Law on Enterprises should be revised to improve business climate: CIEM

Hanoi (VNA) – As the Law on Enterprises is no longer suitable due to heavy burdens of administrative procedures it placed on local firms, a revised bill is necessary to better the business climate and enhance the competitive edge of the economy, according to the Central Institute for Economic Management (CIEM).

At a workshop held in Hanoi on February 28, CIEM Deputy Director Phan Duc Hieu said that there are a wide range of irrational regulations that bar market entry of many businesses, including administrative costs, human resources training costs, and equipment purchase to satisfy legal regulations.

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

Besides ending the use of company seals in the legal system to reduce the costs and procedures for businesses, the Government should remove regulations on requiring enterprises to make periodic reports on labour use, he recommended.

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 no come close to have a controlling interest in the firm.

They said that under the amended law, even minority shareholders must 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 besides 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./.