Concretize legal provisions to protect investors

VCN - Vietnamese laws, including the draft Law on Enterprises and the Law on Investment, include many regulations to increase safety and improve confidence for investors, through regulations advancing effective protection mechanisms for the rights and interests of investors, shareholders and members of enterprises.  
tin nhap 20200107165848 Foreign investors more aggressive in M&As in HCM City
tin nhap 20200107165848 Large investors in agriculture
tin nhap 20200107165848 Free trade pact facilitates foreign investment in Vietnam’s aviation industry
tin nhap 20200107165848
Vietnamese laws are increasingly focusing on protecting investors. Photo: collection

Many important changes

Talking about important points of the draft Law on Enterprise (amended), Phan Duc Hieu, Deputy Director of the Central Institute for Economic Management (CIEM), said protecting shareholders or investors was the most important content of the legal framework on corporate governance. Good shareholder protection regulations would make an important contribution to creating a safe business tool for enterprises. Therefore, the draft Law on Enterprises (amended) had many important changes such as expanding the level and scope of shareholders' rights to create favourable conditions for shareholders to protect their interests and initiate lawsuits when managers abuse positions and powers to damage the company and shareholders.

For example, expanding shareholders' right to access information about the performance of the company; creating favourable conditions for shareholders to implement rights such as abolishing the content of restrictions on minimum time to own shares (to be able to exercise certain rights); supplement the right for the General Meeting of Shareholders to decide remuneration of the Board of Directors,decide to select independent audit; reduce requirement of share ownership from 10 percent to 1 percent for shareholders to exercise important rights.

In this regard, Prof. Dr. Nguyen Mai, Chairman of the Association of Foreign Investment Enterprises (VAFIE), said measures to protect investor interests were important factors in attracting investment, especially foreign investment. The provision on investment guarantee when there is a change in the law is stipulated in Article 13 of the Investment Law, however, this provision is only limited to the change of legal documents on investment incentives; while investors require much more, including: Assuring property rights, securing the transfer of assets and legal profits of investors abroad, securing investment in case of legal changes, investment guarantee for business investment activities. Therefore, the Chairman of VAFIE proposed an “investment guarantee" programme to specify all contents related to investors' interests, including security of property rights; ensure the transfer of legal properties and profits of investors abroad; investment guarantee in case of changes in laws and investors' interests in business activities.

Benefits will be guaranteed

According to the World Bank (WB) report, before the Enterprise Law 2005, Vietnam ranked 159/169 countries in the world in the investor protection index - the most important index in corporate governance. After passing the Enterprise Law 2005 and the Enterprise Law 2014, Vietnam's Investor Protection Index increased by 70 steps to 89/190 countries, and the World Bank has recorded a record of this change. However, since then, the Enterprise Law has not been amended, resulting in Vietnam falling to 97. Therefore, at present, not only the draft of the Enterprise Law (amended), the Investment Law (amended) are also provisions on protecting the rights of investors and shareholders.

However, many enterprises are also concerned about not only old regulations, but also new regulations in the draft laws, such as cutting the percentage of shareholding of shareholders or groups of shareholders owning from 1 percent of total ordinary shares or a smaller percentage as stipulated in the company's charter has the rights such as requesting the review and copy the report numbers and resolutions of the Board of Directors, financial statements and other reports of the Supervisory Board and requesting to convene an extraordinary General Meeting of Shareholders.

In this regard, Phan Le Hoang, Deputy General Director of Pacific Group (Pacific Corporation) expressed concern that regulations on reducing the percentage of share ownership of shareholders or groups of shareholders who own from 10 percent to 1 percent was not appropriate and does not guarantee a competitive environment for enterprises. Protecting the interests of small shareholders is the right thing to do, but to stabilise the company still needs a certain percentage to vote by the majority, to ensure the rights and responsibilities of major shareholders. So, he proposed maintaining the ownership rate of 10 percent of the total number of common shares or more of the shareholder or group of shareholders as prescribed in Clause 2, Article 114 of the current Enterprise Law.

But according to Phan Duc Hieu, the above-mentioned amendment would help expand the right of shareholders to access information about the operation of the company, creating more favourable conditions for shareholders to exercise their rights. In addition, many experts also say corporate governance in countries pays high shareholder rights. The tendency of countries is that people invest less capital but their benefits are guaranteed. However, enterprises still have to give their ideas to get the best regulations for investors as well as their rights in business activities.

By Huong Diu/ Binh Minh

Related News

Customs actively hold dialogues to develop Customs-Business partnerships

Customs actively hold dialogues to develop Customs-Business partnerships

VCN - Business associations highly appreciated the initiative to develop the Customs-Business partnership of the General Department of Vietnam Customs. In particular, the Customs agency actively opens dialogue channels to answer problems for businesses, and at the same time absorbs and amends legal documents and policies in a direction that creates favorable conditions for businesses.
Noi Bai International Airport Customs attracts many new businesses to carry out procedures

Noi Bai International Airport Customs attracts many new businesses to carry out procedures

VCN - In the first 6 months of 2024, at Noi Bai International Airport Customs Branch, there are 2,262 new businesses paying the state budget, the total additional tax amount is VND 289.6 billion.
Banks with the problem of promoting credit growth

Banks with the problem of promoting credit growth

VCN - It is estimated that by the end of June 2024, the economy's credit growth will reach nearly 4.5%. This number is still far from the yearly credit growth target of 14-15%.
Enterprises lose competitive advantage due to regulations on enhancing micronutrients in food

Enterprises lose competitive advantage due to regulations on enhancing micronutrients in food

VCN - Many enterprises are facing the risk of reduced competitiveness of domestic and export goods due to the lower cost of imported goods, which do not incur the expenses associated with enhancing iodine, iron, and zinc, resulting in Vietnamese goods being outcompeted at home.

Latest News

Indonesia licenses certificates of lobster cultivation for three Vietnamese companies

Indonesia licenses certificates of lobster cultivation for three Vietnamese companies

Three out of the five Vietnamese businesses, which have formed limited liability companies in Indonesia, have been verified and received certificates of lobster cultivation from the Directorate General of Aquaculture, according to Indonesia’s Ministry of Maritime Affairs and Fisheries.
Vietnamese spend nearly 150 trillion VND on online shopping

Vietnamese spend nearly 150 trillion VND on online shopping

Vietnamese consumers spent 143.9 trillion (5.68 billion USD) buying 1.53 million items on five e-commerce platforms in the first half of this year, representing a rise of 54.91% and 65.55% over the same period last year, respectively, according market analysis firm Metric.
Four tens of billion USD export markets

Four tens of billion USD export markets

VCN - According to General Department of Vietnam Customs, by the end of June 2024, Vietnam has four markets achieve export turnover of US$ 10 billion.
Successful digital transformation solutions for wood industry enterprises

Successful digital transformation solutions for wood industry enterprises

VCN - Refraining from rushing, implementing steps gradually, and maintaining a clear vision are the recommendations that experts give to wood industry enterprises for successful digital transformation.

More News

Vietnamese lychee sold well at Costco stores in Australia

Vietnamese lychee sold well at Costco stores in Australia

Lychee, one of Vietnam’s major export fruits, has been sold well at Costco stores in Western Australia and South Australia, according to the Vietnam Trade Office in Australia.
Durian exports forecast to top 3 billion USD in 2024

Durian exports forecast to top 3 billion USD in 2024

Durian exports may surpass 3 billion USD this year, according to Dang Phuc Nguyen, General Secretary of the Vietnam Vegetable and Fruit Association (Vinafruit).
FTA - support to promote pangasius export

FTA - support to promote pangasius export

VCN - The implementation of FTAs ​​always creates favorable conditions for businesses to expand and diversify markets, bringing Vietnamese seafood, including pangasius, to participate deeperly into the global production and supply chain.
Vietnam - France trade reached nearly US$2.5 billion in the first half of the year

Vietnam - France trade reached nearly US$2.5 billion in the first half of the year

VCN - France is Vietnam's leading trade partner in Europe with bilateral turnover reaching billions of US$/year.
Technology increases competitiveness in the logistics race

Technology increases competitiveness in the logistics race

VCN - In the context that the logistics industry in Vietnam is forecast to continue to grow strongly, many businesses are actively applying technology and expanding service chains to take advantage of opportunities and keep pace with the general trend.
MoIT proposes key solutions to cope with rising sea freight prices

MoIT proposes key solutions to cope with rising sea freight prices

The Ministry of Industry and Trade (MoIT) has requested local associations and businesses to coordinate implementing key solutions to promote imports and exports as sea freight rates rise.
Vietnamese seaports to handle 1.2-1.4 billion tonnes of cargo by 2030

Vietnamese seaports to handle 1.2-1.4 billion tonnes of cargo by 2030

Vietnam's seaport cargo throughput is set to reach 1.2-1.4 billion tonnes by 2030, with container cargo expected to range from 46.3 to 54.34 million TEUs, according to a detailed plan for the development of seaport groups, wharfs, jetties, buoy berths, and water areas in 2021-2030, with a vision to 2050.
Binh Dinh seeks investment opportunities from Germany, France

Binh Dinh seeks investment opportunities from Germany, France

A delegation from the south central province of Binh Dinh led by Permanent Vice Secretary of the provincial Party Committee Le Kim Toan paid a working trip to Germany and France to explore investment opportunities from July 17-22, reported the provincial Department of Planning and Investment.
Warnings as HRC steel imports continue to increase rapidly

Warnings as HRC steel imports continue to increase rapidly

The amount of imported hot-rolled coil steel in the first six months of this year increased sharply to an alarming level, 1.7 times higher than domestic production.
Read More

Your care

Latest Most read
Indonesia licenses certificates of lobster cultivation for three Vietnamese companies

Indonesia licenses certificates of lobster cultivation for three Vietnamese companies

Three out of the five Vietnamese businesses, which have formed limited liability companies in Indonesia, have been verified and received certificates of lobster cultivation from the Directorate General of Aquaculture, according to Indonesia’s Ministry of Maritime Affairs and Fisheries.
Vietnamese spend nearly 150 trillion VND on online shopping

Vietnamese spend nearly 150 trillion VND on online shopping

Vietnamese consumers spent 143.9 trillion (5.68 billion USD) buying 1.53 million items on five e-commerce platforms in the first half of this year, representing a rise of 54.91% and 65.55% over the same period last year, respectively, according market analysis firm Metric.
Four tens of billion USD export markets

Four tens of billion USD export markets

According to General Department of Vietnam Customs, by the end of June 2024, Vietnam has four markets achieve export turnover of US$ 10 billion.
Successful digital transformation solutions for wood industry enterprises

Successful digital transformation solutions for wood industry enterprises

VCN - Ms. Nguyen Thi Linh Vy, Production Management Director at Imity Company, also states that although they had planned digital transformation two years ago, the company has not yet dared to implement it.
Vietnamese lychee sold well at Costco stores in Australia

Vietnamese lychee sold well at Costco stores in Australia

Lychee, one of Vietnam’s major export fruits, has been sold well at Costco stores in Western Australia and South Australia, according to the Vietnam Trade Office in Australia.
Mobile Version