March 2020

Asia Counsel Insights provide an overview of the key trending legal and business issues in Vietnam and how they may impact your business. Please enjoy your read.

Deal Update

• Acting for The Blue Circle on its turbine supply agreement with General Electric for the supply of 8 x 5MW Cypress platform wind turbines to the 40 MW Hong Phong 1 Wind Power Project.

Insights

Competition

The Government issued Decree No.  35/2020/ND-CP on 24 March 2020  detailing certain articles of the Law  on Competition, which will come into  effect from 15 May 2020 (“Decree  35”). 

Control

Under the Law on Competition, an  “acquisition of an enterprise” is  defined as a direct or indirect  acquisition (means that offshore  acquisitions may apply) of whole or  part of the capital contribution or  assets of another enterprise sufficient  to control or dominate the acquired  enterprise or a business lines of the  acquired enterprise. The acquisition  of an enterprise could be subject to  the notification of economic  concentration. Control means: 

• the acquiring enterprise (the  “acquiror”) acquires more than  50% of: (i) the ownership of  charter capital; or (ii) total voting  shares of the acquired enterprise. 
• the acquiror acquires more than  50% of the ownership or the use  rights of the assets of any business  line of the acquired enterprise. 
• the acquiror has one of the rights  to: (i) decide on the appointment,  dismissal or removal of a majority  or all members of management  personnel; or (ii) decide on the  amendment or supplements to  the charter of the acquired  enterprise; or (iii) decide on  important matters relating to the  operation of the acquired  enterprise. 

Notification threshold of economic concentration

An enterprise which intends to  participate in an economic  concentration must make notification  of economic concentration to the  National Competition Committee if  one of the following thresholds is met: 

• the value transaction of  economic concentration is  VND1,000 billion or more. 
• the total assets or the total revenue in the Vietnamese market of an  enterprise or group of affiliated  enterprises of which the enterprise  participating in the economic  concentration is a member,  reaches VND3,000 billion or more in  the financial year preceding the  economic concentration. 
• the combined market share of the  enterprises which intend to  participate in economic  concentration is 20% or more in the  relevant market in the financial year  preceding the economic  concentration. 

Credit institutions, insurance and  securities companies are subject to  separate notification thresholds. 

Decree 35 elaborates on the criteria  that the NCC must consider in making  its determination on whether the  economic concentration has a substantial anti-competitive effect or  likely to have a substantial anti competitive effect.

Investment Incentives

Decree No. 37/2020/ND-CP issued 30  March 2020 expands the business lines  eligible for investment incentives under the Law on Investment No.  67/2014/QH13 and Circular No.  83/2016/TT-BTC Guiding the  Implementation of Investment  Incentive Programs. Decree 37 is  focused on developing Vietnam’s  already rapidly growing startup  economy by incentivizing investment  in business incubators, co-working  spaces for startups, SME product  distribution chains and technical  support facilities for SMEs. These types  of businesses are now eligible for  import duty exemptions on fixed assets and land-use tax reductions or  exemptions based on the project’s location.  

Eligible enterprises may apply for  incentives at the relevant investment  registration authority prior to the  granting of an investment registration  certificate or afterwards. Only one  type of incentives may be applied for. 

Labour

Decree No. 28/2020/ND-CP on  sanctions for violations of the  regulations on labour, social security,  overseas manpower supply on  contract basis was issued on 1 March  2020, and will take effect on 15 April  2020 and replace the current Decree  No. 95/2013/ND-CP (as amended).  Changes include: 

• Mandatory execution of labour  contract will be a remedy for  violations related to probation  periods, such as: stipulating  multiple probation periods or  stipulating a probation term that  exceeds the maximum term  provided by law. 
• Employers will now be  sanctioned if they institute  multiple disciplinary actions for  an employee’s single breach of  the internal labour regulations. 
• Failure to provide the competent  authority with a copy the labour  contract of foreign employees after their being granted with a work permit will be subject to  sanction.

Education

Circular No. 04/2020/TT-BGDDT  detailing a number of articles of the  Government’s Decree No.  86/2018/ND-CP dated 6 June 2018  on Foreign Cooperation and  Investment in Education was issued  on 18 March 2020 and will take  effect on 5 May 2020. 

Accordingly, Vietnamese language  and Vietnamese studies programs  will be compulsory for pupils who are  Vietnamese citizens studying in  international schools invested/jointly  invested by foreign investors. 

This Circular provides detailed  regulations on approval of  integrated education programs  (curricula combining international  and Vietnamese education). An  integrated curriculum must be  reviewed by an appraisal council  which will be set up in accordance  with the Minister of Education and  Training’s decision to ensure that the  content and duration of the  particular program are appropriate  to the pyscho-physiology of the  students and the fine traditions and  customs of Vietnam, and show no  social prejudices about gender,  ethnicity, religion, or social status. 

Banking

Circular No. 04/2020/TT-BGDDT  detailing a number of articles of the  Government’s Decree No.  86/2018/ND-CP dated 6 June 2018  on Foreign Cooperation and  Investment in Education was issued  on 18 March 2020 and will take  effect on 5 May 2020. 

Accordingly, Vietnamese language  and Vietnamese studies programs  will be compulsory for pupils who are  Vietnamese citizens studying in  international schools invested/jointly  invested by foreign investors. 

This Circular provides detailed  regulations on approval of  integrated education programs  (curricula combining international  and Vietnamese education). An  integrated curriculum must be  reviewed by an appraisal council  which will be set up in accordance  with the Minister of Education and  Training’s decision to ensure that the  content and duration of the  particular program are appropriate  to the pyscho-physiology of the  students and the fine traditions and  customs of Vietnam, and show no  social prejudices about gender,  ethnicity, religion, or social status.