditors and notified to laborers within fifteen days from the date it is approved.

3. The consolidating companies shall cease to exist after the business registration. The consolidated company shall enjoy the lawful rights and interest and be liable for the outstanding debts, labor contracts and other property obligations of the consolidating companies.

Article 108.- Merger of enterprises

1. One or several companies of the same type (hereinafter referred to as the merged companies) may be merged into another company (hereinafter referred to as the merging company) by way of transferring all lawful assets, rights, obligations and interests to the merging company and at the same time, the merged companies shall cease to exist.

2. The procedures for merger of companies are stipulated as follows:

a/ The involved companies shall prepare a merger contract and charter of the merging company. The merger contract must contain the following principal contents: the name and office of the merging company; the name(s) and office(s) of the merged company(ies); the procedures and terms for the merger; the plan for employment of laborers; the time limit, procedures and conditions for conversion of assets; for conversion of shares of equity, shares and bonds of the merged company(ies) to shares of equity, shares and bonds of the merging company; and the time limit for effecting the merger.

b/ Members, owners or shareholders of involved companies shall approve the merger contract and the Charter of the merging company; and register the business of the merging company in accordance with this Law. In this case, the business registration dossier shall include the merger contract. The merger contract shall be sent to all creditors and notified to the laborers within fifteen days from the date it is approved.

c/ After the business registration, the merging company shall enjoy the lawful rights and interests and be liable for the outstanding debts, labor contracts and other property obligations of the merged companies.

Article 109.- Conversion of companies

Limited liability companies may be converted to joint-stock companies and vice versa. The procedures for converting limited liability companies or joint-stock companies (hereinafter referred to as converting companies) respectively to joint-stock companies or limited liability companies (hereinafter referred to as converted companies) are stipulated as follows:

1. The Members’ Council, owners or the General Assembly of Shareholders shall approve a decision on conversion and the charter of the converted company. The decision on conversion must contain the following principal contents: the name and office of the converting company; the name and office of the converted company; the time limit and conditions for conversion of assets, shares of equity, shares and bonds of the converting company to assets, shares of equity, shares and bonds of the converted company; the plan for employment of laborers; and the time limit for effecting the conversion.

2. The decision on conversion shall be sent to all creditors and notified to the laborers within fifteen days from the date it is approved.

3. The business of the converted company shall be registered in accordance with the provisions of this Law. In this case, the business registration dossier shall include the conversion decision.

After the business registration, the converting company shall cease to exist. The converted company shall enjoy all the lawful rights and interests and be liable for the outstanding debts, labor contracts and other property obligations of the converting company.

Article 110.- Conversion of one-member limited liability companies

1. Where a company owner assigns a part of the charter capital to another organization or individual, within fifteen days from the date of assignment, the company owner and the assignee must register the change in the number of members with the business registration body. From the date of registration of the change stipulated in this Clause, the company shall be managed and shall operate in accordance with the provisions regarding limited liability companies with two or more members.

2. Where a company owner assigns the entire charter capital to one individual, within fifteen days from the date of completion of the procedures for assignment, the company owner must request the business registration body to remove the name of the company in the business register, and the assignee must register the business as a private enterprise in accordance with the provisions of this Law. The assignee shall assume all obligations and all lawful rights and interests of the limited liability company, except otherwise agreed by the company owner, the assignee and the creditors of the company.

Article 111.- Cases of dissolution of enterprises

1. The operational duration stated in the Charter expires and there is no decision to extend.

2. By decisions of the enterprise owners, for private enterprises; of all partnership members, for partnerships; of the Members’ Council or company owners in case of limited liability companies; of the General Assembly of Shareholders, for joint-stock companies.

3. The company does not have the minimum number of members stipulated in this Law for a consecutive period of six months.

4. The business registration certificate is revoked.

Article 112.- Procedures for dissolution of enterprises

The dissolution of enterprises shall be carried out in accordance with the following provisions:

1. A decision on the dissolution of an enterprise is approved in accordance with the provisions of this Law. The decision on dissolution of an enterprise must contain the following principal contents:

a/ Name and office of the enterprise;

b/ Reasons for dissolution;

c/ Time limit and procedures for liquidating contracts and paying debts of the enterprise; the time limit for debt payment and contract liquidation shall not exceed six months from the date the decision on dissolution is approved;

d/ Plan for dealing with obligations arising from labor contracts;

e/ Establishment of an asset liquidation group whose rights and duties shall be stipulated in an appendix to the dissolution decision;

f/ Signature of the legal representative of the enterprise.

2. Within seven days after being approved, the decision on dissolution shall be sent to the business registration body, all creditors, persons having related rights, obligations and interests, and to laborers in the enterprise. This decision must be publicly posted at the head office of the enterprise and published in three consecutive issues of a local newspaper or a central daily.

The decision on dissolution must be sent to creditors together with notice on the settlement of the debts. Such a notice shall include the name and address of the creditor; the amount of the debt, the time limit, location and method of paying such debt; the method and time limit for dealing with complaints of creditors.

3. Liquidating the assets and paying the debts of the enterprise.

4. Within seven days after all the debts of the enterprise are fully paid, the liquidation group shall have to send the dossiers related to the dissolution of the enterprise to the business registration body.

Within seven days from the date of receipt of the dossiers related to the dissolution of the enterprise, the business registration body shall remove the name of the enterprise from the business register.

5. Where the business registration certificate of an enterprise is withdrawn, the enterprise must be dissolved within six months from the date of withdrawal of the business registration certificate. The order and procedures for dissolution shall comply with the provisions in this Article.

Article 113.- Bankruptcy of enterprises

The bankruptcy of enterprises shall comply with the legislation on business bankruptcy.

Chapter VIII

STATE MANAGEMENT OVER ENTERPRISES

Article 114.- Contents of the State management over enterprises

1. To promulgate, disseminate and organize the implementation of legal documents on enterprises.

2. To organize business registration; to provide guidance for business registration to ensure the implementation of strategies, planning, orientation and plans for socio-economic development.

3. To organize and manage professional training and fostering, and enhancement of business ethics of enterprise managers, of professional, ethical and political qualifications of officials in charge of the State management over enterprises; and training and building up a contingent of skilled workers.

4. To implement incentive policies toward enterprises in accordance with the orientation and objectives of the strategies, planning and plans for socio-economic development.

5. To examine and inspect enterprises; and to supervise the business operations of enterprises through the system of periodical financial statements and other reports.

Article 115.- Bodies in charge of the State management over enterprises

1. The Government shall exercise the uniform State management of enterprises.

2. Ministries, ministerial level agencies and agencies attached to the Government shall, within their tasks and powers, be responsible for exercising the State management of enterprises in their delegated fields.

The Government shall provide for the coordination between ministries, ministerial-level agencies and agencies attached to the Government in the State management of enterprises.

3. The People’s Committees of the provinces and centrally-run cities shall have the following responsibilities:

a/ To exercise the State management over enterprises within their respective localities in accordance with the provisions of law;

b/ To organize business registration; to inspect, examine and supervise the operation of enterprises within their localities;

c/ To guide and instruct the People’s Committees of rural and urban districts, and provincial capital and cities in the coordination of the exercise of the State management over enterprises.

4. The business registration body shall be provided for by the Government.

Article 116.- Powers and responsibilities of the business registration body

1. To effect the business registration and to issue business registration certificates as prescribed by law.

2. To establish and manage a system of information on enterprises; to provide information to State bodies, organizations and individuals at their requests as prescribed by law.

3. To request enterprises to report on their business situation where it deems necessary for the implementation of the provisions of this Law; to urge the implementation of the reporting regime by enterprises.

4. To directly examine or to request the competent State body to examine enterprises with respect to the matters in the business registration dossiers.

5. To deal with breaches of the regulations on business registration as prescribed by law. To revoke business registration certificates and to demand dissolution of enterprises in accordance with the provisions of this Law.

6. To be responsible before law for breaches committed in the course of business registration.

7. To exercise other powers and perform other responsibilities as prescribed by law.

Article 117.- Inspection of the business operation of enterprises

1. The inspection of the business operation of enterprises shall be carried out in accordance with the functions and powers and in accordance with law.

Financial inspection shall be conducted no more than once each year for each enterprise. The duration of inspection shall not exceed thirty days, and may be extended in special cases as decided by the competent superior authority, but not exceeding thirty days.

Irregular inspection shall only be conducted when there are grounds showing breaches of law by the enterprise.

2. An inspection may only be conducted under a decision of the competent authority; minutes recording conclusions of the inspection must be made when the inspection is completed. The head of the inspection team shall be responsible for the contents of the minutes and conclusions of the inspection.

3. Where a person issues an inspection decision not in accordance with the law or takes advantage of the inspection to gain personal benefits, harass or obstruct the operation of an enterprise, such person shall, depending on the seriousness of the breach, be disciplined or examined for penal liability; and must compensate the enterprise for any damage caused in accordance with the law.

Article 118.- Fiscal year and financial statements of enterprises

1. The fiscal year of enterprises shall commence on January 1st and end on December 31 of a calendar year. The first fiscal year of an enterprise shall commence on the date of issuance of the business registration certificate and end on the last day of the same year.

2. Annual financial statements of an enterprise shall comprise the balance sheet and the profit and loss statement.

3. Within thirty days, for private enterprises and partnerships, and ninety days, for limited liability companies and joint-stock companies, after the final day of a fiscal year, the annual financial statements of enterprises must be sent to the competent tax office and the business registration body; where an enterprise has subsidiary(ies), a notarized copy of the financial statements of the subsidiary(ies) for the same year must also be included.

Chapter IX

COMMENDATION, REWARDS AND DEALING WITH BREACHES

Article 119.- Commendation and rewards

Organizations, individuals and enterprises recording outstanding achievements in business, in raising the efficiency and competitiveness of enterprises, or making major contribution to the national construction, defense and development shall be commended or rewarded in accordance with law.

Article 120.- Acts of breaching the Law on Enterprises

1. Granting business registration certificates to unqualified persons or refusing to grant business registration certificates to persons satisfying the conditions stipulated in this Law.

2. Violating the provisions on examination and inspection of the operation of enterprises.

3. Conducting business in the form of an enterprise in accordance with this Law without business registration, or continuing to conduct business after the business registration certificate has been revoked.

4. Declaring dishonestly, inaccurately or untimely the contents or the alterations to the contents of business registration dossiers of an enterprise.

5. Deliberately valuing assets contributed as capital higher than their actual value.

6. Failing to submit annual financial statements to the competent State body in accordance with this Law or to submit untrue or inaccurate statements.

7. Preventing members, owners or shareholders from exercising their rights in accordance with this Law and the Charter of the company.

8. Other acts breaching the provisions of this Law.

Article 121.- Forms of dealing with breaches

1. Depending on the nature and seriousness of each breach, persons committing breaches of the provisions of this Law shall be disciplined, administratively sanctioned a examined for penal liability according to law.

2. Where a breach causes damage to the interests of an enterprise, its owners, members or shareholders, or of other persons, the person in breach shall have to compensate as prescribed by law.

3. The business registration certificate of an enterprise shall be revoked in the following cases:

a/ Failing to conduct business activities for a duration of one year from the date of being granted the business registration certificate;

b/ Stopping business activities for one full year without informing the business registration body thereof;

c/ Failing to report on business activities of the enterprise to the business registration body for two consecutive years;

d/ Failing to send reports stipulated in Clause 3 of Article 116 of this Law to the business registration body within six months from the date it is so requested in writing;

e/ Conducting prohibited lines of business.

Chapter X

IMPLEMENTATION PROVISIONS

Article 122.- Effectiveness

1. This Law shall take effect as from January 1st 2000.

2. This Law shall replace the Law on Companies, the Law on Private Enterprises of December 21, 1990, the Law on Amendments and Supplements to a Number of Articles of the Law on Companies, and the Law on Amendments and Supplements to a Number of Articles of the Law on Private Enterprises of June 22, 1994.

3. All previous provisions which are contrary to this Law are hereby annulled.

Article 123.- Application to enterprises established prior to the effective date of this Law

1. Limited liability companies, joint-stock companies and private enterprises established under the Law on Companies, the Law on Private Enterprises of December 21, 1990, the Law on Amendments and Supplements to A Number of Articles of the Law on Companies and the Law on Amendments and Supplements to A Number of Articles of the Law on Private Enterprises of June 22, 1994 shall not have to carry out the procedures for business re-registration.

Limited liability companies and joint-stock companies whose charters are not in accordance with this Law must amend or supplement their charters within two years from the date this Law takes effect. Where charters of companies are not amended or supplemented within this time-limit, such charters shall be considered invalid.

2. The Government shall guide and create favorable conditions for large-scale business households operating under Decree No. 66/HDBT March 2, 1992 of the Council of Ministers to convert themselves into enterprises, register business and operate in accordance with this Law.

Small-scale individual business households shall register business and operate under regulations of the Government.

Article 124.- Guiding the implementation

The Government shall detail and guide the implementation of this Law.

This Law was passed by the Xth National Assembly of the Socialist Republic of Vietnam at its 5th session of June 12, 1999.

Chairman of the National Assembly

NONG DUC MANH