Amended Enterprise Law to protect minority shareholders

Hanoi (VNA) – Over the last six years, the 2014 Enterprise Law and its implementing Decrees have had positive impacts on creating a favourable and equal business environment, promoting the establishment, development and expansion of business of enterprise.

However, some contents of the 2014 Law on Enterprises is no longer suitable to reality, creating burdens of costs and time for businesses to comply, according to the Central Institute for Economic Management (CIEM). So that, a revised bill is necessary to better the business climate and enhance the competitive edge of the economy.

The CIEM has been tasked to craft revisions for the Enterprise Law which are expected to submit to the National Assembly for review this May, Deputy Director of the CIEM Phan Duc Hieu told a workshop held in Hanoi on February 28.

The workshop entitled “Market entry regulation: Issues and Solutions for Improving Indicators of Starting a Business and Protecting Minority Shareholders” was organised within the framework of the Australian Program to support Vietnam's economic reform (Aus4Reform) to introduce some key results of the research report and proposed amendments to the Enterprise Law.

According to a CIEM report, it took a new firm a period from six months to a year to start business in Vietnam before 2000. Though the required time was cut to five – seven days after 2000, it now takes an entrepreneur up to 16 days to set up his own firm in reality.

A wide range of irrational regulations that are barring market entry of many businesses, Hieu said, they include administrative costs, human resources training costs, and equipment purchase to satisfy legal regulations.

“A reform, though small, will create tremendous impacts on the business community”, Hieu noted, adding for the sake of local firms, the Government should work to remove regulations that cause troubles to the businesses.

To further improve the business environment and enhance competitiveness for businesses, he recommended policymakers to reform four out of nine procedures for starting a business, including empowering self-determination on seal for enterprises and at the same time, abolish procedures for notification of seal samples.

This is unnecessary and can cause misunderstanding and even unnecessary legal disputes for businesses, he explained.

In addition, the Government should remove regulations on requiring enterprises to make periodic reports on labour use, he recommended.

The workshop entitled “Market entry regulation: Issues and Solutions for Improving Indicators of Starting a Business and Protecting Minority Shareholders” is held in Hanoi on February 28. (Photo: VietnamPlus)

Regarding the protection of minority shareholders, CIEM experts said that weak business management capacity at joint stock firms is threatening the rights of minority shareholders, who do not contribute in large part to the ownership of a company and do not come close to have a controlling interest in the firm.

They said that under the amended law, even minority shareholders shall have the rights to order independent auditing, while shares owned by major shareholders should be kept at 5 percent of the firm’s total shares instead of the current 10 percent.

CIEM experts said that in addition to the Government’s efforts to give practical and effective support to boost the business community development, local firms should make meticulous preparations to enter the market as well as improve their management capacity and make in a modern fashion and in line with international trend.

Particularly, there should be specific and full rules to protect minority shareholders so as to prevent manipulation of major shareholders./.