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Question :: I am a member of the Supervisory Commission (the Commission) of a public company which is unlisted and termed from 2007 to 2010. Until now, my term is still valid. In 2009, I was [not] invited to attend any meeting of the company’s Commission. Recently, I also did not attend the Commission’s meeting to produce the Commission’s Report for submission to the General Shareholder’s Meeting (the Meeting) year 2010 on April 9. I was informed that this Commission’s Report was built by the Commissions’ Director (the another member of the Commission also did not attend). I would like to ask you whether the operation of the Commission like that is legal or not? Is the Report mentioned above legal? What should I do to comply with the rights, duties and obligations of a Commission’s member?
Question :: I am a president of the Management Board (“the Board”) of a public company. As per regulations, the term of the Board, Supervisory Commission (“the Commission”) is five (5) years. Therefore, the first term of the Board, Commission is due on November 2010. However, in order to facilitate the voting of the Board, the Commission in the second term, the Board would like to submit the General Shareholder’s Meeting (“the Meeting”) with the latest on April 19, 2010 for renewal of the first term of the Board, the Commission until April 2011. So, the question is that is the renewal true or not? If the shareholders are not taken opinions directly at the Meeting, can the Board collect opinions indirectly from shareholders in writing? If the Meeting does not pass the renewal, how can the voting of the Board, the Commission be taken in compliance with laws?
Question :: Our company registers shares at the Securities Depository Central (SDC), but cannot deposit, of which my 10.000 shares. So, can I transfer directly 2.000 shares to my brother and compliment 2.000 shares to my wife?

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PART II

ROADMAP OF OPENING VIETNAM SERVICE MARKET UNDER WTO COMMITMENTS

After twelve years of negotiation, economic reforms, improvement of the legal system consistent with the transparency & liberalization policies of WTO, Vietnam got the nod from the WTO in November 7, 2006 and has become a full member since the date of January 11, 2007. Among the outcomes of the negotiation between Vietnam and WTO members, the Schedule of Specific Commitments in Services (“Commitments”) has attracted good deal of attention of foreign and local investors. The Commitments recognizes 11 Sections and 155 sub-sections of services through negotiation and agreement.

1.Business services:

From January 11, 2011, there will be no restrictions on market access and national treatment for foreign investors within the following services: accounting, auditing and accounting books, taxes, architecture, consulting services and technical consulting, and computer related services, R&D, leasing services without the operator, market research services, management services and services related to management consulting. In advertising services (except tobacco advertising), foreign investors shall be entitled to choose forms of investment including the business cooperation contract or joint venture without restriction of foreign capital contribution from January 1, 2009. Meanwhile, from the date of January 11, 2010, foreign investors shall be awarded to owning up to 51% of charter capital of joint ventures performing mining-related services. Within two years thereafter, foreign investors shall be entitled to establish 100% foreign owned enterprises. For services of machinery, equipment maintenance and repair (excluding repairing and maintaining of ship, aircraft, or vehicles and other transportation equipment), foreign investors shall be allowed to own up to 51% of charter capital in joint ventures and to establish enterprises with 100% foreign capital two years later (also from January 11, 2011). Foreign investors doing business in provision of services related to agriculture, hunting and forestry shall be permitted to invest under the BCC or to establish joint-ventures owning up to 51% of charter capital.

2.Distribution services:

Foreign investors are entitled to establish 100% foreign owned enterprises providing in Vietnam wholesale trade, retail services, commission agent services and franchising services with some exceptions as of January 1, 2009. Provision of commission agent services, wholesale trade and retail services to all products in Vietnam and legally imported into Vietnam can be operated by 100% foreign owned enterprises from January 11, 2010. However, Vietnam does not have commitments to goods such as tobacco & cigarettes, newspapers & magazines, recorded articles, precious metals & gemstones, pharmaceuticals, explosives, rude oils and processed oils, rice, sugar (from cane or turnip) awarding for 100% foreign owned enterprises. Foreign service providers will have the right to establish branches providing franchise services in Vietnam after January 11, 2010. The establishment of retail stores (other than the first store) of 100% foreign owned enterprises will be considered based on economic needs test (ENT). The main criteria for ETN include the number of service providers presenting in a geographic area, the stability of the market and the geographic size. Although there was a clear expression on the roadmap about opening distribution services, in actuality, the licensing process of investment in distribution services and of establishment of retail stores requires the approval of the Ministry of Industry and Commerce for each specific case. Therefore, foreign investors still face with impediments from technical barriers when accessing the market of distribution services.

3.Financial services:

Insurance and related services

In line with the Commitment, insurance enterprises with 100% foreign investment capital are allowed to provide compulsory insurance services from January 1, 2008, in which the foreign investors are required to meet the conditions on operation term in their home countries (at least 10 years) and the minimum total assets (approximately USD 2 billions). Foreign insurance enterprises will be entitled to establish non-life insurance branches in Vietnam, after 5 years from the date of accession to the WTO - from January 11, 2012.

Securities services

Foreign securities service suppliers are permitted to set up representative offices or to contribute up to 49% of charter capital of joint-venture securities companies in Vietnam, and as from January 11, 2012 to establish 100% foreign owned enterprises and branches. However, branches could provide only asset management services, investment fund management, custody, clearings and balances, provision and transfer of financial information, consulting and brokerage activities and other supports related to stocks.

Banking Services and Other Financial Services

The foreign commercial banks are allowed to establish 100% foreign owned banks or their branches in Vietnam where satisfying the conditions of minimum total assets. From the date of January 1, 2011, branches of foreign banks will be entitled to receive deposits in Vietnamese Dong correlative with the domestic banks. In addition, branches of foreign commercial banks do not open transaction points other than the established branch. Foreign investors can purchase amount of shares less than 30% charter capital of joint-stock commercial banks in Vietnam or the equitized state-owned banks of Vietnam.

4.Transportation service:

Maritime Transport Services

Content of Vietnam’s commitments on the maritime transport services are considered better than that of other countries getting accession to WTO before, including China. As from the date of January 11, 2009, foreign service suppliers are allowed to establish joint-ventures, with foreign capital contribution not exceeding 49% of total legal capital to operate a fleet under the national flag of Vietnam. As from the date of January 11, 2012, foreign shipping companies are allowed to establish 100% foreign-invested enterprises supplying international maritime transport services related to the cargoes carried by them.

Air Transport Services

The main air transport services committed by Vietnam include sales and marketing air products services, computer reservation services and maintenance and repair of aircraft. Foreign investors are permitted to set up 100% foreign-invested enterprises supplying maintenance and repair of aircraft services. Foreign service suppliers must use public telecommunication network under the management of Vietnam telecommunication authority to supply the computer reservation services. Foreign airlines are permitted to provide sales and marketing air products service in Vietnam through their ticketing offices or agents in Vietnam. Internal Waterways Transport and Rail Transport Services Foreign service suppliers are permitted to establish joint-ventures and are entitled to own up to 49% of legal capital of joint-ventures supplying internal waterways transport and rail transport services in Vietnam.

Road Transport Services

Given that the local road transport market is at the initial stage of development, thus Vietnam’s commitments regarding these services are quite limited and accordingly still under protection for a long time. According to the Commitment, foreign service suppliers are entitled to own up to 49% of the charter capital of joint ventures. As from the date of January 11, 2010, subject to the needs of the market, the said ratio shall be considered to increase up to 51%.

Services Auxiliary to all Modes of Transport

The foreign capital contribution in joint-ventures supplying services auxiliary to all modes of transport shall be increased gradually. After January 11, 2014, foreign service suppliers are permitted to set up 100% foreign-invested enterprises supplying storage and warehouse services and freight transport agency services. No limitations on foreign capital contribution in joint-ventures supplying other services auxiliary to all modes of transport, except for container handling services, will be applied.

5.Communications services:

Courier service Foreign investors are permitted to set up joint-ventures and own up to 51% legal capital of joint ventures conducting the business of courier services. After January 11, 2012, foreign investors are permitted to set up 100% foreign-invested enterprises. However, Vietnam reserves several activities of courier services commercially crucial to local enterprises, including couriering written communication less than 2,000 grams with the price less than 10 times the tariff for the handling of a standard domestic letter in the first weight level for domestic shipments and less than US$9 for international shipments.
Basic telecommunications services
Before the date of January 11, 2010, foreign investors are permitted to own up to 51% of legal capital of joint-ventures with telecommunications service suppliers which are duly licensed in Vietnam to provide non facilities-based services. Then, foreign investors can freely select partners and contribute up to 65% of legal capital. Regarding the business of facilities-based services, foreign investors can contribute up to 49% of legal capital of the joint ventures with telecommunications service suppliers duly licensed in Vietnam.
In relation to value-added services
Especially non facilities-based services, foreign investors are entitled to own up to 51% of legal capital of joint ventures with telecommunications service suppliers duly licensed in Vietnam. As from the date of January 11, 2010, the ratio of foreign capital contribution in joint ventures will be increased to 65%. Regarding facilities-based services, foreign investors are entitled to contribute up to 50% of legal capital of joint ventures with telecommunications service suppliers duly licensed in Vietnam.
Virtual private network (VPN)
In relation to non facilities-based services, foreign investors can freely select partners for joint ventures, in which foreign capital contribution may not exceed 70% of legal capital. Regarding facilities-based services, foreign investors are permitted to establish joint ventures, in which foreign capital contributions capped at 49% of legal capital. Furthermore, according to the Commitments, foreign service suppliers shall be permitted to control fully-owned submarine cable transmission capacity and to provide such capacity to international facilities-based service suppliers licensed in Vietnam. Audiovisual Services Foreign investors can select to invest in the forms of business cooperation contracts or joint ventures with Vietnamese partners who are authorized to provide these services in Vietnam. Foreign capital contribution may not exceed 51% of the legal capital of the joint ventures.

6.Educational services:

Foreign investors are allowed to set up 100% foreign-invested education entities supplying higher education services, adult education and other education services except for secondary education services.

7.Environment services:

Foreign investors are licensed for joint ventures providing following environmental services: (i) sewage services, (ii) refuse disposal services, (iii) cleaning services of exhaust gases; (iv) noise abatement services and (v) environmental impact assessment services. In which, foreign capital contribution shall not exceed 51% of legal capital of joint ventures. As from the date of January 11, 2011, foreign investors are entitled to establish 100% foreign-invested enterprises providing said services in Vietnam. Vietnam reserves the services supplied in the exercise of governmental authority as defined in Article I: 3(c) of GATS.

8.Tourism and travel related services:

According to the Commitment, before the date of January 11, 2015, foreign investment in hotel and restaurant should be in parallel with investment in hotel construction, renovation, restoration or acquisition. In relation to travel agencies and tour operator services, foreign service suppliers are permitted to provide services in the form of joint ventures with Vietnamese partners with no limitation on foreign capital contribution. The foreign owned enterprises can only do inbound services and domestic travel for inbound tourists as an integral part of inbound services, but outbound services and domestic travel.

9.Construction and related engineering services :

As from the date of January 11, 2010, foreign investors are permitted to establish 100% foreign-invested enterprises or branches in Vietnam to conduct the business of construction and related engineering services.

10.Health related and social services

Foreign service suppliers are permitted to provide services through the establishment of 100% foreign-invested hospital, joint venture with Vietnamese partners or through business cooperation contract. In line with the Commitment, the minimum investment capital for a commercial presence in hospital services must be at least US$20 million for a hospital, US$2 million for a policlinic unit and US$200,000 for a specialty unit.

11.Recreational,
cultural and sporting services

Foreign investors are allowed to invest in the form of business cooperation contracts or joint ventures for the business of electronic games business. Vietnamese partners must be specifically authorized to provide these services in Vietnam. Foreign capital contribution shall not exceed 49% of the legal capital of the joint ventures. Regarding entertainment services, including theatre, live bands and circus services foreign investors are permitted to own up to 49% of legal capital of joint ventures after the date of January 11, 2012.

PREFACE

PART I. INVESTMENT LEGISLATION IN VIETNAM

PART II. ROADMAP OF OPENING VIETNAM SERVICE MARKET UNDER WTO COMMITMENTS

PART III. MERGER AND ACQUISITION IN VIETNAM

PART IV. INTELLECTUAL PROPERTY LAW AND TECHNOLOGY TRANSFER

PART V. LABOR

PART VI. BANKRUPTCY OF ENTERPRISE

PART VII. COMPETITION

PART VIII. TAXATION

PART IX. THE LAW ON LAND, REAL ESTATE AND CONSTRUCTION

PART X. FINANCIAL SERVICES

PART XI. DISPUTE RESOLUTION

PART XII. IMMIGRATION ISSUES

INDEX 1. DOUBLE TAX AVOIDANCE AGREEMENT ENTERED BY VIETNAM

INDEX 2. DOUBLE TAX AVOIDANCE AGREEMENT ENTERED BY VIETNAM

INDEX 3. FINANCIAL SERVICE MARKET

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