Decree 24-2000-ND-CP
Government Decree providing detailed reguilations on the implementation of the law foreign investment in Vietnam Government.
GOVERNMENT
SOCIALIST REPUBLIC OF VIETNAM
No.24-2000-ND-CP
Independence - Freedom - Happiness
Hanoi 31 July 2000
GOVERNMENT DECREE PROVIDING DETAILED REGULATIONS ON THE IMPLEMENTATION OF THE LAW ON FOREIGN INVESTMENT IN VIETNAM THE GOVERNMENT
Pursuant to the Law on the Organisation of the Government dated 30 September 1992;
Pursuant to the Law on Foreign Investment in Vietnam dated 12 November 1996 and the Law on Amendments of and Additions to a Number of Articles of the Law on Foreign Investment in Vietnam dated 9 June 2000;
CHAPTER I
General Provisions
This Decree makes detailed regulations on the implementation of the Law on Foreign Investment in Vietnam dated 12 November 1996 and the Law on Amendments of and Additions to a Number of Articles of the Law on Foreign Investment in Vietnam dated 9 June 2000 (hereinafter collectively referred to as the Law on Foreign Investment).
Foreign investment in industrial zones, export processing zones and high-tech zones; foreign investment under build-operate-transfer (abbreviated in English as BOT) contracts, build-transfer-operate (BTO) contracts, and build-transfer (BT) contracts; foreign investment in medical examination and treatment, education, training, and scientific research shall comply with the provisions of this Decree and other relevant provisions of the law.
International credit activities, commercial activities and other forms of indirect investment are not governed by this Decree.
Article 2 Entities participating in investment co-operation
Entities participating in investment co-operation in accordance with the provisions of the Law on Foreign Investment shall comprise:
1.Vietnamese enterprises:
(c)Enterprises belonging to the political organisation or socio-political organisations;
(d)Limited liability companies, shareholding companies, partnerships and private enterprises established in accordance with the Law on Enterprises.
2.Medical examination and treatment establishments, education and training establishments and scientific research establishments which satisfy the conditions stipulated by the Government.
Article 3 Lists and selection of investment projects
Based on the economic and social development planning and orientation for each period, the Ministry of Planning and Investment shall co-ordinate with ministries, branches and people’s committees of provinces and cities under central authority (hereinafter referred to as provincial people’s committees) to submit the lists mentioned above to the Prime Minister of the Government for consideration and promulgation.
2.An investor may on its own initiative select investment projects, investment partners, the form of investment, the locality, the duration of investment, the markets for the sale of products and the legal capital contribution ratio in accordance with the provisions of the Law on Foreign Investment and this Decree.
1.Entities participating in investment co-operation as stipulated in article 2 of this Decree must comply with the provisions of the Law on Foreign Investment, the provisions of this Decree, and other relevant provisions of the law of Vietnam.
2.In any certain cases where Vietnamese law does not yet have provisions regarding foreign investment in Vietnam, the parties may agree in the contract the application of foreign laws provided that the application of foreign laws is not inconsistent with the basic principles of the law of Vietnam.
The files of an investment project and official correspondence with State bodies of Vietnam shall be prepared in Vietnamese, or in Vietnamese and a commonly used foreign language.
CHAPTER II
A business co-operation contract is a document which is signed by two or more parties and which stipulates the responsibilities of, and the sharing of business results between, the parties for the purposes of conducting investment and business in Vietnam without creating a legal entity.
Business co-operation contracts for prospecting, exploration and exploitation of oil and gas and a number of other natural resources in the form of production sharing contracts shall be implemented in accordance with the provisions of the relevant law and the Law on Foreign Investment.
Article 7 Contents of business co-operation contracts
A business co-operation contract must contain the following principal items:
1.The names, addresses, authorized representatives of the business co-operation parties (hereinafter referred to as business co-operation parties); and the transaction address or address of the location in which the project shall be implemented;
3.The contributions of the business co-operation parties, the sharing of business results, and the schedule for the performance of the contract;
8.The procedures for amendment and termination of the contract, and conditions for assignment;
9.The responsibilities for a breach of the contract and methods of dispute resolution.
Apart from the above-mentioned items, the business co-operation parties may agree on other items in the business co-operation contract.
A business co-operation contract must be signed by the authorized representatives of the business co-operation parties on each page and at the end of the contract. The business co-operation contract shall become effective as from the date of issuance of the investment licence.
During the process of business, when deemed necessary, the business co-operation parties may agree to establish a co-ordination board to perform the business co-operation contract.
The co-ordination board shall not have authority over the business co-operation parties. The functions, duties and powers of the co-ordination board shall be agreed by the business co-operation parties.
A foreign business co-operation party may establish an operating office in Vietnam to perform the business co-operation contract and shall be responsible for the activities of the operating office.
The operating office of the foreign business co-operation party shall have a seal, may open accounts, recruit employees, sign contracts and conduct business activities within the scope of the rights and obligations stipulated in the investment licence and the business co-operation contract.
The operating office of the foreign business co-operation party must be registered with the investment licence issuing body.
Article 10Tax obligations of business co-operation parties
1.A foreign business co-operation party shall fulfill tax obligations and other financial obligations in accordance with the Law on Foreign Investment; the Vietnamese business co-operation party shall fulfill tax obligations and other financial obligations in accordance with provisions of the law applicable to domestic enterprises.
2.Corporate income tax and other financial obligations of the business co-operation parties (including land rent, royalties and so forth) may be included in the share of products distributed to the Vietnamese business co-operation party and the Vietnamese business co-operation party shall be responsible for payment to the State.
1.A joint venture enterprise is an enterprise established in Vietnam on the basis of a joint venture contract signed by two or more parties for the purpose of conducting investment and business in Vietnam.
In special circumstances, a joint venture enterprise may be established on the basis of an agreement signed by the Government of Vietnam and the government of another country.
2.A new joint venture enterprise is an enterprise established by a joint venture enterprise already established in Vietnam with:
(c)A medical examination and treatment establishment, an education and training establishment, or a scientific research establishment which satisfies the conditions stipulated by the Government;
(dd)A joint venture enterprise or an enterprise with one hundred (100) per cent foreign owned capital already established in Vietnam.
3.A joint venture enterprise shall be established in the form of a limited liability company. Each joint venture party shall be responsible to the extent of its committed contribution to the legal capital of the enterprise. The joint venture enterprise shall be a legal entity in accordance with the law of Vietnam and shall be established and operate as from the date of issuance of the investment licence.
A joint venture contract must contain the following principal items:
1.The names, addresses and the authorized representatives of the joint venture parties; the name and address of the joint venture enterprise;
2.The objectives and scope of the business;
3.The invested capital, legal capital, legal capital contribution ratio, method and schedule of capital contributions, and the schedule of construction;
9.The procedures for amendment and termination of the contract, conditions for assignment, conditions for termination and dissolution of the enterprise.
10.The responsibilities for a breach of the contract and methods of dispute resolution.
Apart from the above-mentioned items, the joint venture parties may agree on other items in the joint venture contract.
The joint venture contract must be signed by the authorized representatives of the joint venture parties on each page and at the end of the contract. The joint venture contract shall become effective as from the date of issuance of the investment licence.
Article 13 Charters of joint venture enterprises
The charter of a joint venture enterprise must contain the following principal items:
1.The name and address of the enterprise; the names, nationalities and addresses of the authorized representatives of the joint venture parties;
3.The invested capital , legal capital, legal capital contribution ratio, method and schedule of legal capital contribution;
5.The procedures for passing resolutions of the enterprise; the principles for dispute resolution;
8.The ratio for distribution of profits and losses between the joint venture parties;
9.The labour relations within the enterprise and issues of labour recruitment and training;
10.The duration of the operation, and the conditions for termination of operations and dissolution of the enterprise;
11.The procedures for amendment of and addition to the charter of the enterprise.
Apart from the above items, the joint venture parties may agree on other items in the charter of the joint venture enterprise.
The charter of the joint venture enterprise must be signed by the authorized representatives of the joint venture parties on each page and at the end of the charter. The charter of the joint venture enterprise must be registered with the investment licence issuing body.
Article 14 Legal capital of joint venture enterprises
1.The legal capital of a joint venture enterprise must not be less than thirty (30) per cent of the invested capital . In respect of projects for construction of infrastructure facilities, investment projects in regions in which investment is encouraged, afforestation projects and large scale projects, this ratio may be lower but not less than twenty (20) per cent of the invested capital provided that the approval of the investment licence issuing body is obtained.
2.The ratio of capital contribution of a foreign joint venture party or parties shall be agreed by the joint venture parties but shall not be less than thirty (30) per cent of the legal capital of the joint venture enterprise. Based on the business sector, technology, market, business results and other socio-economic benefits of the project, the investment licence issuing body may consider and permit the foreign joint venture party to have a lower capital contribution ratio but not less than twenty (20) per cent of the legal capital.
In the case of establishment of a new joint venture enterprise, the legal capital contribution ratio of the foreign investors must satisfy the above-mentioned condition.
3.With respect to important projects stipulated by the Government, the joint venture parties may, when entering into the joint venture contract, agree on an increase of the capital contribution ratio of the Vietnamese party in the legal capital of the joint venture enterprise.
Article 15 Schedule of legal capital contribution
1.The legal capital may be contributed once in full at the time of establishment of the joint venture enterprise or by installments in accordance with the method and schedule of legal capital contribution stipulated in the joint venture contract.
2.In cases where the joint venture parties fail, without reasonable cause, to make capital contributions in accordance with the agreed schedule, the investment licence issuing body shall have the power to withdraw the investment licence.
Article 16Legal capital contribution in the form of the value of the land use right
The legal capital contribution by a Vietnamese party in the form of the value of the land use right shall be agreed by the joint venture parties the on the basis of the land rent rates determined by the provincial people's committee within the land rent tariff issued by the Ministry of Finance.
Article 17 Boards of management of joint venture enterprises
1.The board of management shall be the body in charge of the joint venture enterprise. The board of management shall comprise a chairman, a vice-chairman and other members.
The number of members of the board of management, the members representing each of the joint venture parties, and the appointment of the chairman of the board of management and of the general director and the first deputy general director shall be determined in accordance with the provisions of the Law on Foreign Investment.
The chairman, the vice chairman and other members of the board of management may concurrently hold the position of general director or deputy general director and other positions of the joint venture enterprise.
2.The term of office of the board of management shall be agreed by the joint venture parties but shall not exceed five years.
3.Where a new joint venture enterprise is established, the existing joint venture enterprise must have at least two members on the board of management, with at least one of those members being a Vietnamese citizen representing the Vietnamese joint venture party.
4.Members of the board of management shall not be entitled to salary but may be entitled to an allowance related to the operation of the board of management as determined by the board of management. Such expenses shall be accounted for as management expenses of the joint venture enterprise.
Article 18 Meeting procedures of boards of management of joint venture enterprises
1.The board of management shall hold a regular meeting at least once a year. The board of management may hold an extraordinary meeting at the request of the chairman of the board of management, or of at least two-thirds of the members of the board of management, or of the general director or of the first deputy general director. Meetings of the board of management shall be convened and chaired by the chairman of the board of management. The chairman of the board of management may authorize the vice-chairman of the board of management to convene and chair a meeting of the board of management.
2.Meetings of the board of management must have a quorum of at least two-thirds of the members of the board of management representing the joint venture parties. A member of the board of management may appoint in writing a proxy to attend meetings and vote on that member’s behalf on matters in respect of which the proxy is authorized to vote.
3.The board of management shall pass resolutions within its authority by voting in the meeting or by obtaining written opinions.
Article 19 Powers and responsibilities of the chairman of the board of management
The chairman of the board of management has the following powers and responsibilities:
1.To convene and chair meetings of the board of management;
2.To play a key role in supervising and monitoring the execution of resolutions of the board of management.
Article 20 Powers and responsibilities of the general director and deputy general directors
1.The general director and deputy general directors of the joint venture enterprise shall be responsible for the management and conduct of the day-to-day activities of the joint venture enterprise. The general director shall be the legal representative of the enterprise unless otherwise stipulated by the charter of the enterprise. The general director or first deputy general director shall be nominated by the Vietnamese joint venture party and be Vietnamese citizens residing permanently in Vietnam. In cases where the joint venture has only one deputy general director, that director shall be the first deputy general director.
2.The board of management shall determine the powers and duties of the general director and the first deputy general director. The general director shall be responsible before the board of management for the operation of the joint venture enterprise. The general director should discuss with the first deputy general director the execution of resolutions of the board of management relating to important issues such as mechanism of organisation; appointment and removal of key personnel; approval of annual financial statements, finalization reports of projects; and signing of economic contracts.
In cases where the general director and the first deputy general director have different opinions in relation to the management of the enterprise, the opinion of the general director shall be conclusive, however the first deputy general director may reserve his or her opinion and raise it with the board of management at its next meeting for consideration and decision.
3.Where the general director is absent, the first deputy general director is authorised to manage the enterprise on behalf of the general director and shall be responsible to the board of management and the general director for his or her work.
Article 21 Enterprises with one-hundred (100) per cent foreign own capital
An enterprise with one hundred (100) per cent foreign owned capital is an enterprise owned and established in Vietnam by foreign investor(s) who shall by themselves manage the enterprise and take full responsibility for its business results.
An enterprise with one hundred (100) per cent foreign owned capital shall be established in the form of a limited liability company and shall be a legal entity in accordance with the law of Vietnam and shall be established and operate from the date of issuance of the investment licence.
Article 22 Charters of enterprises with one-hundred (100) per cent foreign owned capital
The charter of an enterprise with one hundred (100) per cent foreign owned capital must contain the following principal items:
1.The names, addresses of the enterprise; the name and address of the authorized representative of the foreign investors;
3.The invested capital , legal capital, method and schedule of capital contribution[1], and schedule of construction;
6.The labour relations within the enterprise, issues of labour recruitment and training;
7.The duration of operation, and the conditions for termination of operation and dissolution of the enterprise;
8.The procedure for amendments of and additions to the charter of the enterprise.
Apart from the above-mentioned items, the charter of the enterprise may include other items.
The charter of an enterprise with one hundred (100) per cent foreign owned capital must be signed by the authorized representatives of the investors on each page and at the end of the charter. The charter of an enterprise with one hundred (100) per cent foreign owned capital must be registered with the investment licence issuing body.
Article 23Legal capital of enterprises with one hundred (100) per cent foreign owned capital
1.The legal capital of an enterprise with one hundred (100) per cent foreign owned capital must not be less than thirty (30) per cent of the invested capital . In respect of projects for construction of infrastructure facilities, investment projects in regions in which investment is encouraged, afforestation projects and large scale projects, this ratio may be lower but not less than twenty (20) per cent of the invested capital provided that the approval of the investment licence issuing body is obtained.
2.The method and schedule of legal capital contribution[2] shall be stipulated in the charter of an enterprise. In the case where the foreign investors fail, without a reasonable cause, to make capital contributions in accordance with the stipulated schedule, the investment licence issuing body shall have the power to withdraw the investment licence.
3.Any adjustment of the invested capital or legal capital must be decided by the foreign investors and approved by the investment licence issuing body.
Article 24 Representatives of enterprises with one hundred (100) per cent foreign owned capital
The legal representative of an enterprise with one hundred (100) per cent foreign owned capital shall be the general director unless otherwise stipulated by the charter of the enterprise.
CHAPTER III
Implementation of Projects and Business Organisation
Article 25 Personnel and first meeting of boards of management of joint venture enterprises
After issuance of the investment licence, a joint venture enterprise must carry out the following work:
1.Within thirty (30) days from the date of issuance of the investment licence, the joint venture parties shall inform each other of the list of members of the board of management and appoint the chairman and the vice-chairman of the board of management.
2.Within sixty (60) days from the date of issuance of the investment licence, the board of management shall hold the first meeting in order to carry out the following main work:
(a)To pass the working rules of the board of management;
(b)To appoint the general director, deputy general directors and the chief accountant (or financial director);
(c)To determine a detailed schedule for legal capital contribution by the joint venture parties, a plan and schedule of construction.
3.The minutes of the first meeting of the board of management shall be submitted to the department of planning and investment where the head office of the joint venture enterprise is located. In the case of enterprises in industrial zones, export processing zones and hi-tech zones, the minutes shall be submitted to the management board of the industrial zone, export processing zone or hi-tech zone (hereinafter referred to as the industrial zone management board) where the project is implemented.
4.The list of[3] the board of management, the general director and deputy general directors of the joint venture enterprise shall be registered with the department of planning and investment; in the cases of enterprises in industrial zones, export processing zones and hi-tech zones, the above list shall be registered with the industrial zone management board.
Article 26Establishment and registration of the management apparatus of enterprises with one hundred (100) per cent foreign owned capital and business co-operation contracts
The establishment of the management apparatus and the appointment of personnel of an enterprise with one hundred (100) per cent foreign owned capital shall be determined by the foreign investors.
The registration of the list of personnel of an enterprise with one hundred (100) per cent foreign owned capital, or representatives of a business co-operation party and operating office of a foreign business co-operation party (in respect of a business co-operation contract) shall be carried out as in the case of joint venture enterprises stipulated in article 25 of this Decree.
Article 27 Announcement of establishment
After being appointed, the general director of an enterprise with foreign owned capital or the representatives of business co-operation parties shall publish an announcement of the following main information in three consecutive issues of a central or local daily newspaper:
1.The name and address of the enterprise or the location where the business co-operation contract shall be performed; the name and address of the branch, representative office or operating office (if any);
2.The names and addresses of the joint venture parties, and of the business co-operation parties or of the foreign investors;
3.The legal representative(s) of the enterprise or of the business co-operation parties;
4.The number and date of issuance of the investment licence, the investment licence issuing body, the duration of operation of the enterprise or the duration of the business co-operation contract;
5.The invested capital and the legal capital of the enterprise; the capital contribution ratio of each joint venture party and the committed capital contribution of the business co-operation parties;
Article 28 Business registration and practising certificates
1.The investment licence is concurrently the certificate of business registration.
2.With respect to sectors and business lines for which a business licence is required as stipulated by law, enterprises with foreign owned capital and the business co-operation parties shall only be required to register with the authorized State body for the purpose of carrying out business activities in accordance with the investment licence without applying for a business licence.
3.With respect to sectors and business lines for which a practising certificate is required by regulations, enterprises with foreign owned capital and the business co-operation parties must obtain the practising certificate in accordance with the law prior to the commencement of their operations.
Article 29 Branches and representative offices
1.Enterprises with foreign owned capital and business co-operation parties may establish branches and representative offices outside the province or city where the head offices of enterprises are located or where the main activities of business co-operation contracts are carried out for the purpose of conducting business activities in accordance with the provisions of investment licences.
Where necessary to promote export, an enterprise with foreign owned capital may establish branches and representative offices overseas in order to conduct transactions, marketing and the sale of products. The establishment of a branch or representative office overseas must be considered and approved by the Ministry of Planning and Investment.
2.An enterprise with foreign owned capital shall be responsible for the activities of its branch or representative office overseas. Income earned by the branch shall be included in the income of the enterprise and shall be remitted to the parent company in Vietnam annually and shall be subject to corporate income tax at the rate stipulated in the investment licence. Where the enterprise with foreign owned capital establishes a branch in a country which has signed a double taxation avoidance agreement with Vietnam, such agreement shall apply.
3.The Ministry of Planning and Investment shall provide guidelines regarding the formalities and procedures for the establishment of branches or representative offices of enterprises with foreign owned capital and of business co-operation parties.
Article 30 Hire of management organisations
1.With respect to hotels, offices or apartments for lease, golf-courses, sports, entertainment, medical examination and treatment, education and training and a number of sectors for which intensive management skills are required, an enterprise with foreign owned capital or business co-operation parties may hire a management organisation to manage the business activities.
2.The hire of the management organisation must not change or negatively affect the objectives of the operation of the project or the interests of the State of Vietnam as stipulated in the investment licence.
3.The hire of the management organisation shall be carried out by way of a management contract between the enterprise with foreign owned capital or the business co-operation parties and the management organisation. Management fees shall be agreed by the parties in the management contract and shall be accounted for as management expenses of the enterprise or of the business co-operation parties.
A management contract shall only become effective after it is approved by the investment licence issuing body.
4.The management organisation shall operate in the name, and use the seal and accounts, of the enterprise with foreign owned capital or of one or more business co-operation party(ies). The management organisation shall be responsible to the enterprise with foreign owned capital or to the business co-operation parties and shall abide by the law of Vietnam while exercising its rights and performing its obligations as specified in the management contract.
The management organisation must pay taxes and fulfil other financial obligations in accordance with the provisions of the law. The enterprise with foreign owned capital or the business co-operation parties shall, on behalf of the management organisation, pay these amounts to the State of Vietnam.
In all cases, the enterprise with foreign owned capital or the business co-operation parties shall be responsible before the law of Vietnam for the whole operation of the management organisation in respect of matters related to the management activities specified in the management contract. The management organisation shall be directly responsible before the law of Vietnam for its activities which are beyond the scope of the management contract.
Article 31 Re-organisation of enterprises
1.The division, demerger, merger or consolidation of an enterprise or the conversion of the forms of investment (hereinafter collectively refe
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