Luat Viet

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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 VII

COMPETITION

The 2004 Law on Competition has been issued to govern practices in restraint of competition, unfair competitive practices as well as set forth the measures dealing with breaches of the laws on competition.
Practices in restraint of competition include agreements in restraint of competition, abuse of dominant market position, abuse of monopoly position and economic concentration.
According to the Law on Competition, lawful competition practices of entities and individuals are protected in Vietnam. Competition must be undertaken on the principles of honesty, non-infringement of the interests of the State, the public interest and the legitimate rights and interests of other companies and consumers.

1. Restraint of competition

Practices in restraint of competition means practices conducted by a company to reduce, distort or hinder competition in the market, including agreements in restraint of competition, abuse of dominant market position, abuse of monopoly position and economic concentration.
Entities and individuals doing business in Vietnam in breach of the provisions on prohibited practices in restraint of competition shall be imposed a highest fine, which is up to 10% of the total turnover of the violating company as specified in the fiscal year prior to the violation act. Moreover, additional penalties may also apply to such company, such as withdrawal of business registration certificate or application of remedy measures including restructure of the company, compulsory re-sale of whatever the company has respectively acquired, division or separation of companies which are merged or consolidated.

a. Agreements in restraint of competition

Agreements in restraint of competition are (i) agreements either directly or indirectly fixing the price of goods and services; (ii) agreements to share consumer markets or sources of supply of goods and services; (iii) agreements to restrain or control the quantity or volume of goods and services produced, purchased or sold; (iv) agreements to restrain technical or technological developments or to restrain investment; (v) agreements to impose on other companies conditions for signing contracts for the purchase and sale of goods and services or to force other companies to accept obligations which are not directly related to the subject matter of the contract; (vi) agreements which prevent, impede or do not allow other companies to participate in the market or to develop business; (vii) agreements which exclude from the market other companies which are not parties to the agreement; (viii) collusion in order for one or more parties to win a tender for the supply of goods and services.

b. Market domination or monopoly position

A company shall be deemed to hold a monopoly position if there are no other companies competing in the same goods and services in the relevant market.
A company shall be deemed to be dominant in market if such company holds 30% or more of market share, or is capable of substantially restraining competition from other companies.
A group of two companies holding 50% or more of a market share of, or three companies holding 65% or more of market share, or four companies holding 75% or more of market share shall be deemed to be dominant in the market if they act together in order to restrain competition from other companies.
Entities and individuals in dominant market position or monopoly position are banned from carrying out certain activities which may cause any restraint in competition from or harms to other companies as specified in the Law on Competition.

c. Economic concentration

Economic concentration means companies operating in the same area or in relevant areas shall conduct merger, consolidation, acquisition of companies or joint venture between other companies in order to form a newly-established company which is capable of integrated competition, thus, changing the competitive market structure.
An economic concentration is prohibited if the combined market share of those companies which participate in an economic concentration scheme is more than 50% in the relevant market unless those companies are exempted or those companies which have realized the economic concentration scheme is still of medium or small size.

2. Unfair competition

Unfair competitive practices means competitive practices by a company during the course of business, which are contrary to general standards of business ethics, and which cause or may cause damage to the interests of the State and to the legitimate rights and interests of other companies or of consumers.
Entities and individuals doing business in Vietnam are not permitted to conduct unfair competitive practices as stipulated in the Law on Competition, the IP Law and other relevant regulations.

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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