New amendments to Law on Investment, Law on Enterprises and Law on Electricity

On 11 January 2022, the National Assembly passed Law No. 03/2022/QH15 amending and supplementing several articles in 9 laws, including Public Investment Law, Public-Private Partnership Law, Investment Law (the “LOI”), Residential Housing Law, Tendering Law, Electricity Law, Enterprise Law (the “LOE”), Law on Special Consumption Tax, and Law on Civil Judgment Enforcement, which has been effective since 1 March 2022 (the “Law 03/2022”). This Law 03/2022 has made certain remarkable changes, among others, to investment and business activities as highlighted and discussed in this legal update.

Key contents

Amendments to Law on Investment

Change of the Prime Minister’s authority to grant investment in-principle approval

The Prime Minister now only grants the investment in-principle approval for residential housing projects with a land use scale of 300ha or more, or having a population scale of 50,000 people or more, while the Provincial People’s Committee is given the right to grant the investment in-principle approval for projects with a land use scale of less than 300ha and a population scale of less than 50,000 people. Compared to the previous version of the LOI, this change does narrow down the power of the Prime Minister by delegating more power to the Provincial People’s Committee.
Addition of new conditional business lines

The business of cyber security products and services (excluding the business of cyber security information products and services, and the business of civil cryptographic products and services) is supplemented as a new conditional business line under the LOI.

Amendments to Law on Enterprises

Clearer distinction of the members of the Members’ Council and the members of the Multiple-Members LLC

Though the LOE regulates two positions for a Multiple-Members LLC: (1) members of the LLC; and (2) members of the Members’ Council of the LLC, it only provides for the rights of members of the Members’ Council, but does not mention the rights of the members of the LLC. Besides, numerous rights of the members of the Members’ Council, as specified in the LOE, should be the rights of the members of the LLC - such as the right to subscribe for a capital increase or to receive dividends paid by the company.

The Law 03/2022 resolves this prob-lem by changing the term “members of the Members’ Council” into “members of the company” as regulated in Articles 49 and 50 of the LOE. Nevertheless, in other provisions, there is still no distinction between the position of members of the Multiple-Members LLC and the members of the Members’ Council of the LLC, which should be further resolved by the law makers soon.
Removal of requirement of signature of dissenting members on meeting minutes; signature of the chairperson and the person writing the minutes if they refuse to sign on the meeting minutes

The signature of the participants disagreeing to pass the meeting minutes of the Members’ Council of the LLC is no longer required in such meeting minutes under the Law 03/2022.

In addition, if the chairperson and/or the minutes writer refuses to sign the meeting minutes of the Members’ Council (for the LLC)/Board of Directors (for the JSC), the meeting minutes of the Members’ Council/Board of Directors shall be effective once the meeting minutes have been signed by all participants, who have approved to pass the minutes.
Change of voting threshold of General Meeting of Shareholders based on the number of votes of attending shareholders who cast their vote

According to the Law 03/2022, the voting threshold of the General Meeting Shareholders is determined based on the number of votes of attending shareholders who cast their votes, rather than on the number of votes of all attending shareholders, regardless of whether such shareholders cast their votes or not.

It appears that this amendment tightens the regulations on the calculation of votes for passing resolutions of the General Meeting of Shareholders in JSC.

Amendments to Law on Electricity

According to the Law 03/2022, private investors can now operate the transmission grid, being invested and constructed by themselves.

Before the enactment of Law 03/2022, these activities were regulated as monopoly of the State. Therefore, one of the most critical concerns of investors upon acquiring power projects in Vietnam was to reach an agreement with the State-owned enterprise holding the right to oper-ate such grid for electricity transmission. However, with this amendment in the Law 03/2022, the private sections now has another option to deal with the issues in terms of the transmission grid upon investing in power projects in Vietnam.