Asia Counsel Insights

Tet February 2021

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

  • Advised Kim Healthcare Group Corporation on USD24 million investment from series B investors including Singapore private equity funds, ABC World Asia and Aura Group.
  • Established the subsidiary for the Anytime Fitness master franchise in Vietnam and registration of the master franchise with the Ministry of Industry and Trade.


Employment of Foreign Workers

On 30 December 2020 the Government issued Decree No 152/2020/ND-CP on employment of foreign workers, taking effect on 15 February 2020 (“Decree 152”).

Decree 152 states that employers utilising foreign workers must provide the relevant authorities with information regarding the demand for any foreign employee to fill a position that cannot be fulfilled by a Vietnamese worker at least 30 days prior the employee’s planned start day.

The Decree introduces more stringent criteria for determining experts and skilled workers permitted to work in Vietnam. Incoming experts must now provide evidence of at least three years work experience, with verified tertiary qualifications (or five years with a practicing certificate provided in lieu of tertiary qualifications), in their relevant field. Further, skilled workers must now also provide proof of five years of relevant work experience.

Decree 152 also lists a number of exceptions to foreigners that require work permits, including: (i) foreigners married to Vietnamese citizens; (ii) owners, capital contributors, members or chairpersons of companies with capital of three billion VND or more; and (iii) others listed under Article 7 of Decree 152. Under Decree 152, work permits (issued for a period of two years) can now only be extended for another two year period on one occasion. Upon the expiry of the extended work permit, a new work permit must be applied for.

Working Conditions and Labour Relations

Clarity for transportation apps

On 14 December 2020, the Government issued Decree No. 145/2020/ND-CP elaborating articles of the Labor Code on working conditions and labor relations (“Decree 145”), which came into effect on 1 February 2021.

Under Decree 145, methods of salary payment are to be decided at the discretion of the contracting parties, as specified in the applicable employment contract. Further, the payment of any fees related to the opening of bank accounts and bank transfers is now to be the responsibility of the employer. Decree 145 further states that time spent by:

(i) apprentices or trainees on carrying out certain activities,

(ii) leaders of employee representative organizations on carrying out related tasks,

(iii) employees on undergoing medical exams (subject to certain conditions), will now all be included in the determination of working hours for salary entitlement.

Decree 145 also states that employees working as: (i) aircraft crew or aviation staff; (ii) enterprise managers; or (iii) ship crew must provide at least 120 days advance notice in regards to the unilateral termination of a labor contract with a term of 12 months or more, or a period equal to a quarter of the term for a contract of less than 12 months.

In addition, Decree 145 provides significant developments on gender equality, particularly in explicitly upholding the right of all employees to equality in the workplace.

Derivative Securities

On 31 December 2020, the Government issued  Decree No.158/2020/ND-CP on derivative securities  and derivative securities markets (“Decree 158”). This  Decree provides conditions for derivative securities  trading as well as derivative securities clearing and  settlement services.  

Derivative securities trading

Securities companies (“SCs”) and fund managers (“FMCs”) are only allowed to trade derivative  securities after obtaining a certificate of eligibility for  derivative securities trading from the State Securities  Commission. SCs and FMCs must also meet standards on charter capital and equity as well as human  resources and other conditions set out under Article  4.2 and 4.3 of Decree 158.  

Under Decree 158, an SC may engage in derivative  securities brokerage, derivative securities trading and  derivative securities investment consulting. FMCs,  however, are only permitted to carry out derivative  securities investment consulting. 

Derivative securities clearing and settlement services

SCs, commercial banks and foreign bank branches  are allowed to provide derivative securities clearing  and settlement services after obtaining a certificate  of eligibility for providing derivative securities clearing  and settlement services from the State Securities  Commission. In order to obtain this certificate, the  above-mentioned organizations are required to  satisfy the conditions as stipulated in Article 9 of  Decree 158, such as having a securities depository  registration certificate and meeting the minimum  capital adequacy ratio within the last 12 months.  

Securities Law Sanctions

Decree 156/2020/ND-CP issued by the Government on 31  December 2020 in relation to sanctioning administrative  violations in the securities and securities market (“Decree 156”)  has introduced increased fines for individuals and  organizations that commit administrative violations in the field  of securities and securities markets. In respect to using insider  information to trade securities as well as violations of securities  market manipulation regulations, the maximum fine level is  now ten times the illegal revenue for organizations, and five  times the illegal revenue for individuals.  

In addition, those who commit the above violations may be  subject to additional sanctions, including: 

  • suspension of securities business and service activities for  a period of one to three months; 
  • suspension of securities practicing certificate for a period  of 18 to 24 months; and 
  • other additional sanctions contained under Decree 156.  

In relation to the private offering or issuance of securities, Decree 156 stipulates a fine of between VND100,000,000 VND  VND150,000,000 for: (i) the private offering or issuance of  securities in contravention of a registered or approved plan;  (ii) the failure to amend or supplement the application dossiers of an offer or private placement of securities upon detecting  inaccurate information; or (iii) omitting content as prescribed by law. Decree 156 also introduces stricter penalties for  violations on public offer rules, for example the maximum  penalty for offering securities to the public without meeting  the required legal conditions is now VND600,000,000. This  amount is large for Vietnam standards but not in other  jurisdictions.  

In addition to the fines, violators shall also be subject to  additional penalties and remedies as stated in Decree 156. 

    New Securities Regulations  

    On 31 December 2020, the Government issued Decree No.155/2020/ND-CP implementing the Securities Law. The key  changes are below. 

    Decree 155 regulates share offering below par value for both public and private offerings. This is permitted if, among  other things, sufficient equity capital surplus (based on the most recent audited financial statement) to offset the  negative surplus arising from the offering of shares below par value. 

    Under Decree 155, a public company is allowed to determine a maximum foreign ownership rate which is lower than  the prescribed rate, however such a determination must be approved by the General Meeting of Shareholders and  stipulated in the company’s charter. Decree 155 also states that in cases where a conditional market access industry does not specify conditions on foreign investor charter capital ownership ratios, the maximum foreign ownership ratio  will be set at 50% of the company’s charter capital. 

    Decree 155 also regulates the required conditions for a share offering converting an LLC into a JSC, including that capital contributors or company owners must undertake to jointly hold at least 20% of the charter capital of the issuer for at least one year from the end of the offering.

    Corporate Bonds

    On 31 December 2020, the Government adopted Decree  153/2020/ND-CP guiding the Law on Securities 2019 on  corporate bonds (“Decree 153”), which took effect from 1  January 2021 to replace Decree 163/2018/ND-CP (“Decree  163”) and Decree 81/2020/ND-CP (“Decree 81”). 

    Entities purchasing corporate bonds

    Decree 153 provides a list of the specific entities that can purchase corporate bonds, which includes professional  securities investors and strategic investors. Contrastingly,  Decree 163 and Decree 81 did not provide explicit  restrictions on the entities permitted to purchase corporate  bonds. 

    Conditions for bond issuance

    Under Decree 153, the below conditions for bond issuances  have been removed: 

    (i) minimum term of operation of at least one year; (ii) outstanding balance of issued bonds at the time of  issuance must not exceed five time the equity of the  issuer in the most recent financial statement; and (iii) six-month pause between bond issuance tranches  (only for non-convertible bonds and bonds with no  warrants). 

    Lock-up period for bond transfers

    Under Decree 163 and Decree 81, convertible bonds and  bonds with warrants attached were subject to a lock up  period of one year on transfers from the date of completion  of the tranche issuance.

    Under Decree 153, the applicable transfer lock up period is  now at least: (i) three years for strategic investors; and (ii)  one year for professional securities investors, from the date  of completion of the tranche issuance. 

    Transitional Period

    Any corporate bonds issued before 1 January 2021 must continue to comply with Decree 163 until its maturity,  except in regards to disclosing and reporting obligations. 

    SCC’s approval for bond issuance

    Private issuance of corporate bonds by public companies, securities company and fund management companies must be approved by the State Securities Commission (SCC). This SCC approval is not applied to corporate bonds privately issued by the other companies.

    Methods of bond issuance

    Decree 153 also provides for four methods of bond issuance, including: direct issuance, insurance via a bidding organisation, underwriter or bond issuing agent. However, the direct issuance method is allowed for credit institution only.

    Information Disclosure

    Decree 153 strengthens information disclosure regime to improve the transparency in the corporate bond market. The issuer is required to make a range of disclosures to public via the stock exchange. The disclosures are made prior to issuance and on a periodic basis.


    Enterprise Registration 

    Decree 01/2021/ND-CP on enterprise registration took effect on 4 January 2021 to  replace Decree 78/2015/ND-CP and Decree 108/2018/ND-CP (“Decree 01”). Under  Decree 01: 

    • an enterprise code will serve as a tax code and social insurance code; 
    • the procedures on the notification of seal, change of managerial personnel and  private share placement have been removed; 
    • in an application dossier for a change of enterprise registration content, it is no  longer required to state the amended content of the charter in the decision,  resolution, meeting minutes of the owner, members’ council or the general  meeting of shareholders; 
    • it is no longer necessary to submit a hard copy of application dossiers to the  Department of Planning and Investment if an application has already been submitted on the National Business Registration Portal; 
    • if the legal status of an enterprise is “no longer under business operation at the  registered address”, the enterprise will not be allowed to register or provide  notification of any changes to the enterprise registration content; and
    • in case the enterprise registration certificate is not issued, the fee for announcing  the registered enterprise content shall be refunded.

    Vietnam Fact Box 


    On 9 February 2021, the Ministry  of Industry and Trade has  completed a draft Decree on  personal data protection for  public comment. Under the  draft Decree, personal data  includes primary personal data (e.g. name, date of birth,  address, identity information,  marriage status, etc.); and  sensitive personal data (e.g.  political views, health status,  genetic traits, biometrics,  criminal records, financial  status, etc.). In principle, the  disclosure of personal data must  be consented to by the person  holding such data, save for  certain exceptional cases. The  draft also provides that any  unauthorized disclosures of  personal data may be subject  to a fine of up to VND80mil.