I. LAW ON RESIDENCE 2020
Major amendments in household and temporary residence registration from 01 July 2021
Law on Residence No. 68/2020/QH14 (the “Law on Residence 2020”) passed by the National Assembly, dated 13 November 2020, takes effect as of 01 January 2021.
One of the most prominent features of the Law on Residence 2020 is the regulation on replacing the manual method of residence management by household registration books, temporary residence books with electronic residence management. In details:
- Regarding permanent residence registration: Instead of issuing household registration books, registration offices shall update information on the new permanent residence of the person registerering in the residence database when citizens are eligible for permanent residence registration.
- Regarding temporary residence registration: Instead of issuing temporary residence books, registration offices shall appraise and update information on the new temporary residence and the temporary residence duration of the person registering in the residence database when citizens are eligible for temporary residence registration.
Thus, from 01 July 2021, new grants and re-grants of household registration books and temporary residence books will be stopped. For household registration books, temporary residence books which have been granted are still used and valid as papers and documents confirming their residence until the end of 31 December 2022. In case the information in household registration books or temporary residence books is different from those in the residence database, information in the residence database shall prevail. The innovation of management methods in this direction will help citizens do not need to carry the documents containing personal information expressed on the National Database of Population as well as not have to certify the above documents when carrying out administrative procedures or participating in civil transactions but only need to bring a Citizen Identification card or provide a personal identification number to the authorities for implementation.
Regarding the procedures for permanent residence registration, the time limit for permanent residence registration has been reduced from 15 (fifteen) days to 07 (seven) working days from the date of receiving the complete and valid dossier. Specifically, according to the Residence Law 2020, within 07 (seven) working days from the date of receiving a complete and valid dossier, the registration authority shall appraise and update information on the new permanent residence of the applicant to the residence database and notify the applicant of such update; and provide a written explanation for the applicant if the application rejected.
It can be observed that the Law on Residence 2020 has institutionalized the provisions of the 2013 Constitution on ensuring human rights and citizenship related to residence management in the direction of public regulation, transparency, simplification of papers, reducing time, costs, abolishing cumbersome administrative procedures, easily causing troubles for citizens. Simultaneously, the new provisions in the Law on Residence 2020 has shown its contribution to bringing the effectiveness of the State management of national security and order to a higher level in the coming time.
II. DECREE NO. 47/2021/ND-CP
Definition of contribution of capital, purchase of shares of other enterprises
Decree No. 47/2021/ND-CP (“Decree 47”) dated 01 April 2021 providing guidances on several articles of the Law on Enterprises, takes effect as of 04 January 2021.
Decree 47 specifies some features of the Law on Enterprises 2020 regarding the issues related to social enterprises, state-owned enterprises, groups of companies, defense and security enterprises, and disclosure of information of state-owned enterprises.
Accordingly, in order to specify regulations regarding “subsidiary companies of the same parent company with at least 65% state capital must not contribute capital to or purchase shares of other enterprises or to establish new enterprises” under Clause 3, Article 195 of the Law on Enterprises 2020 as well as cases of cross-ownership among companies in the group of companies, Decree 47 specifically explains the capital contribution, purchase of shares of other enterprises or for the establishment of new enterprises including the following cases:
- Joint contribution of capital to establish a new enterprise.
- Joint purchase of stakes/shares of existing enterprises.
- Joint acquisition of stakes/shares from members, shareholders of existing enterprises.
Accordingly, the business registration authority shall reject registration of change of company’s members and shareholders if the capital contribution, purchase of shares, enterprise establishment or transfer of shares or related contributed capital constitute violations against the above regulations while processing the application.
Moreover, regarding regulations on social enterprises, Decree 47 requires social enterprises to maintain pursue of social and environmental objectives, retained earnings for re-investment and other contents in the commitment to pursue social and environmental objectives throughout their operation. Unless the social and environmental objectives are terminated ahead of schedule, the social enterprise shall return all incentives, aids and sponsorships it received to pursue social and environmental objectives if it fails to fulfill the commitment to pursue social and environmental objectives and maintain retained earnings for re-investment.
Decree 47 also provides regulations on Conversion of social protection establishments, social funds and charitable funds into social enterprises. In particular, a social protection establishment, social fund or charitable fund may use all of its property, rights and obligations for conversion into a social enterprise after obtaining the written approval from the authority that issued the license for establishment.
After conversion, the social enterprise shall inherit all lawful rights, interests, debts (including tax debts), employment contracts and other obligations of the social protection establishment, social fund or charitable fund. The social protection establishment, social fund or charitable fund is shut down from the day on which the social enterprise is granted the Enterprise Registration Certificate.
Overall, Decree 47 has provided strict regulations used as a legal basis to help the implementation of the Law on Enterprises 2020 take place more smoothly, especially in determining the exact nature of transactions, responsibilities and powers of enterprise managers, state management agencies as well as in investment transactions related to capital contribution, purchase of shares, transfer of shares among companies in the group of companies.
III. DECREE NO. 21/2021/ND-CP
Investors may utilize investment projects that are not prohibited by laws from transfer as security for fulfillment of obligations
Decree No. 21/2021/ND-CP (“Decree 21”) dated 19 March 2021 of the Government on detailing and guiding the Civil Code regarding security for fulfillment of obligations, replacing Decree No. 163/2006/ND-CP, takes effect as of 15 May 2021.
In comparision with current regulations, Decree 21 has notable features as follows:
Firstly, Decree 21 has stipulated definitions of some terms that were not specified in its predecessor, hence confusion or ambiguity, such as “assets attached to land”, “security contract”, “certificate”, or “reasonable period”, etc.
Secondly, regarding the scope of application of laws and agreements on security for fulfillment of obligations, as Decree 21 is the Decree guiding the Civil Code 2015 on security measures, the Decree applies only to civil legalrelations. Therefore, for typical legal relations such as land, housing, investment, enterprises, securities, insurance, banking, intellectual property, maritime, aviation, bankruptcy, etc. if there are provisions on collateral, it will apply according to those typical provisions. In case the name of the security measure is not clearly identified but the contents of the agreement are consistent with the security measures specified in the Civil Code, the provisions onsuch security measures corresponding to the agreed contents shall prevail.
In addition, Decree 21 also dedicates a chapter on the regulation of collateral. In particular, there are regulations describing collateral, land use rights, assets attached to land, property created from surface rights, enjoyment rights, property rights arise from contracts,… which was previously scattered in circulars. Decree 21 also supplements a number of types of collateral that have not previously been regulated such as: assets created from surface rights and enjoyment rights; investment projects, assets belonging to investment projects, investors can use the entire investment project without prohibition of transfer, their property rights in terms of exploitation and management of investment projects to ensure the fulfillment of obligations; or in case of investment in collateral, which increases the value of the mortgaged asset, the increased value of the investment belongs to the mortgaged asset; etc.
Decree 21 war promulgated for the purpose of overcoming the disadvantages and difficulties in the implementation of the Civil Code 2015 with a number of new points on security transactions that the provisions in the current decrees are no longer suitable for application.
IV. DECREE NO. 31/2021/ND-CP
List of business lines with prohibited and restricted market access for foreign investors has officially been announced
Decree No. 31/2021/ND-CP (“Decree 31”) dated 26 March 2021 of the Government providing guidance on the Law on Investment, takes effect as of the issuance date.
Via Decree 31, the list of business lines with prohibited and restricted market access for foreign investors has officiallybeen announced for the first time, including 25 business lines that are prohibited from access to the market as prescribed in Section A of Appendix I and 59 restricted business lines. In addition, Appendix III specifies the list of geographical areas eligible for investment incentives in areas with difficult or particularly difficult socio-economic conditions, replacing the provisions of Appendix II of the List of geographical areas eligible for investment incentives (promulgated together with the Decree No. 118/2015/ND-CP of the Government dated 12 November 2015).
- Decree 31 has also supplemented several business lines eligible for investment incentives, including:
- Research, manufacture of biotechnology food products.
- Manufacture of sawmill products; manufacture of artificial planks, including: plywood, joinery planks, MDF.
- Investment in development, operation and management of infrastructural works of industrial complexes.
- Investment in facilities for protection of sex workers from gender-based violence in communities.
- Investment in power generation from exhaust gas of building material factories.
In addition, Decree 31 has supplemented 02 (two) cases of termination of investment projects, namely:
- Termination of an investment project in case the investor conducts investment activities on the basis of a sham civil transaction in accordance with the civil law.
- Termination of an investment project under a court’s judgment or decision or arbitral award.
It could be observed that the guidance and supplements in Decree 31 will create many significant changes in the field of investment management, thereby helping the legal corridor of enterprises and investment of our country becomemore and more complete and stricter in the face of the continuous development and innovation of Vietnam’s economy.
V. DECREE NO. 30/2021/ND-CP
Investors with land use rights other than residential land use rights are not recognized as investors of commercial housing construction projects
Decree No. 30/2021/ND-CP (“Decree 30”) dated 26 March 2021 of the Government providing amendments toseveral articles of the Decree No. 99/2015/ND-CP (“Decree 99”) giving details and guidance on some articles of Law on Land, takes effect as of the issuance date.
Decree 30 clearly stipulates cases of selection of investors as owners of commercial housing construction projects and metro area projects with housing. In particular, investors must have land use rights in one of the following cases to be eligible to be investors of commercial housing construction projects:
- Having lawful residential land use rights;
- Having lawful rights to use residential land and other types of land permitted by the competent authority to be repurposed into residential land; or
- Receiving transfer of residential land use rights according to regulations of law on land for commercial housing construction.
Then, in the decision on approval for investment guidlines, it will simultaneously determine that the investor is the owner of the commercial housing construction project.
However, there are many opinions that the above amendments will cause difficulties and congestion for the selection of investors of commercial housing projects when prescribing cases where investors “have the right to use legal residential land and other types of land permitted by competent state authorities to change the purpose of land use to residential land” , then missed cases where investors have the right to use other types of land other than residential land, not “including” residential land, so it has not ensured the synchronization and inter-connection between legal documents.
Regarding the above opinion, lawmakers argue that if the regulation must have residential land and other land allowed by competent state authorities to transfer the purpose of land use to residential land will lead to sedity, an imbalance of supply and demand. In addition, when compared with the provisions of the Law on Housing 2014 and the Law on Investment 2020, the proposal to supplement the case that investors only need to have land use rights other than residential land is also approved as investors of commercial housing construction projects are not in accordance with the provisions of these two laws and also not in accordance with the regulations of the Law on Land 2013.
Thereby, it can be seen that, besides the contrary opinions in the first stage of application, the guiding provisions in Decree 30 have helped to remove many practical problems, especially to ensure the consistence in the system of legal documents. The new points in Decree 30 will help to evaluate and select qualified investors and the State can increase budget revenues through auction of land use rights in commercial housing projects.
VI. DECREE NO. 50/2021/ND-CP
Adjustment of names of certain types of construction contracts
Decree No. 50/2021/ND-CP (“Decree 50”) dated 01 April 2021 of the Government providing amendments to several articles of the Decree No. 37/2015/ND-CP (“Decree 37”) dated 22 April 2015 of the Government giving details and guidance on construction contracts, takes effect as of the issuance date.
The most notable feature of Decree 50 is the appearance of a new type of construction contract as “Simple and small-scale construction contract”. This type of construction contract for the performance of a contract package with a value not exceeding the limit on a small-scale contract package in accordance with regulations of law on bidding. The contents of the contractual work are of a simple technical nature and easy to be conducted.
Decree 50 also amends the name of the technological equipment supply contract (abbreviated as the Equipment Supply Contract) into the contract for procurement of materials, equipment and re-defines the EP contracts (Engineering and Procurement contracts), PC contracts (Engineering and Procurement contracts), EPC contracts (Engineering, Procurement and Construction contracts).
In order to overcome the shortcomings of Decree 37 when not referring to 02 (two) types of contracts “Charge-plus cost-based contract” and “Other construction contracts” as prescribed in Article 140 of the Law on Construction 2014, Decree 50 has supplemented to 02 (two) types of these contracts in the content of the Decree together with the provisions on their construction contract prices and applicable conditions.
Decree 50 was promulgated with the expectation of timely addition of incomplete and ambiguous provisions to help the actual law enforcement process take place smoothly and feasibly, while ensuring synchronization in the legal system on construction and overcoming shortcomings and limitations in order to shorten the implementation time and improve efficiency in the project investment process.